Upgrade to a DR Panel with Section 179The Consolidated Appropriations Act of 2016 (Div. O, title V, sec. 502) will significantly impact reimbursement for radiology procedures using film processing. Starting in 2017, if you are still using a film processor, CMS will decrease reimbursement for these CPT codes by 20%. This decrease will impact the overall cost of owning your processor- unless your chemical supplier and service company both decide to lower their prices to throw you a bone (we wouldn't count on it).
2016 is a good time to consider upgrading to direct digital imaging with a DR panel. Of course, depending on your individual budget scenario, a capital investment along those lines may be daunting. Fortunately, we're going to show you how a section 179 tax deduction can help ease your concerns.
Section 179 Deduction for Digital X-Ray Upgrades: Overview
2016 Deduction Limit = $500,000
- This deduction is good on new and used qualifying equipment.
- This limit is set until further notice, but has been known to change periodically.
- Equipment must be financed/purchased and put into service by 12/31/2016 to secure the deduction.
2016 Spending Cap on Equipment Purchases = $2,000,000
- This is the maximum amount that can be spent on equipment before the Section 179 Deduction begins to be reduced on a dollar for dollar basis (ex. $2,000,500 in equipment is eligible for a $499,500 deduction).
- The spending cap makes Section 179 a true "small business" tax incentive.
- DR panel systems are currently in the range of $28,000 – $54,000.
A small hospital chooses to invest in a wireless CsI DR panel. The panel will be used with a portable AMX IV throughout the hospital. In addition, the panel can be used with the X-ray room in the radiology department whenever it happens to be free.
The hospital makes a capital investment of $50,000 to acquire the panel upgrade kit. With a 35% tax bracket, the savings through Section 179 would be $17,500, reducing the overall cost of the upgrade to a more manageable figure of $32,500 come tax time. This example was created with the very helpful Section 179 calculator at www.section179.org.
You may not have planned to upgrade from your film processor this year but, if you're hoping to avoid big reimbursement cuts, CMS may be forcing your hand. Fortunately, Section 179 can help make the transition more bearable. What's more, a DR panel really can improve your patient service, grow your volume capacity, free up space in your facility, and reduce the money you spend on maintenance.
On a side note: all of this applies to those of you using CR readers too. These systems have a short respite before they too see cuts coming down from CMS. In 2018, reimbursement for studies processed with CR readers will decrease by 7%. The reduction increases to 10% in 2023. While this certainly isn't as dramatic as the cuts hitting film, depending on your patient volume, it can still constitute a significant sum of money.
If you have more questions about DR panels, Section 179, or X-ray parts and service, we're ready to help. Contact us here, or use the button below to submit a request.