CMS RELEASES PROPOSED 2006 PHYSICIAN FEE SCHEDULE - NUCLEAR MEDICINE LIKELY TO BECOME DHS

Since the adoption of the final regulations implementing the federal physician self-referral restrictions ("Stark II"), one of the most active areas for physician joint venture activity has been nuclear medicine. In contrast to most diagnostic imaging procedures, nuclear medicine procedures and supplies have not been included within the category of "designated health services" and, thus not subject to the restrictions imposed by Stark II. (In contrast, nuclear medicine is included within the Florida Patient Self-Referral Act's definition of "designated health services".) After much speculation, it appears that this is about to change.

On August 8, 2005 the Centers for Medicare and Medicaid Services ("CMS") published its proposed Physician Fee Schedule for CY 200& As part of this proposal, CMS announced its intention to include diagnostic and therapeutic nuclear medicine services and supplies within the Stark definition of "designated health services." It is anticipated that CIVIS will include nuclear medicine services and supplies in the final list of DHS for CY 2006. Once that happens, those physicians who have ownership or investment interests in or compensation relationships with facilities that provide these services will need to review those arrangements carefully. In many instances it may be necessary to significantly revise or terminate these relationships to ensure compliance with Stark 11.

In addition to physician referrals for nuclear medicine services, the August 8 publication included a number of other proposed changes to the Medicare program. One proposal involves Medicare's cap for therapy services. Although the program limits its payments for outpatient physical therapy, speech-language therapy and occupational therapy services received by a beneficiary to $1,500 per year, there has been a moratorium on applying these caps since 2000. CMS is proposing to revive these caps, effective 1/1/06.

CMS also is proposing to reduce the Medicare program's reimbursement when a beneficiary receives multiple diagnostic imaging procedures in a single session. Similar to its policy of reducing payment for multiple surgical procedures performed on the same patient, buy the same physician, on the same day, under this proposal Medicare's reimbursement for the second and each succeeding nuclear imaging procedure rendered during the same session would be 50% of the fee schedule amount. NOTE: This proposal only addresses the technical component of nuclear medicine services; CMS has not proposed a similar reduction for the professional components of multiple nuclear imaging procedures that are performed in a single session.