As Congress and the Centers for Medicare and Medicaid Services wrangle over the 2002 Medicare outpatient payment update (See story above), proponents of positron emission tomography are biting their nails over the future of the emerging technology while riding a roller coaster of victory and defeat.
Whatever the final outcome, it has direct implications for hospitals that are considering whether to invest in the technology.
The good news for PET first arrived a year ago when Medicare greatly expanded coverage of PET to six different types of commonly occurring cancers, fueling adoption of the technology. The CMS is poised to add breast cancer to that list. In January, it will review the appropriateness of reimbursing for PET in the diagnosis of Alzheimer's disease-"a very big addition in terms of volume," said Michael Phelps, the chief of the division of nuclear medicine at the UCLA School of Medicine, Los Angeles.
But bad news came in August when the CMS proposed slashing the reimbursement rates to $842 from a national average of $2,249 per scan, said Steven Atkinson, director of PET field marketing for Philips Medical Systems. The proposal knocked the wind out of PET's sails, but after intensive lobbying, the CMS was persuaded to boost the proposed rate to $1,375 on Nov. 30. Barring any delay in the 2002 update, the proposed rate, which affects only hospital-owned outpatient facilities, becomes effective Jan. 1.
"Am I happy? No. Is anyone in the industry happy? No. Are providers or hospitals happy? No," Atkinson said. "It's only something we feel positive about in relation to the disaster that could have occurred."
A nuclear-based technology that offers intimate glimpses of molecular function within the human body, PET is increasingly the key imaging technology for diagnosis treatment planning in cancer. It also holds great promise in detecting other diseases and disorders-everything from heart disease to Alzheimer's.
The technology does not come cheap: Scanners alone sell for upward of $1 million. Only in the past few years has PET poked its head from the cocoon of academic research into the mainstream of medium-sized hospitals, helped in large part by the expansion of coverage by Medicare, said Mona Patel, a medical imaging industry analyst for Frost & Sullivan, a San Jose, Calif.-based market research firm. Cuts in reimbursement could make community hospitals rethink their decisions to buy a PET scanner, she said.
PET sales have nearly quadrupled in the past two years, according to Frost & Sullivan. In 1999, 60 PET units were sold in the U.S., generating $80 million in revenue. When this year closes, Frost & Sullivan forecasts, 230 units will have been sold, generating $325 million in revenue.
Balancing the tricky relationship between price and volume has been at the crux of the debate with the CMS, Phelps said. If reimbursement is generous, it will fuel growth in volume, which eventually will justify decreasing the rate.
"(PET) volume is increasing dramatically, so the $842 reimbursement rate would have had a very chilling effect on the marketplace. The $1,375 is tolerable," Phelps said. PET proponents have been frustrated mainly by the methodology the CMS used to arrive at its rate-actually its lack of methodology, he said.
Monroe Meyerson, chairman of the industry council of the Academy of Molecular Imaging, a trade group based in Los Angeles, said his group presented the CMS with an audited analysis showing the average PET performs about three scans a day and sometimes as many as 4.5. Based on that volume, $2,300 would be "a fair reimbursement to recoup the cost," he said. "I believe they have the cart way before the horse in that some day the level they are proposing will be appropriate and the reason is there is not yet enough volume of scans to drive the price down."
As chairman of Radiology Corporation of American, Boca Raton, Fla., a mobile PET company that services 60 hospitals throughout the country in a risk-sharing arrangement, Meyerson said he is already strategizing the reduced reimbursement rate's effect on his business.
"One discussion was about how do we get into partnering more with (freestanding) sites rather than hospitals," Meyerson said.