Financial Impact of Imaging Examination Site of Service in the Medicare Population

The financial sustainability of the US healthcare system is a growing concern in an environment of declining reimbursement and rising costs. Variable Centers for Medicare and Medicaid (CMS) reimbursement and denial rates for specific imaging examinations exist across sites of service, adding complexity to financial planning for healthcare organizations. Understanding the financial implications of site of service in existing CMS reimbursement for imaging may be of strategic importance for organizations going forward.

Current Procedural Terminology (CPT) codes were obtained for common cross-sectional imaging examinations using the 2022 CMS Medicare Physician Fee Schedule. Using reimbursement rates with historical volumes and denial rates, a simulation was created to estimate the overall reimbursement of paired hospital outpatient departments (HOPD) and free-standing office (FSO) sites. A baseline simulation was performed with random allocation of imaging examinations between sites of service, and an optimized simulation was performed to estimate the maximum financial impact of targeted allocation between sites. These simulations were performed for paired CT and MR scanners separately.

For CT, the baseline simulation estimated annual average reimbursement for combined HOPD and FSO was $3.25M. Reimbursement increased to $3.51M after optimized reallocation of studies between sites of service, resulting in an expected gain of $260,162 for a set of paired HOPD and FSO scanners. For MR, the same approach resulted in baseline reimbursement of $2.51M, increasing to $2.60M upon reallocation between sites for an expected gain of $87,532. Assuming a stable cost of service delivery, this approach would result in improved margins of 8% for CT and 3.5% for MR. There were 28 CT and 19 MRI daily patient imaging appointments at each respective HOPD and FSO scanners, unchanged between baseline and optimized cases. Differences in reimbursement rates between sites were the dominant driver of increased margins at low denial rates, although denial rates became dominant at values greater than 50%.

Given CMS payment and denial rate variability, optimally allocating imaging studies between sites of service may improve reimbursement for the same services delivered. Although financial incentives exist for site allocation, such decisions should require physician input to assess safety and appropriate level of care. This work contributes to an understanding of financial incentives of existing reimbursement policy and may guide future policy design towards high value care.