Alliance HealthCare Services, Inc. (NASDAQ:AIQ) (“Alliance” or the “Company”), a leading national provider of radiology and radiation therapy services, today provided additional information regarding the potential impact of the final 2014 Medicare reimbursement rates, which were issued on November 27, 2013 by the Centers for Medicare and Medicaid Studies (“CMS”).
Using 2013 estimated volume data, the total impact to Alliance is a predicted reduction of approximately $2.8 million in Medicare reimbursement. With respect to patients that Alliance bills to Medicare directly under the Medicare Physician Fee Schedule (“MPFS”), the impact to Alliance will include a reduction in reimbursement for MRI of approximately $1.4 million, linear accelerator of approximately $0.7 million, and a portion of procedures that Alliance bills under-arrangement with its hospital partners for stereotactic radiosurgery procedures under the Hospital Outpatient Payment System (“HOPPS”) totaling approximately $0.7 million.
Howard Aihara, Alliance’s Executive Vice President and Chief Financial Officer, stated, “We are pleased to receive the final rule, which now allows us to more accurately plan for the impact in 2014. While slightly more than our initial impact expectations of $2 million, this change in reimbursement represents approximately 2% of our full year 2013 Adjusted EBITDA guidance range. This is a manageable amount and will not hinder our ability to do business or our focus on expanding our relationships and providing added value to our hospital partners.”
The calculations noted above do not include the decrease under the Medicare statutory formula, or sustainable growth rate methodology, used to update the MPFS. CMS projects an additional 20.1% reduction in MPFS payment rates for 2014 if Congress fails to intervene. In the past, when the application of the statutory formula would have resulted in lower payment, Congress has passed interim legislation to prevent the reductions. We cannot assure, however, that Congress will pass similar legislation for 2014 or for future years, or that any such legislation will fully prevent the reductions required under the statutory formula.