Utilization management firms grow big business to little practical effect

Ask any radiologist to name the fastest growing sectors of the diagnostic imaging industry, and you may get a variety of answers. Unquestionably, device manufacturers are reaping rewards from emerging imaging techniques, particularly new cardiac applications for CT and MR. And teleradiology companies are proliferating by filling the demand for nighttime and weekend teleradiology coverage.

But growth in the business of radiology utilization management has been equally impressive. Almost every major third-party payer-in an effort to gain control over its spiraling payments for imaging services-has contracted with a radiology utilization management company.

This issue of Diagnostic Imaging contains a fascinating discussion of this phenomenon by the principals of the major UM companies. John C. Hayes, editor of Diagnostic Imaging, convened a panel of these professionals to gain their perspectives on the reasons behind the significant increase in diagnostic imaging services and insights on which strategies are best in ensuring that inappropriate imaging is not performed. Also participating most effectively on behalf of radiologists was Dr. James Borgstede, president of the American College of Radiology.

Preauthorization of sophisticated imaging procedures such as MR, CT, and PET has been the principal tool employed by these companies to tamp down utilization. The preauthorization process is clearly a hassle. Merely erecting this barrier, regardless of how efficient the process may be, means some studies just may not be ordered. In my view, preauthorization has not proved to be an efficient regulator of imaging utilization, and it has even invited fraud in some markets. The UM companies deny this, but imagers seeking preauthorization cite examples of frustration and delay, particularly when an inappropriate study ordered by the treating physician requires modification in the judgment of the radiologist.

There is an additional concern that some referring physicians simply refuse to be bothered at all with preauthorization, demanding "assistance" of the imaging provider in obtaining it. I hear widespread reports of this activity, but few physicians or imaging centers that shift this responsibility from the referrer are known to suffer any adverse consequences, despite the risk of scrutiny under the anti-kickback statute or expulsion from the health plan. As a result, imaging centers that refuse to offer preauthorization assistance appear to be the ones harmed by loss of business to those who will.

Although some payers announced with fanfare the introduction of privileging/credentialing policies for imaging providers, their efforts to date have been disappointing. Privileging and credentialing represent the most tailored approaches to attacking the conflicts of interest and overutilization by those who self-refer, but they seem to be the least used and enforced. The best example of a credentialing program failing to achieve its potential is the one announced last year by Highmark Blue Cross Blue Shield. As noted in the article on page 30 ("Utilization management: Exec panel reveals keys to the system"), despite very specific credentialing requirements, almost 25% of Highmark's providers that initially failed to meet its credentialing requirements have been accepted back on appeal.

With the demand and cost of imaging ever increasing, radiologists can expect to continue to navigate a private payer market replete with UM activity. One can only hope the system will evolve from a bureaucratic approach that characterizes preauthorization to more sophisticated credentialing and ordering processes that ensure appropriate imaging untainted by the conflicts of self-referral.

Mr. Greeson is a partner in the healthcare group of Reed Smith LLP in Falls Church, VA.