Just a few weeks have passed since the Deficit Reduction Act (DRA) of 2005 was implemented, yet some radiology administrators still cling to the hope that it will be repealed at any moment. Although many believe that something -- divine intervention perhaps -- will forestall the DRA-mandated cuts, "you have to behave as if this is really happening," said Bob Maier, president of healthcare consulting firm Regents Health Resources in Brentwood, TN.
"Everyone should have done the math already" to determine the effect of the DRA, said Fred Gaschen, executive vice president of Sacramento, CA-based Radiological Associates of Sacramento Medical Group.
When conducting a DRA-impact analysis for your facility, Maier said to ask the following questions:
- How severe will the effect be?
- What will you do to make up costs?
- Can you afford to cut costs internally?
- Can you eliminate scheduling backlog?
- Can you increase the volume of scans at your facility?
- Will you add a second shift or extend hours to increase your capacity?
Strategic plans plot business success
To diversify or specify your business line, look at your surrounding market, Gaschen said.
"I am amazed at the number of facilities that never completed even a basic strategic plan," he noted.
A strategic plan helps your business find its focus and earn greater profits. It uses data to accurately describe the current pitfalls and powers of your business.
For example, everyone talks about the importance of imaging to an aging baby-boomer population. Examine census data in your specific area, Gaschen said. Just because the general population of elderly has increased nationwide doesn't necessarily mean that the senior population near your facility grew as well, he stated.
Refinance debt
"The DRA makes imaging a much more competitive business," Maier said.
Centers that carry a large debt for previous facility or equipment improvements should look to refinance where possible, he suggested. DRA cuts could make debt repayment difficult.
Should any proposals to delay the DRA-mandated cuts to imaging come into play later, it would provide a much-needed circuit breaker for centers to refinance or renegotiate their debts. If legislative relief is offered, be prepared to take advantage of it, Maier and Gaschen suggested.
Renegotiate payor contracts
In addition, look at contracts with payors and keep an eye on new payor regulations, Gaschen said. Many private payors have already implemented measures similar to the DRA, he said.
He pointed to insurers United and Aetna, both of which adopted payment policies mimicking the Centers for Medicare and Medicaid Service (CMS) payment reduction on same-day, contiguous body-part scans.
"Make sure that you're aware of what's going on around you in the industry so you can be prepared," Gaschen said.
Examine commercial contracts and attempt to remove any ties to Medicare payments. Gaschen renegotiated contracts in this way several years ago.
"If you can, try to renegotiate with payers and aim for 2008," he said. "If not, you're looking down the barrel of a double blast."
Imaging shakedown
Consolidating the market may be part of the U.S. government's overall design, Maier said.
"Imaging centers will close (and) this can be a good thing or a bad thing," he noted.
If radiology services improve overall because of increased competition, everyone benefits. Conversely, if a cut to radiology stretches the industry too thin, then customer service suffers.
"And with radiology, when we talk about customer service, we're talking about people's health and well-being," he said.
The federal government wants to reduce imaging costs, Gaschen said.
"That's correct, that's fine," he said. "We're talking about taking a scalpel to remove a growth. They took a meat cleaver and hacked off a leg."
By Melissa Varnavas
AuntMinnie.com contributing writer
January 24, 2007
This article originally appeared in the "Radiology Administrator's Compliance & Reimbursement Insider," a monthly newsletter published by HC Pro that is designed specifically for radiology administrators. For a free trial subscription, please click here.
Related Reading
DRA looming: Is your organization prepared? October 6, 2006
Documentation makes all the reimbursement difference, October 4, 2006
Increase image reimbursement with a designated coder, August 7, 2006
Prevent IR coding whirlwind with basics, July 26, 2006
The added value of ACR accreditation, June 13, 2006
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