Imaging costs sneak up on plans, but can be managed

June 1, 2005

Just when it looked like nothing could eclipse pharmaceutical costs, Harvard Pilgrim Health Plan found a new cost generator sneaking up, diagnostic imaging, which was increasing an average of 25% a year over the past few years. Much like disease management firms and pharmacy benefit managers, companies such as National Imaging Association (NIA), American Imaging Management (AIM) and MedSolutions have stepped in to help manage the cost of imaging services.

Just when it looked like nothing could eclipse pharmaceutical costs, Harvard Pilgrim Health Plan found a new cost generator sneaking up-diagnostic imaging-which was increasing an average of 25% a year over the past few years. Much like disease management firms and pharmacy benefit managers, companies such as National Imaging Association (NIA), American Imaging Management (AIM) and MedSolutions have stepped in to help manage the cost of imaging services.

The rise in the number of freestanding, entrepreneurial imaging centers operated by non-radiology specialty physicians combined with improvements in technology, consumer advertising, an aging population and an increase in demand has made the market explode, putting managed care up against yet another budget buster. In addition, although the utilization of advanced imaging techniques is less than other imaging procedures, they contribute to increased spend due to their high cost.

Harvard Pilgrim relies on an NIA program prompted by guidelines to determine medical necessity authorization or clinical denial for imaging tests. William Corwin, MD, medical director for Harvard Pilgrim, says that the requests meet guidelines 70% of the time; if they do not, meeting the request is at the discretion of a clinician and finally, peer-to-peer review based on a set of algorithms.

On average, 60% of providers who NIA evaluates, meet the guidelines while the other 40% undergo advanced review, says NIA's founder and president, John Donahue. Of that 40%, 10% to 15% are denied by NIA or the request is withdrawn by the physician. Typical savings are $1.50 to $2 per-member per-month, bringing increases in trend from double to single digits.

"Our goal is to eliminate inappropriate ordering, which is often due to overly cautious but well-intentioned physicians who cast too broad a net when interpreting test results, or to entrepreneurial, not so well-intentioned physicians who want to see return on investment for their imaging equipment," Donahue says.

The rate of hard denials is 9% to 15% and for alternative recommendations, 7.5%, which adds up to substantial savings. As an integrated delivery system, Harvard Pilgrim, Dr. Corwin says, is sensitive to giving physicians the responsibility for doing the right thing.

Pittsburgh-based Highmark has been a leader in the efforts to curb imaging costs and promote patient safety. Prompted by the high use of imaging services in Western Pennsylvania due to an aging population, the health plan engaged NIA for preauthorization services and limited privileging three years ago, and costs plateaued.

Highmark's current contract with NIA includes privileging for out-patient services for staff, physicians and facilities, which must meet objective, professional guidelines to deliver high-quality imaging services. Started last July, 1, 700 practitioners have gone through the privileging process with 75% to 80% meeting the criteria with others willing to upgrade their staffs. Carey Vinson, MD, medical director and vice president, quality and medical performance management, says that the privileging thus far has resulted in savings through appropriate use of tests and avoiding unnecessary services.

In 2006, providers ordering outpatient, non-emergency advanced imaging tests will seek preauthorization for MRI, computerized axial tomography (CAT) and PET scans to help Highmark evaluate data to identify appropriate and inappropriate patterns of advanced imaging utilization.