GAO recommends preauthorization to slow explosive Medicare imaging growth

July 21, 2008

To the chagrin of imaging advocates, a Government Accountability Office study has found that preauthorization may be best way for Medicare to slow the rapid growth of outpatient MR, CT, and other high-tech imaging services.

To the chagrin of imaging advocates, a Government Accountability Office study has found that preauthorization may be best way for Medicare to slow the rapid growth of outpatient MR, CT, and other high-tech imaging services. The June 2008 report confirmed findings of a 2005 Medicare Payment Advisory Commission study that singled out high-tech medical imaging as the fastest growing component of physician services covered by Medicare Part B. The MedPAC report is widely cited for influencing congressional reforms in the Deficit Reduction Act of 2005 that substantially cut Medicare outpatient rates for high-tech medical imaging.Sen. John D. Rockefeller IV (D-WV), chair of the Senate Finance Subcommittee on Health, and Gordon H. Smith (R-OR), ranking member of the Senate Special Committee on Aging, asked the GAO to reexamine the MedPAC investigation and management practices that private payers use to regulate imaging spending.

The GAO findings included the following:

  • Medicare spending for in-office imaging services increased from $6.9 billion in 2000 to more than $14 billion in 2006.
  • The proportion of outpatient Medicare imaging performed in physician offices rose from 58% in 2000 to 64% in 2006.
  • Spending on advanced imaging, such as CT, MRI, and nuclear medicine, rose 17% per year, substantially faster than spending on less expensive ultrasound and x-ray procedures.
  • Cardiologists relied on medical imaging for 36% of their total Medical revenue in 2006, up from 23% in 2000.
  • In-office imaging spending in 2006 varied nearly eightfold from state-to-state, from $62 in Vermont to $472 in Florida. The huge difference led GAO analysts to express concern about whether Medicare payment policies have emboldened physicians to overuse imaging.

The GAO found fault with Centers for Medicare and Medicaid Services cost-control policies that focused on provider billing fraud following the provision of imaging services. It urged CMS to redirect its cost-control efforts to constrain spending growth on the front end of imaging, specifically the patient referral practices of physician-owned in-office imaging facilities. The GAO noted that private insurance plans have successfully used prior authorization to slow the growth of imaging-related spending. It also cited physician credentialing to restrict equipment use to qualified practitioners and physician profiling, a statistical technique that identifies high-utilization physicians.

The reactions of imaging advocates to the report ranged from disappointment to anger.American College of Radiology officials agreed with the report's findings but disagreed with the GAO about its preauthorization recommendation. The ACR prefers mandatory facility accreditation as a less intrusive approach. Congress adopted mandatory accreditation for MR, CT, and PET, and other modalities in Medicare-related legislation passed in mid-July. Dr. James H. Thrall, ACR Board of Chancellors chair, said in a statement that cost and quality concerns should be dealt with directly and not through third parties."Why spend more taxpayer dollars to hire outside entities to examine claims on an individual basis, possibly delaying legitimate exams?" he said.The recommendations outraged the Access to Medical Imaging Coalition, a consortium of professional associations and device manufacturers groups,"I can't even say this report is half-baked, because I don't even think that it was ready to put in the oven," said Timothy P. Trysla, executive director of AMIC. Trysla was disappointed that the GAO chose to ignore other quality assurance policies enacted by private insurers. As of July 1, United Healthcare, for example, began requiring MRI, CT, PET, nuclear medicine/cardiology, and echocardiography providers to pursue accreditation through the ACR or the Intersocietal Accreditation Commission.Trysla also pointed to a GAO admission in the report that the Department of Health and Human Services had raised concerns about the administrative burden of implementing prior authorization and its applicability to the federal insurance program.The Medical Imaging & Technology Alliance, a division of the National Electrical Manufacturers Association, faulted the report for ignoring recent data, reference medical guidelines, and evidence of appropriateness and accreditation criteria used by providers and payers. "The GAO report obscures how medical imaging utilization decisions are made and the benefit that imaging has to healthcare savings and patient outcomes," said Andrew Whitman, MITA vice president.For more information from the Diagnostic Imaging archives:

Proponents hail passage of Medicare bill as triumph for physicians, patients

Universal coverage may mean practice changes

CMS decision didn't come out of the blue

Medicare imaging costs skyrocket, draw scrutiny