1. Katie Keysor Senior Director Economics & Health Policy
Economics 101: An Overview of General Terminology, Concepts and Hot Topics
Katie Keysor
Senior Director
Economics & Health Policy

2. Alphabet Soup ACO – Accountable Care Organization
ADIS – Advanced Diagnostic Imaging Services
APC – Ambulatory Payment Classification
APM – Alternative Payment Model
CAC – Carrier Advisory Committee
CPT – Current Procedural Terminology
CERT – Comprehensive Error Rate Testing
CF – Conversion Factor
CMD – Contractor Medical Director
CMS – Centers for Medicare and Medicaid Services 2

3. More Alphabet Soup DOS – Date of Service DRA – Deficit Reduction Act
EHR – Electronic Health Record
E/M – Evaluation and Management
GPCI – Geographic Practice Cost Index
HCPCS – Healthcare Common Procedural Coding System
HHS – Health and Human Services
HIT – Health Information Technology
HOPPS – Hospital Outpatient Prospective Payment System
IPAB – Independent Payment Advisory Board 3

4. …And More ICD-9,10 – International Classification of Diseases
IDTF – Independent Diagnostic Testing Facility
LCD – Local Coverage Determination
MAC – Medicare Administrative Contractor
MACRA – Medicare Access and CHIP Reauthorization Act
MCC – Managed Care Committee
MCN – Managed Care Network
MedCAC – Medicare Evidence Development and Coverage Advisory Committee
MedPAC – Medicare Payment Advisory Commission
MFS – Medicare Fee Schedule
MEI – Medicare Economic Index 4

5. …And More Still MIPS – Merit Based Incentive Payment System
MPPR – Multiple Procedure Payment Reduction
NCD – National Coverage Determination
NCCI – National Correct Coding Initiative
NPI – National Provider Identifier
PC, -26 – Professional Component
POS – Place of Service
PPACA – Patient Protection and Affordable Care Act of 2010
PPIS – Physician Practice Information Survey
PPS – Prospective Payment System
PQRS – Physician Quality Reporting System 5

6. …Last one QPP – Quality Payment Program
RAC – Recovery Audit Contractor
RBM – Radiology Business Management Company
RBMA – Radiology Business Management Association
RCCB – Radiology Coding Certification Board
RVU – Relative Value Unit
RUC – Relative Value Update Committee
SGR – Sustainable Growth Rate
TC – Technical Component
And many others… 6

7. Economics: From New Technology to Coverage
New Technology (published evidence)
CPT Code
Code Valuation
Coverage 7

8. What are CPT Codes? CPT = Current Procedural Terminology
Listing of descriptive terms/identifying codes for reporting of medical services and procedures
Developed, owned, and copyrighted by American Medical Association (AMA)
Updated Yearly – codes can be
created, revised, or deleted 8

9. How are Codes Created?
Code proposals are submitted to the CPT Editorial Panel for consideration
The Panel meets three times a year to discuss the creation of new codes and the deletion or revision of existing codes
It is comprised of 17 individuals: nominees from the Blue Cross and Blue Shield Association, the American Hospital Association, Americans Health Insurance Plans, the Centers for Medicare and Medicaid Services (CMS), and the American Medical Association (AMA)
Radiology is represented on the CPT Editorial Panel by Daniel Picus, MD, FACR 9

10. Types of CPT Codes Category III Category I – high evidence threshold
“Emerging Technology”
Intended to be used for data collection to substantiate widespread use
Category I – high evidence threshold
Distinct service/procedure
FDA approved
Widely performed (in USA)
Substantial US peer reviewed literature 10

11. How to Choose a CPT Code
Select the code that accurately identifies the service performed
Do not select a code that merely approximates the service provided
If no accurate code exists, then use an unlisted code

12. International Classification of Diseases 10th Revision – Clinical Modifications (ICD-10-CM)
Implemented October 1, 2015
Codes used to designate signs, symptoms, injury, disease, screen
Establish medical necessity
3-7 characters (alphanumeric)
Code to highest level of specificity 12

13. ACR Coding Resources Ultrasound Nuclear Medicine
Interventional Radiology Update (SIR/ACR)
ACR Radiology Coding SourceTM
Bimonthly electronic newsletter on coding & reimbursement
Feature article
Medicare and third party payer issues
Q&A
CEUs available toward RCCB certification
Clinical Examples in Radiology (AMA/ACR)
Published quarterly
Real dictations with expert analysis
Documentation challenge
Test case
Semi-annual bulletin articles to address timely topics 66

14. What Happens After A Code is Created?
New and revised CPT codes will need to be valued before they can be implemented 14

15. R B V S Radiology Allergy Testing Diaphragmatic Hernia Repair .01 108
Resource B
Based
Relative V
Value S
Scale
Allergy
Testing
Diaphragmatic Hernia Repair
Radiology
.01
108 15

16. Total RVU +
Work (PC)
Practice Expense (TC)

17. What is the RUC? Formed in 1991 Convenes three times a year
The RUC Panel is comprised of 31 members
Radiology is represented by Zeke Silva, MD, FACR
Makes value-based recommendations to CMS for new and revised codes coming from CPT
Random surveys are conducted to gather data related to the time, intensity, and complexity of the procedure
Data used to support the recommended RVU relative to all other procedures
To understand what happened to CTC, we must understand the payment system involved.
What the RUC is?
What the RUC does?
How the RUC functions?

