CMS proposes raising equipment utilization rate to 90%

The Centers for Medicare & Medicaid Services (CMS) has recommended an increase in the equipment usage rate from the current 50 percent to 90 percent for equipment priced more than $1 million as part of its proposed rule for the 2010 Medicare Physician Fee Schedule (MPFS).

In its July 1 proposal, the agency "acknowledged that the current 50 percent usage assumption does not capture the actual usage rates for all equipment," and relied heavily on the March MedPAC report. Based on studies cited by MedPAC, CMS concluded that its "current usage rate assumption is significantly understated, especially with respect to the types of high-cost equipment that were the subject of the studies," such as CT and MRI.

The agency stated that its current 50 percent utilization rate translates into about 25 hours per week out of a 50 hour work week. Based on the MedPAC report, it concluded that the median value of 46 hours for MRIs is equivalent to a utilization rate of 92 percent on a 50 hour week. For CT scanners, averaging the value from the first study of 40 hours per week and the value from the second study of 50 hours per week yields 45 hours and is equivalent to a 90 percent utilization rate on a 50 hour work week.

CMS noted that it is not proposing a change in the usage rate for imaging equipment priced at less than $1 million at this time.

"The current payment rates assume that a physician who owns this type of equipment will use it about 50 percent of the time, but recent survey data suggest this expensive equipment is being used more frequently. As the use of this type of equipment increases, the per-treatment costs for purchasing, maintaining and operating the expensive equipment declines, making a reduction in payment appropriate," CMS stated.

The recommendation from CMS further fuels a vigorous debate on imaging equipment utilization rates. Healthcare reform legislation introduced in the House of Representatives in late June called for a 75 percent increase in the equipment utilization rate. In addition the Obama Administration has suggested that a 95 percent utilization rate would be appropriate. In response, members of the American College of Radiology (ACR) urged the House of Representatives' Rural Caucus to reject the proposed changes to the equipment utilization rate at a Capitol Hill briefing held June 24.

CMS is accepting comments on its proposals until August 31. The final rule is scheduled to be released in November.