Medical Device Daily Washington Editor

WASHINGTON — Imaging services have cost the taxpayer a bundle where Medicare is concerned, so much so that Congressional negotiators folded a provision to tamp down on the rise in those costs into the Deficit Reduction Act of 2005.

Still, several expert witnesses at last week's hearing of the Medicare Payment Advisory Commission (MedPAC) indicated that overuse of imaging is a persistent problem, and their recommendations included pre-authorization as a way to put a dent in imaging overuse.

At the start of the Friday session, staff analyst Ariel Winter said, "we recognize [the benefits of] the technological progress in imaging," but said the "rapid growth in services ... and the varying use by providers" raise concerns about inappropriate use.

Winter introduced three experts on the subject of Part B imaging, the first of whom was Lawrence Casalino, PhD, of the University of Chicago. He said radiologists' share of Medicare imaging payments fell by 9% between 2002 and 2006 while cardiologists' share rose by 10%.

Casalino also said that a 242% increase in MR billed by primary care doctors between 2000 and 2005 suggests "some form of leasing or per-click" arrangements, which are those in which a physician leases radiology equipment from an outside source, usually a freestanding radiology clinic, and marks up the technical fees for billing purposes.

He observed that MRIs will usually take place "if it has any chance of doing a benefit and little chance of doing it harm" and if the patient squeaks loudly enough. He also pointed to "a lot of regional variation," leading to suspicions about appropriateness.

Health plans, Casalino said, will acknowledge that "imaging goes down," when they put up procedural hurdles, but said that when physician "feel squeezed for income, it's easy to order more imaging.

"You can order images without limit, but you can't see patients without limit," he commented, adding that some data indicate that "pretty soon, 2% of cancers in the U.S. will be attributable to CT scans."

As for Medicare pre-authorization, Casalino said "I don't necessarily disagree with this," but suggested "not making it a blanket requirement." His recommendation was to require pre-authorization for high-use providers, which would generate "much less political backlash." He also observed that despite the rhetoric of medical societies, some doctors "know some guys in their communities who think [pre-authorization] should be done too."

Laurence Baker, PhD, of Stanford University (Stanford, California), noted first that the number of computerized axial tomography (CT) units in operation in the U.S. rose from slightly less than 5,400 in 1995 to almost 8,400 nine years later. He described a similar rise in installations of MR equipment over the same period, from a bit more than 2,400 units to almost 5,900.

"Is there a relationship between availability and utilization? There certainly is," Baker said, asserting that "adding a scanner is associated with about 800 additional MRI procedures for the Medicare population" a year. The incremental cost to Medicare is about half a million dollars each year for each new scanner.

"There certainly are some benefits to expanding utilization" of CT and MR technology, Baker said, such as carotid artery angiography, which "reduces [the] side-effect risk" associated with other forms of angiographic imaging. All the same, "expanded availability of MRI appears associated with less clearly less beneficial utilization, and back pain is one good example," he said.

Baker said physician ownership results in "dramatic [utilization] increase over time," citing a study he conducted recently based on billing for technical components by neurologists. His numbers indicated that 9.3% of neurologists who had no history of billing for the technical portion of an MRI will recommend an MRI for lower back pain, but that number rises to 14.5% for those with a technical component billing history.

As for policy recommendations, Baker said the options included limiting financial self-interest and pre-authorization, but he declined to come down decisively in favor of any particular approach.

Bruce Steinwald, director of healthcare research at the Government Accountability Office, reviewed data from a June study of cost-containment procedures. He noted the well-known increase in Medicare imaging between 2000 and 2006, from almost $6.9 billion to more than $14 billion, but remarked that only 11% came from an increase in the number of beneficiaries.

Steinwald also noted vast geographic disparities in per-beneficiary imaging costs per year, with the retirement haven of Florida generating more than $400 per beneficiary per year vs. less than $100 in a number of states.

Pre-authorization works, he said. "We did a whole bunch of interviews" of plans that "are active in managing imaging benefits." Those using prior authorization relied heavily on contract benefits management companies. CMS's approach, on the other hand, "is in essence a post-pay claims review, what's known as pay-and-chase.'"

Steinwald said the net effect of pre-authorization and other efforts by the private plans was a reduction in the rate of growth in imaging, due principally to pre-authorization. "The plans in our study reported that prior authorization ... was the practice most important to managing physician use of imaging." He recommended that "CMS consider more front-end approaches, including prior authorization and privileging," but said CMS should "not necessarily [be] limited to those approaches."

Steinwald said his discussions with CMS indicated the agency is skeptical, citing the probability that "proprietary systems won't work well in a public program" due to public disclosure, and "an appeals process that can overturn decisions." He said GAO understood those concerns, "but we don't think post-payment systems" will constrain costs.

MedPAC chairman Glenn Hackbarth said, "Clearly, there's evidence of rapid growth, and ownership is associated with more growth," but asked whether more scans in doctors' offices are a substitute for hospital outpatient activity and whether they prevent more costly treatment.

As for substitution, Steinwald said, "the evidence is that it continues to grow in other settings" despite that some substitution does take place. Baker added that discernible "offsets in outpatient spending are much smaller than increases in" physician-billed scans, and that there is an offset in terms of better outcomes for some disease states. That case is tougher to make for back pain, for instance, because the data indicate no meaningfully different outcomes.

Casalino chimed in, saying that the answer to "this will vary a lot ... by the type of episode." Those with lower back pain "want to know if they have a herniated disc," and even though it won't change the outcome, patients want to know what to expect.

Commission member Bill Scanlon, an independent health policy consultant, asked whether "we should give post-claims review a chance," which might get around the fact that "Medicare ... has to operate in a transparent world."

Steinwald said CMS does not have the resources for such reviews and that the agency's focus seemed more on fraud than appropriateness. "Our position would be do both (front end and back end reviews), and if CMS needs more resources, they should have them." Casalino made the case that post-claim reviews will not get to the problem very effectively because trying to get the money back "would create an even bigger [political] problem."

Commission member Robert Reischauer, PhD, of the Urban Institute (Washington), said, "Any time I see a rapid expansion in a service" along with "innovative financial arrangements, bells begin to go off." He asked, "Is there any way out of this other than bundling and capitation to get the mix of services right?"

Baker replied that he did not see "a lot a lot of data on capitated services," but said bundling "could change the game a lot and would lead to efforts to make things more efficient."