The Deficit Reduction Act of 2005: Policy, Politics, and Impact on Radiologists

The Deficit Reduction Act of 2005 (DRA) includes several provisions affecting Medicare physician payment policy that could have a significant impact on radiologists. Imaging and computer-assisted imaging services performed in physicians' offices will be subject to new payment caps starting in 2007, with reimbursement for the technical component limited to the lesser of what would be paid under the Hospital Outpatient Prospective Payment System or the Medicare fee schedule. It eliminates the scheduled reduction in fee-schedule payments for physicians' services for 2006, leaving payments at 2005 levels. It captures the savings accruing from a Medicare administrative decision cutting technical-component reimbursement for imaging of contiguous body parts, rather than allowing the savings to be redirected to other areas of physician payment. The imaging payment cuts will save Medicare an estimated $2.8 billion over 5 years. The impact on individual physicians will vary substantially, depending on the extent of technical component and global billing, how much of their practices are devoted to Medicare, and the imaging modalities in which they specialize. Although the DRA cuts payments for certain imaging services, it does nothing to control utilization, which is the prime mover driving spending.