18. What is Practice Expense?
Considers the direct expense inputs related to the performance of the procedure
Clinical Labor costs
Costs of medical supplies
Equipment costs
To understand what happened to CTC, we must understand the payment system involved.
What the RUC is?
What the RUC does?
How the RUC functions?

19. What Happens After The RUC?
The AMA shares the RUC-approved values with CMS
CMS publishes the values in the Medicare Physician Fee Schedule (MPFS) after their internal review
CMS may choose to make refinements (revisions) to the values proposed by the AMA/RUC
To understand what happened to CTC, we must understand the payment system involved.
What the RUC is?
What the RUC does?
How the RUC functions?

20. Medicare Physician Fee Schedule (MPFS)
How radiologists get paid for their work and practice expense for their offices

21. Medicare Physician Fee Schedule
Proposed Rule published in late June/early July
Final Rule published in late October/early November
Monitor the impacts of adjustments to the MFS for increases and decreases in physician work, practice expense and malpractice RVUs
Other CMS payment policy decisions (e.g. MPPR, interest rate, utilization rate, etc.)
Analyze these effects and write formal comments to CMS on areas of concern

22. Clinical Decision Support
Protecting Access to Medicare Act (PAMA) Mandate: Requires referring providers to consult appropriate use criteria (AUC) prior to ordering advanced diagnostic imaging services - CT, MR, nuclear medicine exams and PET - for Medicare patients. 
CMS believes the goal of an appropriate use criteria (AUC) program is to promote the evidence-based use of advanced diagnostic imaging to improve quality of care and reduce inappropriate imaging.
The law gives preference to AUCs developed by “Provider-Led” entities. The American College of Radiology is considered a “provider-led entity”.
CMS envisions a system where the ordering professional would input information regarding the clinical presentation of the patient into the CDS tool and the tool would provide immediate feedback to the ordering professional on the appropriateness of one or more imaging services.
Ideally, CMS would like to see multiple CDS mechanisms available that could integrate directly into, or be seamlessly interoperable with, existing health IT systems.

23. Hospital Outpatient Prospective Payment System (HOPPS)
HOPPS mandated by Balanced Budget Act (BBA) of 1997
April 7, 2000 CMS issued final rule on HOPPS
HOPPS went into effect August 2000
Previously Medicare paid for services performed in hospital in a variety of methodologies based on reasonable costs

24. Prospective Payment System
Less granular than Medicare Physician Fee Schedule
Belief that prospective payments incent efficiency
Other examples: DRG payments to hospitals for inpatient admission
Payments calculated annually based on hospital charges 24

25. Ambulatory Payment Classifications
Service divided into ambulatory payment classifications (APC)
Each APC encompasses services that are clinically similar and require similar resources
All services within an APC are generally paid at same prospectively-fixed rate.
Payment determined by hospital charges submitted to CMS

26. 2 Times Rule
CMS considers the items and services within a group as NOT comparable if the highest median cost for an item or service within a group is more than two times greater than the lowest median cost

27. Proactive Work with CMS
Work with The Moran Company to analyze new bundled CPT codes based on predecessor codes
Meet with CMS staff in person to provide recommendations prior to publication of Final Rule
CMS is appreciative of the information and generally accepts recommendations

28. Policy Mechanics of MIPS
Merit-Based Incentive Payment System (MIPS) starts in Essentially a modified fee-for-service program.
New P4P program under FFS payment system
Current penalties under PQRS, meaningful use (MU), value-based modifier (VBM) will end 2018
Performance and composite scores will be based on four categories:
Quality (PQRS/30 percent)
Resource use (VBM/30 percent)
Meaningful Use (25 percent)
Clinical Practice Improvement Activities (15 percent)
MIPS categories to build/improve on PQRS, VBM and MU
Composite scoring assesses performance on sliding scale and gives credit for benchmark attainment and improvement.
The payment adjustments: negative for those below the threshold; zero for those at the threshold; positive above the threshold:
2019: capped at +/-4%; going to 2022 and beyond capped at +/-9%.
One of the most important sentences in the legislation for radiology: “Encourage the use of qualified clinical data registries.”

