MRI backlash: Crackdown on costs of imaging

Ancillary revenue has become a key to financial survival for many physicians in a world of declining reimbursements. For some larger groups, the strategy has revolved around MRI machines and other imaging equipment -- high-ticket items that carry the potential for profitability.

While it has a hefty price tag, in-office imaging equipment has proven to be a convenient option for patients and a positive investment for physicians, so it's no wonder that many groups would want to add that service to their repertoire.

The revenue stream, however, is not without its share of dams, as insurers and government agencies look to rein in costs. Overutilization, especially when it comes to imaging, has become a hot-button topic in health care, and physicians are finding the decision to purchase an MRI machine to be about more than whether they can afford it.

They also have to consider if they'll get paid for the tests.

"In the whole debate of imaging equipment in offices, whether you agree or disagree, ultimately [insurers] have the trump card," said James Borgstede, MD, a radiologist in Colorado Springs, Colo., and chair of the board of chancellors of the American College of Radiology. "If they see it as a problem, they're going to solve the problem."

The problem, as defined by insurers and the Medicare Payment Advisory Commission, is the rapid growth of diagnostic imaging tests. In a March report to Congress, MedPAC said imaging utilization grew faster than any other physician service, at 9.4%, between 2001 and 2002. Some types of imaging, such as nuclear medicine and advanced MRI, grew more than 17%, according to the report.

Likewise, Pittsburgh-based Highmark BlueCross BlueShield said its spending on imaging claims had increased 20% annually over the last three years.

In response, Highmark is launching a new program focused on reprivileging physicians in its network who perform imaging services and requiring preauthorization for imaging procedures. The insurer hopes the idea of limiting contracts and implementing a more stringent referral policy will increase quality and bring imaging usage rates closer to the national average, said Carey Vinson, MD, Highmark's medical director for quality management.

Similarly, Harvard Pilgrim Health Care, based in Wellesley, Mass., started a preauthorization program in July. Practices are required to submit information to National Imaging Associates, a radiology utilization management firm based in New Jersey, before ordering a test. About 10% of the time, doctors end up having to discuss the case with a National Imaging Associates representative, who may suggest a different course of action instead of the imaging test, Harvard Pilgrim officials said.

The tactics affect more than just radiologists. Cardiology, orthopedics and neurology are some of the other specialties that have embraced imaging technology in their own offices. While the practice is not yet widespread among insurers, the idea of health plans taking it upon themselves to try to get a handle on costs is not surprising to many physicians.

"I think it's absolutely justified," said James Donaldson, MD, radiologist-in-chief of the Dept. of Medical Imaging at Children's Memorial Hospital in Chicago. "Clearly, the federal government won't be able to modify Stark laws soon enough to suit insurers."

Certificate of need

Certainly, the insurers' clampdown can create a situation in which professional rivalries are bound to come out, especially between radiologists and nonradiologists.

Rather than battle with insurers, physician groups in some states end up battling each other for the chance to gain access to the MRI revenue stream.

Some 36 states have certificate-of-need laws, which were in place before health plans started looking at their own cost-limiting measures. They usually target expensive health care items, such as imaging machines or new construction, and they're theoretically meant to keep utilization rates from running out of control.

In North Carolina, for example, eight separate entities -- including five physician groups -- are vying for the approval to purchase one MRI machine for Wake County. The state takes an inventory of machines and the number of procedures performed by them in each region and weighs that number against its own capacity determinations to decide if a need for more machines exists, said Mike McKillip, project analyst for the Certificate of Need Section of the North Carolina Dept. of Health and Human Services.

Not only is it a nerve-racking ordeal to wait for a decision, but the application process is an expensive one, said W. Kent Davis, MD, a radiologist and president of Raleigh Radiology, which has a hospital location and three stand-alone offices.

"I understand the rationale for why they have [a CON law]," Dr. Davis said. "Would it be nice to go out and buy an MRI without asking permission? Yes. But doctors need to realize we need to be responsible for how we contribute to health care costs."

Cost responsibility

Part of Dr. Donaldson's role with Children's Memorial Hospital is to oversee the selection and purchase process of MRIs and other imaging machines. Over the years, the hospital has made some expensive capital investments in hopes of raising the bar for pediatric care.

