Feds Target Radiology Imaging Payment Cuts

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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