Imaging fuels Medicare growth, federal report finds

August 25, 2009

Radiologists who believe that Washington insiders have targeted medical imaging for financial cutbacks can find plenty of evidence to raise concerns in a recent report on Medicare costs published by the Medicare Payment Advisory Committee.

Radiologists who believe that Washington insiders have targeted medical imaging for financial cutbacks can find plenty of evidence to raise concerns in a recent report on Medicare costs published by the Medicare Payment Advisory Committee.

“Data Book: Healthcare Spending and the Medicare Program,” a 198-page report released by MedPAC in June, is peppered with the statistics indicating that medical imaging continues to fuel rapid Medicare spending growth, although it excuses radiologists from blame. The report was posted at the MedPAC website (medpac.gov). 

Among it’s findings: Medicare spending for imaging services under the physician fee schedule grew from $8.4 billion in 2002 to $13.2 billion in 2007. CT and MR accounted for one-third of Medicare spending on imaging in 2007. About 15% of the costs stemmed from nuclear medicine and PET. Diagnostic ultrasound rang up another 12%.

MedPAC, a 17-member voluntary panel, has not been a great friend of medical imaging since its creation in 1997. Designed to advise Congress about Medicare financial issues, MedPAC identified the explosion of Medicare spending on high-tech medical imaging in the mid-2000s. Its findings are widely credited with imaging rate cuts that Congress wrote into the 2005 Deficit Reduction Act.

Congress adopted MedPAC’s recommendation requiring a discount whenever imaging providers cover contiguous anatomic sections during CT and MRI scans, and it is considering a MedPAC proposal to increase the assumed utilization rate used in the formula for calculating Medicare reimbursement rates for CT and MRI.

MedPAC’s position could become even more influential if Congress follows through with a controversial White House plan to give it regulatory power over healthcare similar to the Federal Reserve Board’s regulatory control over banking and finance.

The MedPAC data book reports that the growth of outpatient imaging utilization, covered by Medicare Part B, may have slowed to 3.8% in 2007, but additional volume added to a five-year trend that has established imaging as major contributor to physician services growth. From 2002 and 2007, the volume per beneficiary of imaging exams grew 44.4%, the report found.

Under the Hospital Outpatient Prospective Payment System, imaging ranked second only to general hospital procedures for driving Medical hospital outpatient costs, MedPAC reported. General procedures accounted for 47% of those payments, while imaging was the source for 23%.

While MedPAC was hard on imaging, it was generally generous in its appraisal of radiologists and their role in rising imaging costs. The report found that radiologists received 43% of the physician fee schedule payment for Medicare-related imaging in 2007, but that their share of total imaging payments declined 1.5% per year from 2002 to 2007 while the shares of other specialists grew. The share of imaging payments directed to general surgeon rose 5.5% per year. Internists and cardiologists saw their share of imaging payments rise 2% and 1.9% per year respectively.

MedPAC also reported data showing that radiologists read most of the scans covered by Medicare, but don’t tend to own the equipment. Radiologists received three-quarters of the money that Medicare paid out for the professional component of imaging, but only one-third of the global billings, and just 13% of the technical component.