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Radiology searches for place in healthcare reform puzzle


Radiologists worry about surprise rate cuts and tighter tech regulation but still wield influence over IT and healthcare quality initiatives

Few political undertakings equal healthcare reform in size, complexity, and importance to the nation's economic status and well-being. The U.S. way of dispensing medicine reflects its big, diverse, wildly creative, and opportunistic culture. Its 305 million inhabitants want long and healthy lives, free from the tragedies of stillbirth, childhood disease, disability, or premature death from infectious disease, diabetes, myocardial infarction, or cancer.

So do residents in other countries. Yet no other industrialized nation came close to spending the $2.1 trillion that the U.S. funneled into healthcare in 2006. Spending on healthcare services exceeds 16% of the U.S. gross domestic product. The federal government spends more on medical research through the National Institutes of Health and the National Science Foundation than do all the countries of the European Union combined.

Healthcare is one of the fastest growing sectors of the U.S. economy. In the past four decades, it has grown, on average, 2.5 percentage points per year faster than the GDP (Figure 1). If this rate of growth continues, healthcare spending will exceed 22% of GDP by 2020 and will reach nearly 30% by 2030, according to testimony during a recent healthcare reform summit sponsored by the Senate Finance Committee.

In 2007, healthcare accounted for about one-quarter of federal spending. The Congressional Budget Office estimates that if current policies continue, health spending will account for almost half of all federal noninterest outlays by 2050.


For all this expenditure, however, the U.S. healthcare colossus is chronically troubled with problems concerning access and quality, as well as cost. If properly insured, residents of the U.S. can receive excellent healthcare. If uninsured or underinsured, they can be forced to live with their untreated symptoms, sometimes succumbing to preventable death. Despite $35 million spent annually to finance uncompensated care, 47 million U.S. patients are exiled to the fringes of the healthcare system for lack of insurance.

Healthcare is emmeshed in the corporate fabric of the U.S. Unlike their foreign competition, which often benefits from socialized medicine, employers in the U.S. finance 61% of healthcare costs through workplace-connected insurance (Figure 2). Such costs in the manufacturing sector amounted to $2.38 per worker per hour of work in 2005, compared with less than a dollar for foreign manufacturers, according to a report from the New America Foundation.

An extraordinary amount of that money is wasted. Based on more than 20 years of utilization research, Dr. John E. Wennberg, director of the Center for the Evaluative Clinical Sciences at Dartmouth Medical School, has established that nearly 30% of U.S. healthcare spending-roughly $630 billion annually-is spent on ineffective, redundant, or inappropriate diagnosis and treatment.

Wennberg and long-time colleague Dr. Elliott S. Fisher, also at Dartmouth, drew these conclusions by examining geographic variations in healthcare utilization in the U.S. (Perspect Biol Med 2003;46[1]:69-79). They established that per capita Medicare spending varies nearly 66% from community to community or state to state.

"High spending does not translate into better care," Fisher said at the Senate Finance Committee summit in June.

Differing physician cultures explain some geographic variations. Some medical schools emphasize cesarean sections to minimize birth complications. Some hospital radiology chairs swear by the value of carotid endarterectomy for preventing stroke, and some physician groups advocate cardiac CT angiography or CT lung cancer screening.

Medical imaging has contributed to healthcare's escalating costs (Figure 3). The Medicare Payment Advisory Commission (MedPAC), a Congressional advisory panel, reported in 2005 that medical imaging had become the foremost contributor to the increasing cost of physician services covered by Medicare. From 2001 to 2005, imaging volume covered by Medicare increased an average of 9.1% per year. In 2006, the growth rate was 6.2%.

Radiology is susceptible to the economics of induced demand that formed the basis of Wennberg and Fisher's research. In a state-by-state analysis, a June 2008 Government Accountability Office report identified an eightfold variation for in-office imaging spending per Medicare beneficiary-from $62 in Vermont to $472 in Florida.

"That is a staggering difference," said Dr. Michael Pentecost, chief of radiology for the Mid-Atlantic Kaiser Permanente Medical Group in Rockville, MD, and a frequent commentator on healthcare policy issues. "You could say more medical imaging could be performed in Vermont or much less should be performed in Florida, but you've got to figure the truth is in between."

Such inconsistency carries over to variations in the quality of care. Research shows a disturbing lack of evidence-based research to guide medical decision making. Clinical practice patterns suggest than some physicians prescribe diagnostic techniques and therapies that fall outside recommended standards of care.


Such problems are not unique to the early 21st century. Policymakers have been talking about growing healthcare costs since the 1970s. Incremental reforms-such as certificate of need programs for hospital expansion and equipment acquisition, Medicare diagnosis-related groups for hospital payments, relative value scales for physician payment, and private sector managed care-have slowed the growth of costs. The only substantial attempt at comprehensive reform, however, proved disastrous in 1993 for congressional Democrats and the first Clinton administration.

