Medicare imaging soars from in-office services

Radiologists' share of office-based market declines as more cardiologists bill for high-tech imaging

A recent study blames a shift of medical imaging to in-office services owned by referring physicians for more than doubling the cost of outpatient imaging services covered by Medicare from 2000 to 2006.

The June report from the Government Accountability Office found that Medicare Part B spending for in-office imaging services rose from $6.9 billion in 2000 to more than $14 billion in 2006. The GAO also uncovered an eightfold geographic variation in annual Medicare outpatient expenditures for in-office imaging, ranging from $62 per member in Vermont to $472 per member in Florida.

Substantial geographic variations in imaging use suggest that some utilization is inappropriate, according to GAO analysts.

Radiology's share of in-office imaging business from Medicare Part B declined from 36% in 2000 to 32% in 2006. Cardiology's share rose from 29% in 2000 to 35% in 2006.

The proportion of cardiologists who billed for advanced in-office services nearly doubled from 2000 to 2006, from 24 per 100 physicians to about 43 per 100 physicians, analysts said. This trend may at least partially explain why spending on advanced imaging-such as CT, MRI, and nuclear medicine-rose 17% per year, substantially faster than the 9% annual increases for less expensive ultrasound and x-ray procedures.

Referring physicians are generally prohibited by federal law from referring Medicare patients to a service in which they hold an ownership interest, but an in-office exception to the law allows them to refer their patients to imaging and other ancillary services performed in their medical offices.

The report confirmed findings of a 2005 Medicare Payment Advisory Commission study that singled out high-tech medical imaging as one of the fastest growing components of physician services covered by Medicare Part B. The MedPAC report is widely cited for influencing congressional reforms in the Deficit Reduction Act of 2005 that substantially cut Medicare outpatient rates for high-tech medical imaging.

Sen. John D. Rockefeller IV (D-WV), chair of the Senate Finance Subcommittee on Health, and Gordon H. Smith (R-OR), ranking member of the Senate Special Committee on Aging, asked the GAO to reexamine the MedPAC investigation and management practices that private payers use to regulate imaging spending.

The GAO found fault with Centers for Medicare and Medicaid Services cost-control policies that focused on provider billing fraud following the provision of imaging services. It urged CMS to redirect its cost-control efforts to constrain spending growth on the front end of imaging, specifically the patient referral practices of physician-owned in-office imaging facilities.

Based on an evaluation of 17 private health plans, GAO analysts noted that private insurers have successfully used prior authorization to slow the growth of imaging-related spending. It also cited use of physician credentialing to restrict equipment use to qualified practitioners and physician profiling, a statistical technique that identifies high-utilization physicians.

The Department of Health and Human Services initially reacted negatively to the preauthorization proposal, citing possible statutory restraints and problems applying it to the giant federal health insurance program.

American College of Radiology officials agreed with the report's findings but also disagreed with the GAO about its preauthorization recommendation. The ACR prefers mandatory facility accreditation as a less intrusive approach. Congress adopted mandatory accreditation for MR, CT, and PET, and other modalities in Medicare-related legislation passed in mid-July.

Dr. James H. Thrall, ACR board of chancellors chair, said in a statement that cost and quality concerns should be dealt with directly and not through third parties.

"Why spend more taxpayer dollars to hire outside entities to examine claims on an individual basis, possibly delaying legitimate exams?" he said.

The GAO made the right diagnosis but the wrong recommendation for treatment, said attorney Thomas W. Greeson, a partner in the healthcare group of Reed Smith LLP in Falls Church, VA, and a contributor to Diagnostic Imaging.

"A significant amount of growth and migration of diagnostic imaging services into physicians' offices is due to self-referral, but preauthorization would be a burdensome administrative process," he said.

The Medical Imaging & Technology Alliance, a division of the National Electrical Manufacturers Association, faulted the report for ignoring recent data, reference medical guidelines, and evidence of appropriateness and accreditation criteria used by providers and payers.

"The GAO report obscures how medical imaging utilization decisions are made and the benefit that imaging has to healthcare savings and patient outcomes," said Andrew Whitman, MITA vice president.

Dr. Howard Forman, a professor of radiology, epidemiology, and public health at Yale, was troubled by radiology's diminished control over medical imaging.

"Radiology is not synonymous with medical imaging, and the GAO reports makes it very clear that radiologists are responsible for a smaller percent of the total medical imaging in the physician office," he said.

Forman recommended renewed efforts by radiologists to demonstrate their ability to deliver imaging that is both high-quality and cost-effective.

"If we take more of a lead in determining when patients should or should not have certain tests, even when it seems to be against our self-interest, we will come out ahead in the long run," he said.

-By H.A. Abella and James Brice