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Specialists garner a bigger share of medical imaging


Diagnostic imaging's crucial role in medical practice is affirmed by the eagerness with which referring physicians have embraced diagnostic ultrasound, MR, CT, and nuclear medicine for an ever-lengthening list of clinical roles. Evidence now suggests that referring physicians appreciate diagnostic imaging so much, for both clinical and financial reasons, that a growing number are intent on making it their own. They are using exemptions in federal antireferral law that allow them to add high-tech imaging to their menu of in-office services.

Diagnostic imaging's crucial role in medical practice is affirmed by the eagerness with which referring physicians have embraced diagnostic ultrasound, MR, CT, and nuclear medicine for an ever-lengthening list of clinical roles. Evidence now suggests that referring physicians appreciate diagnostic imaging so much, for both clinical and financial reasons, that a growing number are intent on making it their own. They are using exemptions in federal antireferral law that allow them to add high-tech imaging to their menu of in-office services.

The trend has been linked to utilization growth that has led officials at the Centers for Medicare and Medicaid Services to reexamine its reimbursement and management policies for diagnostic imaging.

In-office medical imaging rose 46% to 35.5 million procedures between 1998 and 2003, according to Medicare Part B data from the American College of Radiology (Figure 1). For MRI, in-office self-referral increased 387% to 523,000 procedures (Figure 2). Nuclear medicine expanded 243% to 4.4 million procedures, and CT, mainly single-slice spiral imaging during those years, jumped 193% to 347,000 procedures.

That expansion has helped make diagnostic imaging the fastest growing physician service covered by the federal medical insurance program, according to the Medicare Payment Advisory Commission, a nonpartisan group that advises Congress about Medicare issues. Spending on imaging services increased about 60% from 1999 to 2003. Non-neurological MRI applications covered by Medicare increased 99%. Nuclear medicine grew 85%, and non-neurological CT rose 82%.

Overall, the growth added $3.4 billion to Medicare spending during those four years, according to a MedPAC report.

ACR lobbying efforts questioning the propriety of in-office imaging have inflamed longstanding tensions between the ACR and the American College of Cardiology. The ACC has become the standard-bearer for physician efforts to break down barriers that impede their right to perform medical imaging and to offer it directly to patients in their offices.

In an interview, Dr. Steven E. Nissen, president-elect of the American College of Cardiology, defended the suitability of in-office imaging while challenging claims that its rapid growth rate makes it inappropriate.

"Those procedures are often appropriate and often well-performed and improve patient care," he said.

Interviews and a review of Medicare Part B data by Diagnostic Imaging show that self-referral has become ingrained in medical practices. Physicians have become accustomed to performing office-based radiologic procedures. Research by ACR chief economist Jonathan Sunshine, Ph.D. indicates that nonradiologists performed about one-third of all noninvasive medical imaging paid for by Medicare in 2002. From 1999 to 2002, the 23.5% growth rate in utilization among nonradiologists was twice that of radiologists. Most of those procedures involved inexpensive plain-film radiography, but the growth of group practice size nationwide, increased vendor interest in group practice sales, and lax enforcement of the federal ban on physician self-referral have encouraged groups to become more aggressive in their adoption of high-tech imaging technologies.

Despite repeated requests for information, the Department of Health and Human Services' Office of the Inspector General and the Justice Department could provide no evidence of enforcement activity since Congress passed the federal self-referral ban for diagnostic imaging in 1995. Documents posted on federal Web sites indicate that the OIG and Justice Department have been involved in several actions involving diagnostic imaging and alleged kickback schemes, but no actions relating to diagnostic imaging and alleged violations of the self-referral law are posted.

The OIG public affairs office informed Diagnostic Imaging several times between 1996 and 2000 that only egregious cases of fraud would be prosecuted until regulations of the 1995 law were finalized. Those rules finally became enforceable in August of this year. Inspector General Daniel R. Levinson declined to be interviewed by Diagnostic Imaging to discuss enforcement since their publication.

Although lawyers frequently caution referring physicians about the dangers of violating self-referral law, regulatory exemptions gave them a green light to legally self-refer in certain regions of the country.


