Steve Blades, President of the Cardiovascular Outpatient Center Alliance

When I wrote an article two years ago for Cardiovascular Business (Sept/Oct 2008, page 40), I outlined the potential impact the severe 2008-2010 Medicare cuts would have on non-hospital outpatient cath labs (OPCLs). At that time, three OPCL members of the Cardiovascular Outpatient Center Alliance (COCA), an educational and advocacy association, had decided to either sell to local hospitals or close their doors. I anticipated that many more would likely follow their lead if COCA could not educate CMS to change the reimbursement mechanism for OPCLs.

Fast forward to this year and the devastation that the 2010 Medicare Physician Fee Schedule has wrought on private cardiology practices in the U.S. Cardiology groups are implementing a variety of strategies to adjust to the huge cuts to the practice expense relative value unit (RVU) component resulting from the flawed Physician Practice Information Survey utilized by CMS. This survey “demonstrated” that cardiology practice expenses had decreased by 40 percent over the past five years, resulting in reductions for most outpatient cardiovascular procedures.

The American Medical Association vetted the cardiology survey results, despite the fact that the survey only polled 55 cardiologists out of some 20,000 across the U.S. Recent efforts by the Cardiology Advocacy Alliance, American College of Cardiology, COCA and other organizations have been unable to halt the phase-in of these Medicare reimbursement cuts over the next four years.

The final impact of these changes on Medicare reimbursement for OPCLs is even worse than what could have been expected for 2009-2010. For example, Medicare reimbursement for the technical component of a left heart cath (LHC) dropped another 17 percent in 2010 from the 2009 rates, reflecting a 50 percent drop from the 2007 rates when the first cuts were implemented. The fully-transitioned LHC Medicare reimbursement cuts in 2013 are currently pegged at 68 percent below the 2007 rates. During this same period, LHCs performed in hospitals’ OPCLs have received an 18 percent increase, resulting in a widening gulf between these two settings with very similar expense structures. In fact, in 2007, OPCLs were paid approximately 93 percent of outpatient hospital rates, but that has decreased to less than 40 percent in 2010.

These draconian reimbursement cuts have resulted in the expected negative changes for OPCLs. Out of the 65 OPCLs represented by COCA membership in 2008, 23 have now closed or have been “integrated” into hospital systems along with their respective practices. The most obvious result for these actions has been a dramatic increase in the cost of performing these services for both the Medicare program and Medicare patients: CMS now pays 60 percent more for these procedures in an outpatient hospital setting, forcing each Medicare patient’s copayment to increase by more than $625. This dramatic increase is accompanied by potential access and patient care issues as patients are forced into more acute settings.

Where does this leave OPCLs in 2010 and beyond? It’s obvious that most, if not all, OPCLs will find it difficult to remain viable as the phased-in cuts reduce Medicare reimbursement well below the cost of performing diagnostic procedures, especially if commercial payors follow suit. The best opportunity lies with convincing CMS to develop an alternative Medicare payment mechanism for OPCLs that will restore reasonable reimbursement for diagnostic caths.

COCA members are actively working with members of Congress to find a workable solution to allow OPCLs to continue to provide services to Medicare patients. In the interim, many COCA members have added peripheral vascular interventions and other therapeutic procedures to their offered services, as these are still reimbursed at reasonable rates.

We are clearly at a tipping point for the future of non-hospital outpatient cath labs, but many of us are convinced that ambulatory care provided in physician-based settings is still the best hope for continuing the progress that cardiologists have made over the past decades of turning cardiovascular disease from a once fatal outcome into a treatable chronic disease and eventually to a more preventable one.

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