Advanced Imaging Spending and Reimbursement Drops – Another Reason to go In-House

Friends – The article below speaks to the decrease of spending (and the decrease in reimbursements) for “advanced imaging” (CT and MRI).  This highlights the necessity of NOT having a fixed-cost service contract on these modalities.  If reimbursements and patient volumes decrease, hospitals are receiving less revenue from these modalities and thus have fewer dollars to pay the contract costs.  As I have often advocated, it is better in most cases to move toward a service option that can flex linearly with decreases in volume and revenue.  The ultimate flexible service option in in-house service.  You only consume labor and parts when your equipment requires it.  Decreased equipment usage results in decreased cost.       Pat

Advanced imaging spending drops to bottom of services list

By Kate Madden Yee, AuntMinnie.com staff writer

November 26, 2012 — CHICAGO – A decrease in volume growth and cuts to Medicare payments have left advanced medical imaging near the bottom of all healthcare service categories contributing to overall Medicare spending — rather than at the head of the pack as policymakers continue to believe, according to research presented Monday morning at RSNA 2012.

Before the Deficit Reduction Act (DRA) of 2005 went into effect, advanced medical imaging was the fastest growing service category: In 2001, it was in the 86th growth rate percentile. However, by 2011 it was the slowest, in the 2nd growth rate percentile.

As far as advanced imaging is concerned, the DRA worked, lead presenter David Lee, PhD, from GE Healthcare, told session attendees.

“It’s sobering to look at all the cuts [advanced imaging has taken] over these years and surprising that Congress continues to focus on imaging as a source of healthcare savings, since it’s clear that Medicare spending for advanced medical imaging has slowed down,” he said.

For the study, Lee and colleague Dr. Richard Duszak Jr., CEO of the American College of Radiology’s (ACR) Harvey L. Neiman Health Policy Institute, calculated per-beneficiary Medicare expenditures with Medicare physician and outpatient claims data from 2000 to 2010. Lee and Duszak’s team used Berenson-Eggers Type of Service (BETOS) categories (developed by the Centers for Medicare and Medicaid Services to track Medicare expenditures) and focused on CT and MRI.

The team calculated compound annual growth rates (CAGRs) over three periods: pre-DRA (2000 to 2005), DRA (2005 to 2007), and post-DRA (2007 to 2010).

For all services, CAGR was 7.7% pre-DRA, 3.5% DRA, and 5.2% post-DRA. But advanced medical imaging’s specific CAGRs had a much more dramatic spread, going from 17% in the pre-DRA period to -4.7% in the DRA period and 1.3% in the post-DRA period. In fact, between 2008 and 2009, 15 of 23 other service categories grew faster than advanced medical imaging; between 2009 and 2010, 21 of 23 other service categories grew faster.

Advanced imaging spending has slowed in both absolute and relative terms since 2005,” Lee said.

If advanced imaging isn’t to blame for Medicare spending growth, which services are? Post-DRA, the fastest growing service categories have been specialty care, nursing home visits, anesthesia, hospital visits, and office visits, according to Lee.

Making sure information like this gets into policymakers’ hands is a challenge, Lee said.

“We’re doing everything we can in this environment of healthcare reform,” he said. “The ACR continues to tell Congress that imaging has already been cut, and more of the same will threaten access to care.”

Self-referral: A DRA dud?

The DRA may have slowed advanced imaging spending for radiologists, but it did little to curb orthopedic surgeons’ private office use of MRI, according to a presentation given in the same session.

Dr. Vijay Rao of Thomas Jefferson University and colleagues examined Medicare Part B fee-for-service data for 2006 to 2010; they selected all CPT codes for MRI, and used Medicare specialty codes to identify orthopedic surgeons and radiologists, as well as place-of-service codes to identify scans done in private offices.

During the first four years of the DRA’s implementation, orthopedic surgeons’ in-office MRI volume increased 21%, while radiologists’ in-office volume decreased by 10%, the group found. And MRI reimbursements to orthopedic surgeons only decreased by 8%, compared with a 34% decrease among radiologists. Why? Orthopedic surgeons may have increased self-referral to make up volume, or there may be more of them acquiring MRI units — or both, according to Rao.

“One purpose of the DRA was to reduce the incentive for self-referral,” she said. “The thinking was that if the technical component payments were substantially reduced, the profit margin would be removed and [nonradiologist] physicians would be discouraged from buying and using their own equipment. But the DRA has not been effective in deterring orthopedic surgeons from purchasing or leasing these scanners.”

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