New image: Payers hope prior authorization will reduce growing imaging costs

September 1, 2008

The cost of imaging procedures tops $100 billion a year and is expected to double in the next four years. MCOs hope managed care strategies will contain the increases.

The cost of imaging procedures tops $100 billion a year and is expected to double over the next four years, according to a white paper, "Ensuring Quality Through Appropriate Use of Diagnostic Imaging," produced by America's Health Insurance Plans (AHIP). Unfortunately, AHIP estimates that about half of the scans for certain conditions fail to improve patients' diagnoses or treatments.

A recent study by McKinsey Global Institute also indicates a trend toward inappropriate imaging, saying that diagnostics from magnetic resonance imaging (MRI) and computed tomography (CT) scans contribute $26.5 billion in unnecessary health services.

The numbers keep coming, even from the Medicare sector. The Government Accountability Office (GAO) reports a dramatic surge in high-tech imaging in Part B, such as MRIs, CT scans and positron emission tomography (PET) scans. Medicare spending for imaging services has more than doubled from 2000 to 2006, increasing to about $14 billion. GAO's recent study also points out the substantial variation in the use of services across regions, suggesting that some utilization is not necessary or appropriate.

"Imaging is the fastest growing area in healthcare, but it detects disease earlier, thereby decreasing costs of delayed or inaccurate diagnoses, and should be expected to grow at a greater pace than the rest of healthcare," he says. "We can accept higher costs if imaging is done appropriately."

One more issue raising eyebrows is the growth of providing imaging services in physician offices. Physicians receive payment for the technical (capturing images) and professional (interpretation) components of the service. This trend may lead to referrals by physicians to facilities in which they have a financial interest. With the costs of some imaging equipment running as high as $2 million each, physicians have a financial incentive to utilize the equipment and recoup their investment over time.

The Medicare Imaging Disclosure Sunshine Act of 2008 would require referring physicians to disclose their ownership interest in imaging services at the time of referral and provide an alternative list of providers.

"Self-referrals are driving volume," says Paul Danao, vice president of business development for American Imaging Management (AIM), a radiology benefit management company. "The equipment previously was only found in limited settings, but now, providers have expressed interest in owning the equipment as a means of increasing revenue."

As reported in Radiology, physicians who referred patients to themselves or same-specialty physicians for imaging used imaging between 1.12 and 2.29 times as often, per episode of care, as physicians who referred patients to radiologists.

CONTRACTING FOR HELP

Just like pharmacy benefit management, many health plans are contracting with radiology benefit management companies or establishing in-house teams to provide a balance of cost and quality solutions for managing outpatient diagnostic imaging services. At the heart of these programs is prior authorization, which although it provides a process for evaluating the appropriateness of imaging services-based on evidence-based guidelines, feedback on individual provider practice patterns, and consultations among clinicians and radiologists-the programs rarely result in denial.

Although prior authorization has proved to decrease radiology growth trends, the tool has its detractors. Some physicians worry that advance approval and other programs directed at saving costs may not save lives if patients are prevented from receiving necessary services. In some cases, physicians opt to order an alternative diagnostic test that does not require preauthorization but may also not deliver the most helpful information.

Others are concerned that prior authorization will present an administrative burden to practices and that certain physicians may be wrongly singled out for inappropriate use of imaging studies.

Organizations such as ACR have developed appropriateness criteria, along with guidelines and technical standards, which describe how individual examinations should be performed for most patients in most circumstances. The practice guidelines, however, acknowledge the need for healthcare providers to use their best judgment in making decisions about treatment.