Because of increasing problems with access, cost, and quality, healthcare reform is back on the table. Presidential candidates from both the Republican and Democratic parties have proposed reform plans, and Democratic leaders in the House and Senate are ready to make reform a legislative priority after the November election.

"It is one of the top priorities," said Josh Cooper, senior director of government relations at the American College of Radiology.

Republican John McCain supports a market-driven plan (see accompanying article). It proposes replacing tax cuts for employer-sponsored healthcare insurance plans with tax breaks for individuals to choose their own coverage. Various pooled options would increase choice and control costs. Analysts say the elimination of corporate tax breaks would probably lead to the end of employer-sponsored plans and would shift the responsibility for acquiring health coverage to individuals and families.

McCain's plan calls for cost-containment, disease prevention, and the adoption of electronic medical records. He supports policies that encourage competition among health insurers, the re-importation of prescription drugs as a cost-saving measure, and tort reform to address medical malpractice abuses.

Democrat Barack Obama emphasizes universal healthcare access and insurance coverage in addition to many cost-containment strategies also supported by his opponent (see accompanying article). He plans to expand Medicaid and the State Children's Health Insurance Program (SCHIP) to guarantee insurance coverage for all children. He would spend tens of billions of dollars for a new public insurance program for self-insured individuals and employees of small businesses, and for subsidized premiums for low-income individuals and families.

Obama intends to save billions of dollars by authorizing Medicare to negotiate with pharmaceutical companies for drug prices. Driven by the buying power of its 42 million beneficiaries, Medicare could negotiate deep discounts that would reduce pharmaceutical company profitability, he contends.

Like McCain, Obama would invest heavily in healthcare information technology to subsidize adoption of electronic medical records and other IT systems, such as barcoding, to reduce medical errors. He supports increased funding of the National Institutes of Health for biomedical research.

Obama is likely to fall on the side of healthcare consumers (and trial lawyers) regarding medical malpractice reform, and he has called for a national institute for comparative healthcare effectiveness as a mechanism to assess emerging and competing technologies.


On the whole, radiologists appear more comfortable with the McCain plan than the potentially more costly Obama proposal.

"As a radiologist, I would be happy with the McCain plan," said Dr. Robert D. Harris, director of ultrasound at Dartmouth-Hitchcock Medical Center. "It won't tinker too much with the system, though it would still allow for a lot of wasteful imaging."

McCain's views on health savings accounts, the interstate sale of insurance, and information technologies are all mainstream conservative positions, Pentecost said. The Republican candidate's positions on healthcare cost containment match up well with his opposition to skyrocketing federal spending.

"He claims that he will tackle health inflation while reminding people that he fought other issues that were popular with his political bases, like congressional earmarks and the Medicare prescription drug bill," he said.Because of McCain's reputation as a political maverick, Pentecost would not be surprised if he came up with something entirely new.

Both candidates' plans feature favorable and unfavorable terms for medical imaging, said Dr. Howard Forman, a professor of radiology, epidemiology, and public health at Yale School of Medicine.

By broadly increasing access, especially for children, the Obama plan would direct more revenue to radiology and other clinical practices. Subsidized insurance for adults would also lower barriers to diagnosis and treatment. In general terms, the McCain and Obama plans recognize growing evidence showing that high-tech medical imaging is expensive, widely available, and sometimes used to excess, he said. Though Obama more openly supports a new institute for comparative healthcare effectiveness, this proposal has bipartisan support in the Senate. A new institute could slow the adoption of new imaging technologies by requiring proof of their cost- and clinical effectiveness studies before reimbursement would be implemented.

"There is fairly good evidence that we have adopted lots of technologies-both in imaging and elsewhere-that were subsequently found to have little or no positive effect," Forman said.


It was unclear in midsummer how either candidate would fix the Medicare Sustainable Growth Rate formula established by the 1997 Medicare Modernization Act. Finding a permanent solution to the SGR is the top legislative priority for the ACR, according to Dr. James H. Thrall, chair of the college's board of chancellors.

Intended to control costs, the SGR formula reduces Medicare physician payment rates when overall physician spending for the preceding years exceeds specific financial targets. Reduced rates are supposed to cancel out the fiscal effect of the previous year's excess spending. Congress, however, has repeatedly delayed planned SGR cuts at the insistence of physicians. Without a permanent fix, Medicare will be forced in mid-2010 to cut rates deeply enough to cancel out an accumulated $200 billion deficit, Thrall said.

McCain and Obama condemned the SGR rescue ritual in the midst of the congressional debate in March for the so-called fix to Medicare payments, but neither voted on the initial Senate Medicare bill nor to override President Bush's veto. Both have promised to reform the SGR policy, but neither has offered a detailed plan on how to do it.

Vigilance has been a watchword at the ACR to protect members against future Medicare rate cuts like the surprise reductions added to the Deficit Reduction Act of 2005, Cooper said.