29. Alternative Payment Models
Loosely defined in the statute to permit innovation but do require physicians to assume two-sided financial risk and must include a quality component.
e.g. ACOs, bundled payments, etc.
CMS must define APM criteria by Nov. 1, 2016
To encourage physicians to take on this risk, legislation provides annual 5% incentive payments from 2019 to 2025.
To be eligible for bonuses, participants need to receive at least 25% of their Medicare revenue through an APM in
Revenue threshold increases over time to 75% APM in 2023 on.
APM Participants would be exempt from MIPS quality program.
Beginning in 2026, providers participating in a qualifying APMs will have the opportunity to earn up to .75% in annual automatic adjustments while all other professionals will receive an annual automatic update of .25%.

30. Summary of New Payment Provisions
MIPS
APM
Consolidated Value Based Payment Programs
EHR incentive program
PQRS
Value-based modifier
Clinical practice improvement
Positive/Negative Adjustment phase in % %
2021-7%
2022 and subsequent years-9%
Professionals who receive a significant share of their revenues through APMs will receive a 5% bonus each year from Professionals who qualify for this bonus will be excluded from the MIPS assessment and most EHR meaningful use requirements.
In 2026, Providers participating in APMs can earn up to .75% in annual automatic adjustments. Other professionals will receive 0.25%.

31. CMS COVERAGE DECISION LCD NCD (CAC)
Once there is a levl 1 CPT code and it has been valued by the RUC, these are the 2 big outcomes LCD’s (local coverage determination) and NCD’s (national coverage determination).

32. What is a MAC? Medicare Administrative Contractor
These are the folks who cut the checks for Medicare, and they are typically insurance companies that you know and love that have won bids to manage and pay Medicare claims
15 Jurisdictions 32

33. Local Coverage Determination (LCD)
Most Medicare coverage decisions are made at the local level through LCDs
No LCD does not mean there is no coverage
MACs are required to post draft coverage policies for comment and hold Carrier Advisory Committee (CAC) meetings to discuss the policies
ACR CAC Networks
Screening coverage must be through a National Coverage Determination 33

34. National Coverage Determination - NCD
“reasonable and necessary for the diagnosis or treatment of an illness or injury within the scope of a Medicare benefit. “NCD’s are made through evidence-based process… with public participation. In some cases CMS’ own research is supplemented with an outside technology assessment and/or consultation with MEDCAC” (eg internal decision cardiac flow add-on code for cardiac MRI)
For coverage a test must be

35. MedCAC Provide independent, expert guidance…
“Up to 100 experts in clinical and administrative medicine, biological and physical sciences, public health administration, patient advocacy, health care data management and information analysis, health care economics,and medical ethics…” 35

36. US Preventive Services Task Force
Since it’s a screening test, USPSTF IS INVOLVED. Of course you have heard of them in the context of mammography…
“...independent panel of private sector experts in prevention and primary care…conducts rigorous impartial assessments of the scientific evidence… for effectiveness of screening, counseling, and preventative medications”

37. CT Lung Cancer Screening
Received a grade B rating from the USPSTF. Subsequently CMS issued a national coverage determination (NCD) for the coverage of a lung cancer screening counseling and shared decision making visit as a preventative benefit effective February 6, 2015.
Applicable in both the hospital outpatient and physician office setting.
ACR submitted recommendations for work and direct PE inputs. The ACR recommended that CMS crosswalk LDCT to (computed tomography, thorax; without contrast material) with additional physician work added to account for the added intensity of the service.

38. CT Lung Cancer Screening
After reviewing this recommendation, CMS believes that the physician work (time and intensity) is identical in both to 71250, and therefore, they are proposing valuation the same as
CMS placed LDCT for LCS in APC 5570 (Level II Imaging Without Contrast), at a payment rate of $ for the technical component in the hospital outpatient setting for 2016.
For 2017, CMS reassigned LDCT to APC 5521 (Level I Imaging Without Contrast), at a payment rate of $59.84.
Failure to pay for LDCT at an adequate rate will limit patient access to this service. 38

39. Private Payer Coverage – Influences
Medicare
Often, Medicare coverage or non-coverage equals private payer coverage or non-coverage, but not always
Blue Cross Blue Shield Association Technology Evaluation Center (TEC)
United States Preventative Services Task Force (USPSTF)
Increasing influence on Medicare coverage decisions
Some payers now cite the USPSTF in their coverage decisions
Radiology Benefits Management Companies (RBMs)
Most say that they use ACR Practice Guidelines and Appropriateness Criteria, but do not have transparent processes 39

40. Private Payer Decisions
Little to no transparency
Not required to publish draft policies for public comment
Relationships are key! 40

41. James Moorefield Economics Fellowship
Two week program
Learn about activities of the College, and specifically about economics.
Provide clinical feedback on various projects
Two interns per year
Applications accepted February-April

42. QUESTIONS???