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Kevin J. Hayes, Julian Pettengill, and Jeffrey Stensland Getting The Price Right: Medicare Payment Rates For Cardiovascular Services Health Affairs, January/February 2007; 26(1): 124-136. [Abstract] [Full Text] [PDF] [Reprints & Permissions]

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ASE responds

Michael Picard, MD   ( 6 February 2007 )

Re: ASE Responds

Kevin J Hayes, Julian Pettengill and Jeffrey Stensland   ( 23 February 2007 )

ASE responds 6 February 2007
Michael Picard, MD, President American Society of Echocardiography Send comment to journal: Re: ASE responds MHPICARD{at}PARTNERS.ORG Michael Picard, MD	This article argues that because Medicare utilization of echocardiography is growing more quickly than that of other physicians’ services, echocardiography must be overpriced. Many factors contribute to echocardiography utilization, including the increasing prevalence of heart disease, the increasing survival rate of patients with heart disease, and technological advances that have expanded echocardiography’s clinical applications. Ironically, these factors are discussed in other articles in the same issue of Health Affairs. The paper’s premise is incorrect. In fact, echocardiography’s Medicare growth rate is about the same as that for other physicians’ services. The authors’ analysis counts as “new growth” those expenditures that shifted from hospital to non-hospital settings. If site of service is held constant, echocardiography utilization is growing at the same rate as that of other physicians’ services covered under Medicare. Further, the authors attribute the growth in echocardiography to its Medicare payment rate, implying that cardiologists provide these services more frequently because they are financially lucrative. Yet approximately 70% of echocardiography services are ordered by non-cardiologists who do not perform them and have no financial incentive to order them. Finally, having assumed unjustifiable growth of echocardiography services, the authors recommend Medicare payment reductions as the solution. The current allowances result from processes whose legitimacy depends upon their being applied even-handedly to all services, without reference to rate of growth. Altering this formula based on rate of growth would undermine the legitimacy of these well-established processes. While we support studies to better understand the appropriate utilization of cardiovascular services, such studies should be based on accurate data analysis, especially if they are to serve as the basis for broad policy recommendations.
Re: ASE Responds 23 February 2007
Kevin J Hayes, Principal Policy Analyst Medicare Payment Advisory Commission, Julian Pettengill and Jeffrey Stensland Send comment to journal: Re: Re: ASE Responds khayes{at}medpac.gov Kevin J Hayes, et al.	We disagree with several points in the ASE response to our paper. The ASE overstates what we say about the prices for echocardiography and other services in Medicare’s physician fee schedule. We do not conclude that the services are overpriced. The question we address is whether the Centers for Medicare and Medicaid Services should review the accuracy of the prices for these services. By law, the CMS must review prices in the physician fee schedule at least every 5 years. Experience has shown that only selected services are considered during these reviews. With 6,700 services billable under the fee schedule, decisions about which services to review are very important. In the case of cardiovascular services, we suggest that certain diagnostic services, including echocardiography, may be good candidates for the next review. Use of the services is growing rapidly, and physicians are choosing increasingly to furnish the services in their offices instead of facility settings such as a hospital outpatient department. In addition, few of the services have been reviewed during the 15-year history of the fee schedule. Contrary to the ASE’s assertion, the growth rate for echocardiography is not the same as that for other physician services. As shown in MedPAC’s March 2006 Report to the Congress: Medicare Payment Policy, from 1999 to 2004, use of echocardiography grew 1.5 to 2 times as fast as all services payable under the fee schedule. We see growth differentials in two measures of service use: units of service and volume. The number of units is just the number of times a service is billed. This measure is the same for all settings and does not go up unless the number of services used by Medicare beneficiaries goes up. The second measure — volume — is units of service multiplied by relative value units (RVUs) in the fee schedule. Consequently, volume is influenced both by the number of services used and by the higher RVUs per unit of service for the office setting. But either way, we see more rapid growth in use of echocardiography than use of physician services overall. We do not agree that site of service is unimportant, however. Many factors affect site of service, including the patient’s medical conditions, type of procedure, and patients’ and physicians’ preferences but also the relationship between payments and costs. When growth is occurring more rapidly in the physician office setting than facility settings, it is likely that payments are at least adequate relative to costs. We agree with the ASE that the process for pricing services should be even-handed. The concern is that existing processes do not appear so even. Previous reviews of prices in the fee schedule have led to many more price increases than decreases. We believe analyses such as the one we describe are one way among others to bring more balance to the process.