Medicare Part B data provided by the ACR show staggering growth for self-referred in-office imaging in some states from 1998 to 2003. In high-ranking Florida (Figure 3), in-office self-referral grew 381% for CT, 783% for MR, and 163% for nuclear medicine. The number of self-referred nuclear medicine scans performed in physician offices increased by about 409,000 during those five years. MR utilization grew by 119,000 scans and CT by 61,000.

Opinion as to why Florida is a hot spot for self-referral varies, but sources agree that many physicians there simply want to cash in on the economic benefits of diagnostic imaging. Hospitals and radiologists who perform diagnostic imaging face significant competition from large, multi- or single-specialty practices that perform imaging on their own equipment, said Dr. Mark Schwimmer, president of Radiology Associates, a group practice in Hollywood.

"This leads to the question: If a large physician group owns its own equipment, does that increase the probability that its members would order more diagnostic tests on their patients versus when they sent them to the hospital or to a nonaffiliated diagnostic center? The statistics speak for themselves," Schwimmer said.

Imaging centers in Jacksonville, Miami, Bradenton, Venice, and Sarasota use leasing arrangements to attract referrals from primary-care physicians, according to radiologists familiar with the practice. Referring physicians lease blocks of imaging time on PET, MR, or other scanners and bill Medicare for global services. The practice is legal under the personal service exemption of the Stark II regulations, but it creates the same overutilization problems as in-office imaging, said attorney Thomas Greeson, a partner in the Falls Church, VA, law firm of Reed Smith LLP.

Centers that lease their services can also have a devastating effect on non-self-referred services that compete with them. The patient volume of a mobile PET service contracted by a Sarasota-area hospital dropped from a dozen to a single patient per week after a leased-time PET clinic opened in the neighborhood, according to a radiologist who reads studies for the hospital service.

Although leasing is generally not a large revenue generator for most imaging centers, center operators will engage in it when their referring physicians require it, said Cherrill Farnsworth, executive director of the National Coalition of Quality Diagnostic Imaging Services, a trade group of imaging center operators.

"It is everywhere," Farnsworth said. "Our members tell us they don't want to do it, but it is sometimes the only thing they can do to save their business."

Leasing can be so lucrative, according to a radiologist who asked to remain anonymous, that physicians who do not participate in such arrangements are criticized for not joining in. He recalls sitting in his hospital's cafeteria next to a neurosurgeon, who was told by a primary-care doctor that he was crazy to continue to send patients to the radiology group for imaging when he could earn more money by joining a time-leasing deal.


Deregulation of insurance rates and rate cuts by private insurers were probably the main motivators for the growth of in-office self-referral in Ohio, said Dr. Thomas Seward, a radiologist at Bethesda North Hospital in Cincinnati. The Ohio state health department identified a fivefold increase in mobile and freestanding MR systems, to a total of 126, in the three years following deregulation in May 1996. Most of the 174 acute-care hospitals were equipped with the technology three years after certificates of need were eliminated, according to a report from the law firm of Bricker and Eckler.

Ohio insurers gave physicians an incentive to install MRI and other high-tech imaging equipment when they enacted across-the-board payment rate cuts in the early 1990s, Seward said.

Medicare Part B data suggest that those trends translated into rapid growth of in-office utilization (Figure 4). In-office use of MR and CT was practically nonexistent in 1998, but patient volume for the two modalities in in-office, self-referred settings increased to more than 38,000 by 2003. Nearly 45,000 in-office nuclear medicine scanners in Ohio were self-referred in 1998; by 2003, that total had risen to nearly 199,000.

Radiologists are included in the mix of physicians who collaborate in in-office imaging equipment ownership. Some take the step to retain business; some limit their involvement to discounted reading arrangements. The group practice bills the insurer for global services and pays the radiologist a predetermined percentage of the technical fees to read the scans. In other cases, radiologists invite referring physicians to become involved in their imaging services, including owning a share of the business itself, Seward said.

"They then send patients to you. If they can't send their patients to a scanner in which they've invested, they will send them to another scanner within their corporate fold, so they will reap the benefits," he said.


