A new way to manage radiology utilization could help limit costs

September 1, 2006

With radiology costs in the United States growing to more than $100 billion annually, diagnostic imaging is the second-largest and fastest-growing expense for health plans behind pharmaceuticals. Unmanaged, radiology spending is expected to continue growing at a rate of 20% annually. Factors driving this growth include fragmentation of care, the continual advances in diagnostic imaging technology, the affordability of imaging equipment leading to adoption and utilization in more care settings, direct advertising to patients, and an aging population. As a result, radiology utilization management has become a top priority for health plans.

With radiology costs in the United States growing to more than $100 billion annually, diagnostic imaging is the second-largest and fastest-growing expense for health plans behind pharmaceuticals. Unmanaged, radiology spending is expected to continue growing at a rate of 20% annually. Factors driving this growth include fragmentation of care, the continual advances in diagnostic imaging technology, the affordability of imaging equipment leading to adoption and utilization in more care settings, direct advertising to patients, and an aging population. As a result, radiology utilization management has become a top priority for health plans.

To help health plans control the growth in radiology costs, radiology benefits management (RBM) firms have emerged to provide services geared largely at pre-authorizing physician imaging orders to avoid expensive exams that do not meet a set of pre-determined guidelines for medical necessity and appropriateness. The downsides of this approach are that it creates administrative burdens for care providers; interferes with the doctor-patient relationship, challenges the judgment of medical professionals and causes friction between the physician and the health plan.

Current radiology utilization management approaches have failed to address another major contributor to the rise in imaging expense-the costs resulting from duplicate exams. Redundant exams are performed because physicians are unaware of, or unable to access the results of previous clinically equivalent exams. The potential cost savings and quality of care improvements of providing access to results previous studies are enormous.

Health plans continue to implement radiology utilization management programs based on pre-authorization in spite of their shortcomings largely because they don't think there's a better option. There is, however, an alternative radiology utilization management approach that offers health plans an improved solution that targets a large cost savings opportunity while empowering physicians to deliver better care instead of restricting access.

A health information exchange provides for the secure sharing of clinical information among multiple healthcare constituents. Health plans can leverage a health information exchange to prevent duplicative imaging. The Center for Information Technology Leadership at Harvard University (CITL) estimates that about 20% of hospital radiology tests are duplicates1 , which represents approximately wasted spending of $20 billion a year nationwide.

A health information exchange links a region's hospitals, imaging centers and physicians into a secure, distributed network for sharing digital images and results. A network appliance is installed at each imaging provider's facility to serve as a secure gateway to that facility's digital patient data and also to update the central registry of imaging studies. These images and results can then be securely published to the appropriate physician's office and/or hospital. When combined with appropriate health plan policies and procedures, duplicative exams can be eliminated.

The health information exchange approach should be considered for three primary reasons:

1) It targets a tremendous area of waste. Whereas current methods target only inappropriate spending (e.g., the physician orders unwarranted procedures), heath information exchange eliminates duplicative spending, which is believed to be at least half of all wasted imaging spend. Radiology benefits managers are typically unable to address duplicative imaging due to the inability to access claims data in a timely fashion.

2) It is more patient and provider friendly. Current radiology utilization management approaches pit the provider and patient against the health plan. They result in the degradation of payer-provider-patient relationships and generate poor public relations for the payer. With health information exchange, radiology costs are contained without the friction between the health plan and physician.

3) It improves care. Current radiology utilization management approaches are seen as restricting or degrading care. By providing access to previous studies, health information exchange actually improves the physician's ability to deliver quality care to their patients. Standard of care dictates that previous studies are used, when available. In addition to eliminating redundant exams, the rollout of a health information exchange provides physicians with access to previous studies at other facilities that would have previously been unavailable to them.