Medical Device Daily Washington Editor

WASHINGTON – Medicare imaging costs have generated a rather large blip on the radar screen of policymakers, and last week's meeting of the Medicare Payment Advisory Commission (MedPAC) demonstrated once again that little in the way of a consensus is available on how to deal with the issue.

On the same day as the meeting, Nov. 6, the Wall Street Journal ran an article on the use of radiology benefits managers by large insurers to constrain the cost escalation in the use of magnetic resonance imaging (MRI) and computerized axial tomography (CT) equipment. With even more expensive modalities drawing the attention of hospitals and outpatient clinics, private payers are also bearing down on imaging costs.

The WSJ article indicates that private payers have an even more difficult time constraining costs, inasmuch as they "typically pay more than the government" for positron emission tomography (PET) scans.

MedPAC staffer Ariel Winter stated in his presentation before the commission that manufacturers have come up with "impressive technological progress in imaging," but reminded the commissioners that "the rapid growth in imaging and geographic variance" has "raised concerns about appropriate use."

Winter reminded the panel that charges for imaging services under Medicare Part B consist of a technical component, which is the scan, and the professional component, which is the interpretation of the results.

CMS's reimbursement for the technical component involves a calculation that assumes that imaging equipment is generally in use 50% of the time the imaging lab is open, but Winter indicated that a survey conducted by the National Opinion Research Center (NORC; Chicago) in six markets "found that MRI [magnetic resonance imaging] and CT [computerized axial tomography] machines were used more than 50% of the time" in 2006. Winters said later in the session that these numbers assume that such facilities are open 50 hours a week.

Winter's presentation indicated that the NORC survey showed that MRI machines were busy at a median of 100% of the workday and a mean of more than 90%. The same numbers for CT installations were both 73% and 75%.

He cautioned the commission that "although the survey results are not nationally representative," the numbers "raise concerns that physicians are underestimating" the rate of usage when reporting to CMS.

Winter said that the commission could exercise any one several options in terms of its recommendations to Congress, including requiring that providers "who purchase costly imaging equipment should be expected to use it at nearly full capacity," with 75% as one possible utilization rate. Another possible policy recommendation would be to "discourage low-volume providers from purchasing costly equipment, which may reduce excess capacity," he said.

He also noted that a 64-slice scanner is one of several developments that can speed imaging sessions along, and "providers using older machines may also be performing studies in less time," which may skew CMS's numbers on how much revenue a lab can generate.

Among the questions the commission has to answer in order to make a recommendation to Congress is whether equipment rates should be based on an efficiency standard. Other questions include whether time estimates for MRI and CT should be updated and whether any other practice expenses should be considered.

One commissioner commented that the utilization rate paradigm creates headaches for providers in less-densely-populated areas, but commission member John Bertko of the Rand Corporation (Santa Monica, California), said "it's normal for people in my end of Arizona to drive 70 miles to Wal-Mart and I don't think you need to have an MRI every 20 miles." Countering that view was commissioner George Miller, president/CEO of Community Mercy Health Partners (Springfield, Ohio), who replied, "I would be concerned about the statement that we would discourage low-volume providers from buying expensive imaging equipment."

Commission chairman Glenn Hackbarth, an independent consultant, weighed in on the side of caution as well, stating, "you need to think carefully about where you want to make those adjustments" in terms of utilization rates, but he also offered the possibility that adjustments "could be made after a policy is set in place."

William Scanlon, another commissioner who works as an independent consultant, pointed out the opposite dilemma in stating, "I've seen places where they run [machines] for two shifts. That's 80 hours a week."

Commissioner Ronald Castellanos, MD, of Southwest Florida Urological Associates (Ft. Myers, Florida), said "I think we all want to get payment back close to the cost," but he urged caution about the NORC data. He made note of survey conducted by the American Medical Association (Washington) "involving every specialty in the U.S., and I'd like to get that data" rather than the six-market study by NORC.

Castellanos also said his practice operates a single-slice CT machine, "so I think you have to be careful about cost per minute." Commissioners discussed the possibility of bundling imaging services into a larger reimbursement scheme, but the discussion closed with no firm resolutions.