A new payment system for outpatient services? The implications for radiology

Congress is now contemplating the most significant change in outpatient payment methodology in Medicare's 31-year history. It may approve a proposal by the Health Care Financing Administration (HCFA) to establish a Medicare prospective payment system for hospital outpatient departments. In March 1955, five years after a Congressional directive to develop a new outpatient payment system, HCFA delivered its proposal recommending use of the ambulatory patient groups (APG) classification system for determining payment of hospital outpatient services. The APG system, which uses outpatient procedures as its primary variable, divides all such procedures into one of three categories: 1) significant procedures or therapies (including therapeutic and other significant radiological procedures); 2) ancillary test and procedures (including 11 radiology ancillary service APGs); or 3) medical visits. Outpatients can be assigned to one or more of the 290 APGs, each comprising a number of clinically and resource intensity-similar procedures, medical visits or ancillary tests. Any new payment methodology for outpatient procedures would broadly impact the radiology community. How radiology providers will fare under the system being proposed will depend on several issues that have not yet been resolved, such as how the basic unit of payment is defined (e.g., a service, a visit, or an episode of care) and whether payment rates will be adequate to compensate for the costs of providing services. One key issue will be whether contrast media and radiopharmaceuticals will continue to be paid as pass-through costs, giving providers the flexibility to choose the specific agent that is most appropriate for their patients.