"After the DRA, we are not taking anything for granted," he said. "We certainly recognized that imaging will remain a possible target. Our job is to educate members of Congress why arbitrary cuts are a bad idea."

In terms of Medicare reform, the ACR recorded a recent victory by persuading Congress to mandate facility accreditation for MRI, CT, PET, and other nuclear medicine modalities as a condition for payment from its outpatient physician pay schedule beginning in 2012. The ACR and Intersociety Accreditation Commission plan to apply to become accrediting agencies.

The Medicare Improvements Act also included a two-year demonstration project beginning in 2010 to collect data regarding physician compliance with appropriateness criteria for cross-sectional imaging. Participating physicians will be paid for compliance from a $10 million fund established by Congress. The comptroller general was ordered to file a project evaluation in 2014.

A new federal law to close loopholes that permit in-office self-referral is unlikely in 2009, according to Cooper.

"That would be very hard politically. There may be some cost savings from it, but I don't know how desperate Congress would be for the money," he said.


Regardless of how the 2008 national election plays out, medical practitioners can be assured that IT and comparative effectiveness research will factor into the next round of reforms.

Support for implementation of the electronic medical record is politically color-blind. A 2005 RAND study (Health Affairs 2005;24[5]:1234-1245) estimated that healthcare IT could save at least $81 billion annually while reducing morbidity and mortality resulting from medical errors. It also indicated savings of $1.7 billion per year over 15 years from radiology by making the transition to computers from radiology reports and radiology in general, said Dr. Eliot Siegel, chief of radiology and nuclear medicine at the Baltimore VA Maryland Health Care System.

Scott P. Serota, chief executive of the Blue Cross and Blue Shield Association, noted that only 18% of physicians have adopted electronic medical records. The rate among solo and small group practices is 8%.

Radiologists have an important role to play in overcoming interoperability problems and the lack of technical standards that stand in the way of universal compliance. Radiologists successfully fought that battle in the 1990s with the development of the DICOM standard. The Integration of the Healthcare Enterprise initiative, a project supported by the RSNA, was established to promote interoperability among radiology and other medical data systems. Most hospitals have achieved near-filmless operations far in advance of going paperless, Siegel said.

Standard-setting for documents, however, has been difficult because hard copy can be digitized in many forms: Word documents, ASCII files, PDFs, and other formats.

The Healthcare Information Technology Standards Panel (HITSP) and other efforts to create electronic medical records have focused on combining the radiology report with lab values, progress notes, and other text-based information. "HITSP and another initiative called the American Health Information Community have not engaged radiology in regard to diagnostic images," Siegel said. "It is important that we join these national efforts."


As with IT, federal support for a center to perform comparative effectiveness research resonates well in both conservative and liberal camps. All healthcare decision makers want better healthcare data, and those who pay for and apply new medical technologies seek a scientific basis for their clinical application.

Also called clinical outcomes trials and evidence development studies, such examinations of the clinical and cost-effectiveness of new technologies are frustrating to their advocates because they delay the commercial introduction of promising technologies and deny patients access to them until their efficacy is established.

Outcomes studies are also time-consuming. A promising technology can be obsolete before clinical trial results are published. On the positive side, comparative effectiveness research can identify ineffective technologies before they add to healthcare costs, according to Yale radiologist Forman.

"We, as a society, might prefer slightly delayed technology diffusion in exchange for better overall delivery of healthcare," he said.

Accustomed to Kaiser Permanente's cost-sensitive approach to health maintenance, Pentecost sees merit in cost-effectiveness analyses. Problems arise, however, when numerous variables affect the outcome.

"You may have a good idea for better hypertension treatment, but many people with hypertension also have diabetes or glaucoma and are obese," he said. "Many evaluations of effectiveness never take comorbidities into account in a meaningful way.

Funding and politics are also factors. The federal Agency for Health Care Policy and Research was formed in the 1980s as part of the Department of Health and Human Services. Its mission was specifically to fund research to answer clinical and cost effectiveness questions and to recommend policies based on the results.

Some observers believe it could have played that role well, with better funding and political protection, said Dr. Sean Tunis, director of the Center for Medical Technology Policy in Baltimore.

The agency was nearly defunded in the mid-90s. Its mission was altered, and its name was changed to the Agency for Health Research and Quality after it lost a political battle with Texas back surgeons over its guidelines for surgical intervention for lower back pain.

"The incident highlights the dangers of being in the business of policy making or policy recommendations," Tunis said. "That is the third rail when it comes to who makes the hard calls on which technologies are paid for."

As the former director of clinical standards and quality at the Centers for Medicare and Medicaid Services, Tunis believes a comparative effectiveness center can wield influence if it is closely tied with the decision makers, including payers, policy makers, patients, and clinicians, who use the evidence to make decisions.

"That would be the magic ingredient," he said.

Voters will decide Nov. 4 which direction health reform will take.

James Brice is senior editor of Diagnostic Imaging.

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