It's easy to make a recommendation for high-quality equipment when the hospital is spending the money, Dr. Donaldson said. But in today's economic environment, doctors in private practice might not be so willing to make such a deep financial commitment. Or, they even might buy a cheaper machine and perform lower-quality scans as a result, he said.

"I think it is risky," said Dr. Donaldson, a radiologist who said his group, a 16-physician subsidiary of the hospital, has talked conceptually with Children's about investing in imaging machines as a joint venture. "If I'm just an entrepreneur looking to invest some money, I would be a little leery."

Entrepreneurial spirit is one of the reasons behind overutilization, Dr. Borgstede said. Ordering tests with revenue in the back of your mind can add unnecessary cost to the system, he said.

Radiologists, insurers and government agencies alike have said nonradiologists bear some of the responsibility for increasing utilization rates because of the equipment they purchase for their own offices. A worst-case reimbursement scenario, Dr. Borgstede said, is that insurers decide to cut costs by simply cutting their conversion factor.

"If you're in the business to make money, you increase your utilization again, and then you're paid half as much again," Dr. Borgstede said. "Pretty soon, they will achieve cost savings, but the way they do it is horrible for my business. The only thing I do in medicine is imaging. After the shambles are created, I'm the one who's left to pick it up."

Nonradiologists say there are definite benefits to having in-office imaging equipment, with better quality and patient convenience topping the list. The American Academy of Orthopaedic Surgeons, for example, takes the position that orthopedists are qualified to perform imaging studies and interpret results, and the limitation strategy by insurers "undermines both the quality and convenience" of patient care.

"Patients want a timely diagnosis," said Robert H. Haralson III, MD, executive director of medical affairs for AAOS. Dr. Haralson recently left a 42-physician group in Knoxville, Tenn., that owns three MRI machines to join the academy. "If you have a patient in your office, you want to be able to x-ray them right there. If I take a cast off and say, 'OK, you have to go across town,' they're going to raise so much Cain that the insurance company will have to give in," he said.

For cardiologists, the issue centers on nuclear imaging, which is a growing in-office service. The test is a vital tool for diagnosing the level of heart disease in a patient, and cardiologists are the best-trained physicians in interpreting the results, said Michael Wolk, MD, president of the American College of Cardiology and professor of clinical medicine at Weill Medical College at Cornell University in New York.

"If evidence-based medicine is being used, I think you will see an increase in utilization, and it will save many dollars by helping cardiologists to make better diagnoses early," Dr. Wolk said.

Quality counts

Diagnostic testing saves money, physicians maintain, when the tests are performed by high-quality machines. Relatively speaking, there are some inexpensive MRI machines available that render inconclusive results, requiring follow-up scans and more cost, doctors said.

"If they made a rule, which makes sense to me, that no scan of a brain or spine should be done on a machine with less than a 1.5 tesla magnet, that would change things immediately," said James J. Anthony, MD, a neurologist with Riverhills Healthcare Inc, a multispecialty practice in Cincinnati. Dr. Anthony and his partners own a 1.5 tesla MRI machine, which produces a magnetic field 30,000 times stronger than the earth's own magnetic field. The stronger the magnet, the higher quality the image. "I tried talking to insurance companies about this 10 or 15 years ago, but they didn't care," he said.

Physicians agree that a key to the imaging debate is using quality to weed out the facilities that could be contributing to increasing costs by ordering tests based on their bottom line.

Dr. Wolk, for example, said he supports the credentialing of nuclear laboratories, and the ACC is working to educate cardiologists about imaging utilization guidelines and the ethics of appropriate self-referral. Dr. Borgstede said the American College of Radiology was not pushing a Stark-style legislation package, but this also isn't the time for physicians to wait and see how payers react to growing costs.

Setting quality benchmarks would ensure that the proper physicians are performing and reading the scans. It would protect patients better, and it would keep costs down, he said.

"I don't think the status quo is going to continue," Dr. Borgstede said. "In some fashion, all insurers will deal with this, and clearly, they have articulated to us that it's a problem. Optimally, for us, we'll be able to engage other specialties in a dialogue and find out what is the appropriate way to deal with utilization."