Steve Blades, President, Cardiovascular Outpatient Center Alliance

In recent months, at least three non-hospital outpatient cath labs performed their last cardiac catheterization procedures. Faced with rising costs and looming reimbursement cuts, these physician-driven independent outpatient facilities made the difficult decision to close their doors for good.

With the recent release of the proposed 2009 Medicare physician fee schedule (PFS), which does nothing to reverse steep cuts to outpatient cath labs (OPCLs) first outlined in the 2007 schedule, this same scenario may soon play out in dozens of communities across the country.

Despite the efforts of the various cardiology groups including the Cardiovascular Outpatient Center Alliance (COCA) and its more than 60 member labs to advocate for fair reimbursement, the Centers for Medicare & Medicaid Services (CMS) failed to take action—even after being presented with data underscoring fundamental flaws in the formula it uses to calculate practice expense reimbursement to non-hospital cath labs. As a result, reimbursement for catheterization procedures performed in a non-hospital setting will be reduced by 47 percent by 2010—beginning with a 23 percent cut that took effect January 1 of this year.

With fewer than 100 outpatient cath labs in the country, CMS does not currently have a methodology that takes into account the true costs associated with performing the procedure on an outpatient basis. Instead, it reimburses non-hospital labs using the same formulas created to calculate the cost of procedures performed in physician offices. As a result, the direct and indirect costs of outpatient catheterization procedures are dramatically undervalued.

If this seems like déjà vu all over again, it is. OPCLs battled the same cuts when the 2007 PFS was introduced. While CMS ultimately allowed local Medicare carriers to set prices while more information could be gathered, the agency failed to incorporate most of the data provided to them into the 2008 and 2009 schedules.

With reimbursements now set to drop below the cost of performing these procedures, many patients will be forced to seek care in hospital-based labs where they will face longer waits and higher costs. According to the 2007 ambulatory payment classification (APC) and PFS rates published by CMS, Medicare beneficiaries could pay $500 or more in additional out-of-pocket co-pays at hospital-based labs.

Yet, even as reimbursement rates for non-hospital cath labs are cut, their hospital counterparts continue to see substantial increases. Despite research that shows a hospital outpatient cath lab’s cost structure is similar to that of a non-hospital lab, hospitals have experienced a 25 percent increase in reimbursement since 2006. According to recently released CMS payment schedules, hospital reimbursement will continue to climb by 14 percent over the next two years.

While the disparity can be attributed to the fact that hospitals are reimbursed using APC rates while outpatient cath lab reimbursements are dictated by the PFS, a comparison of the rates only underscores the inequity. Under the proposed 2009 rule, non-hospital labs would be reimbursed at just 44 percent of hospital APC rates, putting reimbursement well below the intensive infrastructure, equipment, staffing and supply costs associated with the procedure.

Ironically, reimbursing OPCLs at just 85 percent of the proposed 2009 APC rate would restore reimbursement to 2007 levels. Though not equal, such an action could prevent the closure of more outpatient labs and preserve access for the thousands of Medicare beneficiaries who rely on them.

Better yet, CMS should recognize non-hospital cath labs as a separate and distinct entity and begin reimbursing them as such. With the potential of soaring co-pays and an estimated $50 million in increased federal costs, the entire healthcare system stands to benefit from a rational and decisive solution.
 

Mr. Blades is the president of the Cardiovascular Outpatient Center Alliance (www.cocaheart.org) and can be reached at sblades@bladesandassociates.com.