Panel Urges Crackdown On Medicare’s Use Of Imaging

An influential advisory group is urging Congress to crack down on doctors who order too many MRIs for seniors, setting off a battle with physicians and patient groups who argue Medicare beneficiaries might suffer significant delays in treatment.

The recommendation by the Medicare Payment Advisory Commission would require some physicians who order a lot of MRIs, CT scans, nuclear medicine studies and other imaging tests to get pre-approval from Medicare.

In its latest report, sent to Congress Wednesday, MedPAC takes aim at physicians who inappropriately order these tests and concludes that Medicare costs in this area are surging partially because physicians are increasingly buying their own high-tech equipment. When they can perform diagnostic tests in their own offices, they get to pocket the profits.

“There’s some bad behavior going on out there, with physicians buying imaging equipment and generating unnecessary services,” Robert Berenson, MedPAC vice chairman, said in an interview. “It seems prudent to target high utilizers for authorization.”

Imaging is one of the fastest-growing Medicare costs, rising from $6.5 billion to $11.7 billion between 2000 and 2009, according to federal figures. Industry groups claim the use of all imaging services declined between 2008 and 2009, but MedPAC disputes that data and counters that usage is on the rise.

While a 1989 law prohibited physicians from referring patients to testing centers in which they had a financial interest, it did not stop them from performing imaging and other tests in their offices. In 2008, the Center for Studying Health System Change surveyed doctors and found that 29 percent owned or leased equipment to conduct testing such as echocardiograms and nuclear medicine studies, 25 percent had clinical lab testing equipment, 23 percent had X-ray machines, and 17 percent had MRI or computed tomography machines.

“Physician investment in diagnostic testing equipment has contributed to rapid growth of imaging and other tests under the physician fee schedule and has resulted in a high level of utilization that likely includes unnecessary services,” MedPAC told Congress. While MedPAC acknowledged that having the equipment close at hand allows physicians to diagnose and treat patients quicker and more precisely, it also argued that these doctors order more of the services than those who send patients to unrelated facilities.

The proposal sparked a furor among some physicians and politicians even before it was announced, pointing to the difficulty of making even small changes in the sprawling program for the elderly – much less overhaul it.

Opponents argue that getting prior authorization would delay care and wouldn’t save much money. Such changes would “likely result in denial of timely and medically necessary care, and exacerbate public concerns about governmental intrusion into the physician-patient relationship,” more than two dozen physician groups wrote in a March letter to MedPAC Chairman Glenn Hackbarth.

They also maintain that new restrictions are premature, given that laws and regulations approved over the past five years have slowed imaging’s growth.

“Medicare payment for diagnostic imaging services in non-hospital settings have been subjected to a series of cuts in recent years, and many [payments] will have been reduced by 25-40 percent by 2013,” according to the letter. “Medicare payment reductions carry a significant risk of unintended consequences and should not be imposed until the current cuts have been fully phased in.”

Some lawmakers also oppose the move. In a May 20 letter to Hackbarth, House Energy and Commerce Health Subcommittee Chairman Joe Pitts, R-Pa., and ranking member Frank Pallone, D-N.J., call into question MedPAC’s conclusion that imaging is a major driver of the program’s increased spending. While Pitts and Pallone fought over last year’s health law, the two have joined forces to oppose MedPAC’s recommendation.

Congress is not required to follow any MedPAC recommendations, but some observers think Capitol Hill may give these findings a closer look as it works to control the federal deficit.

Lawmakers previously have taken several steps to control Medicare imaging expenditures. As part of the Deficit Reduction Act of 2005, Medicare cannot pay a physician more for imaging services done in his office or a free-standing imaging center than the program pays for a similar service offered in a hospital outpatient facility.

A 2008 law required imaging centers and physician offices to become accredited by a government-approved entity by Jan. 1, and created a demonstration project to test the appropriate use of specific imaging services.

Moreover, last year’s health overhaul law reduced imaging payments by $3 billion over 10 years.

The health law also requires doctors who refer Medicare and Medicaid patients to in-house imaging machines to disclose that they own the equipment, and provide patients with a list of 10 alternative sites within 25 miles.

In his fiscal 2010 budget proposal, President Barack Obama tried to restrict the growth of imaging costs by requiring the use of radiology benefit managers in Medicare. That proposal did not become law, although many private insurers use similar controls.

MedPAC also made several recommendations to reduce payments to account for efficiencies when a patient gets multiple diagnostic services during the same visit.

While MedPAC did not recommend action to crack down on physician referrals to their own physical therapy, radiation therapy and anatomic pathology test centers, it promised to track their growth.

Berenson maintains the 2005 imaging changes did not create access problems for seniors and the disabled, and there is no reason why Congress should stop there.

The Government Accountability office, which has embraced the idea of requiring pre-authorizations, “did a study and found that the impact of the [change] was that spending decreased 12 to 13 percent, volume continued to increase, but less,” he said. “That’s a pretty good result. There were no access problems and significant savings. We should continue to look for opportunities to reduce overpriced services. Nothing bad happens.”

KHN’s Juan E. Gastelum contributed to this article. This article was updated from an earlier version as more information became available.