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Feds Target Radiology Imaging Payment Cuts

 |  By HealthLeaders Media Staff  
   May 29, 2009

In the bulls-eye for cuts to find billions of dollars for health reform sit a wide array of physician radiology services whose annual price tag to Medicare has more than doubled to $14 billion between 2000 and 2006.

Services related to advanced imaging–specifically CT, MRI, and PET scans–could take much of the hit, with costs that have risen from about $3 billion to $7.6 billion in that time. Payments for MRI alone account for nearly half.

"Spending on advanced imaging, such as CT scans, MRIs, and nuclear medicine, rose substantially faster than other imaging services, such as ultrasound, X-ray, and other standard imaging," said the General Accounting Office report to Congress last summer. And that was just for Part B, Medicare's physician fee schedule.

A March report from the Medicare Payment Advisory Commission (MEDPAC) added: "The rapid volume growth of costly imaging services may be driven, at least in part, by prices that are too high."  

The GAO report said the increase was seen across multiple specialties, especially cardiologists and vascular surgeons, but also vascular and orthopedic surgeons, primary care physicians, and urologists.

As a result, federal officials, including the Senate Finance Committee, are looking at two major ways to lower what it pays for imaging providers:

 

  1. They are considering a hotly contested move to require prior authorization, especially for advanced imaging technologies, similar to practices by many health plans. A Congressional Budget Office report last December suggests a savings of $220 million between 2010 and 2014 and about $1 billion between 2010 and 2019 with radiology benefit managers who would block unnecessary scans.

  2. They are evaluating the controversial proposal to restructure the payment formula in such a way that lowers the value of equipment factored in the equation, resulting in a much lower reimbursement to the provider.

Radiology groups are opposed to both strategies, but acknowledge that the high increases in federal payments have made them a target. "To do the things they're suggesting without adequate data and research, without examination of alternatives, is problematic because it only addresses the costs without addressing why they have gone up so much," says Jonathan Berlin, MD, associate professor of radiology at Northwestern University Feinberg School of Medicine.

The Access to Medical Imaging Coalition is vehemently against using authorization managers to approve physician scan requests. Such managers "are for-profit management companies established by the health insurance industry to deny coverage for imaging services. Physicians who deal with RBMs (radiology benefit managers) say they undermine patient care, force patients to wait to receive needed tests, and cause delays in diagnosis and care," the coalition says.

The Medical Imaging and Technology Alliance has a similar view. "Based on insufficient data and analysis, the MedPAC report makes recommendations that will lead to dramatic Medicare cuts for imaging and have dire consequences for the diagnosis, treatment, and care of patients," said Ilyse Schuman, MITA's managing director.

The federal reports acknowledge that much of the growth in both expense and number of images is rooted in the growth of more sophisticated and costly technology that appropriately diagnoses and treats more complex patient conditions.

And while the legitimate need for such services has clearly increased as has the resolution capabilities of these devices, some of the greater demand is pushed by forces without necessary medical justification, according to the reports. The GAO report mentions a trend toward physicians ordering scans to defend themselves "against malpractice suits." Other reasons for more utilization include the influence of direct-to-consumer advertising, and a shift of the use from Medicare Part A (hospitals) to Part B (physicians' offices), the GAO said.

 

The ability of physicians to refer patients to their own practices for imaging "was a major spending driver," the GAO said.  Also, the report added health plan representatives believe "primary care physicians often lacked knowledge about the most appropriate test to order for a patient, and therefore tended to order a significant portion of imaging tests that would be considered unnecessary based on clinical guidelines."

Berlin acknowledges that imaging has "become a target" and realizes the "distinct possibility that a certain amount of imaging in some parts of the country may be inappropriate."

But he echoes the views of many in the American College of Radiology who question the government's assumptions that there is overuse. The Deficit Reduction Act has already imposed significant cuts in fees on imaging providers, and further cuts could drive some providers away, he says.

"If you continue to cut the reimbursement for imaging arbitrarily, you will continue to put imaging facilities out of business. That may not be a problem in overserved markets, but it could be in rural areas, where there may not be another imaging facility for another 150 miles," Berlin says.

Changes to radiology payments

The most controversial cost-cutting measure under consideration is how federal officials propose to change the radiology payment equation.  The formula now assumes that imaging devices operate 25 hours a week, or half the time the office is open for business. But MEDPAC's and Senate Finance Committee's May 20 reports suggest that a more accurate number is 45 hours a week, or 90% of the time the practice operates.

"Once providers purchase machines, they have an incentive to use them as frequently as possible. Indeed, there is evidence that MRI and computed tomography (CT) machines are used much more frequently than Medicare assumes," the March MEDPAC report concludes.

Using the higher percentage would spread the equipment's cost over many more patient images, a change that "would result in a reduction in [practice expense] for costly imaging services and an increase in [payment] for other physician services," the Senate Finance Committee report suggests. The section is entitled "Adjusting Reimbursement for High-Growth, Over-Valued Physician Services."

Such a change is advised for imaging equipment that costs "at least $1 million," which recommends exploring the application of the 90% time standard "to less expensive imaging equipment" as well.

Berlin says these assumptions may be flawed because they were based on "informal reviews" of a few facilities. The ACR has initiated talks with CMS about the need for a more comprehensive survey, he says.

Berlin adds that Medicare program should investigate whether there are other ways to induce efficiency within imaging "short of draconian cuts," such as encouraging standardization of technology so many institutions can view and interpret the same images.

"Eventually, after addressing privacy concerns, storing images in a national computerized repository," might eliminate duplication, he suggests.

Lastly, he says, CMS should really explore the variety of other reasons why the imaging costs have gone up. "Defensive medicine, self-referral, advertising, all play a role. The bottom line is that people are demanding imaging more now than they were in the past."

But the GAO points to wide variation in in-office spending per beneficiary across geographic regions, a trend that suggests not all utilization was necessary or appropriate.

In 2006, "in-office imaging spending per beneficiary varied almost eight-fold across the states–from $62 in Vermont to $472 in Florida," the report said, adding that such variation "is more likely due to differences in physician practice patterns rather than patient health status."

The report adds, "in general, more health care services do not necessarily lead to improved outcomes."

 

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