CMS's proposed physician fee schedule for 2006 proposes to add CPT codes for Nuclear Medicine Services to its list of designated health services (DHS), effective January 1, 2006. 70 Fed. Reg. 45,764 (Aug. 8, 2005). The proposed rule seeks to include all diagnostic and therapeutic nuclear medicine procedures under the DHS category for either radiology and certain other imaging services or radiation therapy services and supplies. This includes PET scanners and nuclear cameras.

The proposed rule explains that such services were not defined as radiology services or radiation therapy services and supplies in the Stark Phase I final rule. At that time, CMS believed that diagnostic nuclear medicine was not commonly considered radiology and that therapeutic nuclear medicine services were not considered to be radiation therapy services. CMS acknowledges that its view has changed significantly since the publication of the Phase I final rule regarding whether such services are radiation and radiation therapy. CMS cites the Dorland's Illustrated Medical Dictionary and Encyclopedia Britannica Online definitions of radiology as support for this proposition. Notably, in a March 26, 2004, letter to CMS, the American College of Radiology stated that nuclear medicine is considered a part of the specialty of radiology and that the American Board of Radiology certification of diagnostic radiologists includes testing questions concerning nuclear medicine. As further support for its position, CMS cites the placement of nuclear medicine codes as a subset of radiology in the CPT manual. Finally, CMS notes that the Medicare statute includes diagnostic nuclear medicine in the same coverage and payment categories as radiology services.

In addition, CMS believes that diagnostic and therapeutic nuclear medicine services pose the same risk of abuse that Congress intended to eliminate by creating the self-referral prohibition for other imaging services. The proposed rule goes to great lengths to highlight the "risk of abuse and anti-competitiveness" created by a physician's self-referral for nuclear medicine services. CMS notes that nuclear medicine services that were once performed in hospital facilities can now be performed in physician-owned freestanding facilities. When performed in hospitals, the services would have been considered DHS as an inpatient or outpatient hospital service. Further, the publication makes it clear that CMS has changed its position, in part, because of the increase in Medicare coverage of PET scans, which has in turn increased utilization. CMS has traced this increased utilization to the physician office setting, rather than the hospital setting. CMS supports its new position through reference to several studies and articles which found that when referral sources are permitted to have a financial relationship with an imaging center, more procedures are performed. In one study, approximately half of the imaging performed by self-referring physicians ceased when those physicians lost their financial interest in the procedures.

To facilitate inclusion of nuclear medicine in the definition of DHS, CMS proposes to remove the existing language from the definitions of Radiology and certain other imaging services and Radiation therapy services and supplies that excludes nuclear medicine services. In addition, CMS has created an additional list of CPT/HCPCS codes for nuclear medicine services that will be added to the current list of DHS. This list contains every code in the CPT manual for nuclear medicine. It also includes the HCPCS codes for radiopharmaceuticals used in diagnostic imaging and therapeutic treatment.

Interestingly, the list contains separate entries for the global, TC and 26 modifiers. Of particular interest is the inclusion of the 26 modifier, which signifies a professional component of a service and is usually used when a physician performs an interpretation. Including the professional component of a service on the list of CPT codes indicates that the professional component is a DHS. Services personally performed by a physician, however, are specifically excluded from the definition of a referral according to the Phase II final regulations. In addition, CMS has created a specific exception to the referral prohibition under Stark for physician services, which are defined as services performed by a physician in the same group as the referring physician, services performed under the supervision of a physician who is a member of the referring physician's group practice, or services "incident to" a physician's service, as defined in the regulation. Because this issue is not discussed in the preamble text, the motivation behind, or the full meaning of, the inclusion of the codes both globally and with the modifiers is unclear.

CMS acknowledges that since previous guidance allowed physicians to invest in expensive equipment, such as PET scanners, divestiture in those entities or preclusion from claims to Medicare may have widespread impact. Thus, CMS is soliciting comments on whether, or how, to minimize the impact on physicians who currently have such financial relationships. The agency has suggested that it might be willing to consider grandfathering or a delayed effective date.