In-office self-referral is a recent phenomenon in Alabama. Although nonradiologists performed 41,674 in-office nuclear medicine scans in the state in 1998, in-office self-referral of MR and CT accounted for only 1311 procedures (Figure 5). In 2003, however, nonradiologists billed Medicare for 47,089 in-office MR and CT scans, compared with radiologists, who billed the technical component of 24,723 MR and CT outpatient scans. Self-referred in-office nuclear medicine studies rose 136% to 98,507.

Certificate of need deregulation in 2003 and the advent of imaging services strategies that employ the rural healthcare exemption are encouraging these trends, said Lee Morrison, director of imaging services at HealthSouth Medical Center in Birmingham. The rural exemption applies when at least 75% of the designated health services are furnished to individuals residing in rural areas.

Morrison joined the center, associated with the University of Alabama-Birmingham, in June after operating an open MRI facility in Jasper, for two years. Jasper and the surrounding Walker County are home to only 40,000 residents, so Morrison's center lost most of its potential business when the town's orthopedic surgeons set up their own in-office MR scanner.

Morrison was familiar with several imaging services chains that were performing profitably in rural Alabama by forming partnerships with local physicians, but he decided against that approach to save his center.

"I did not establish my company to go into multimembership partnerships and ownership," he said. "Once you've cut the pie so thin, is it truly profitable for anybody?"

Champion Diagnostics in Baton Rouge, LA, uses limited partnership arrangements with local physicians to establish imaging centers in rural communities that could not otherwise support such services. John P. Stagg, president of Champion Diagnostics, and his partners have built or are building imaging centers at Bessemer, Albertville, Cullman, and Vestavia Hills, AL, and in Central, LA.

Champion targets towns with populations of 25,000 to 45,000 and a service area of about 100,000. The ideal community is served by 50 practicing physicians, with a hospital within five miles of the proposed imaging services site. Primary-care physicians account for a majority of practitioners who participate in center ownership. They have the final say on equipment selection, facility design, and marketing.

"It is important to avoid a cookie-cutter approach," Stagg said. "We try to tailor our product to the local communities."

Located about 10 miles from Birmingham, the Bessemer center did not qualify for the Stark II rural exemption, Stagg said. To operate legally, it can accept only referrals covered by private insurance.

The facilities have qualified for payment from Blue Cross Blue Shield of Alabama, the state's leading insurer. Champion facilities begin earning a profit after four to six months of operation. The expected return on investment for investors is 25%, he said.


It is no secret that political hardball is the game of choice among elected representatives in the Texas state legislature. Legislators will take extraordinary action to protect a position or make a point. A group of Democrats, for example, exiled themselves in New Mexico in 2003 to keep majority Republicans from enacting a redistricting plan thought to work in the GOP's favor. But leaders of the Texas Radiological Society did not realize what awaited them this year when they proposed H.B. 3281, a bill that would have required self-referring physicians to disclose their ownership interest to patients and to secure special contracts with payers in order to bill for their in-office imaging services.

Despite the historic disinclination of Texas lawmakers to regulate self-referral, the state's radiological society was optimistic about the bill's prospects, said its president, Dr. Thomas Dodd. The bill's supporters included the Texas Business Association and the Texas Hospital Association. The powerful THA, in particular, was outspoken in its opposition to limited-services, physician-owned specialty hospitals. It argued that these hospitals caused financial problems for full-service hospitals, especially in the more isolated cities of West Texas. Administrators of several rural hospitals that the THA identified as threatened by competing physician-owned hospitals did not respond to telephone requests for interviews.

Medicare Part B data confirmed Texas's predilection for in-office self-referral (Figure 6). In-office nuclear medicine grew more than threefold from 1998 to 2003, to more than 260,000 procedures. Self-referral of in-office MR and CT increased 1630% and 348%, respectively.

Dodd and his colleagues knew that the Texas Medical Association opposed the bill, but they did not appreciate the resolute nature of that opposition until a hearing on H.B. 3281 took place before the House Business and Industry Committee. The radiological society's five witnesses were repeatedly interrupted, Dodd said. Committee members enforced a two-minute rule limiting debate and peppered the witnesses with questions that broke the continuity of their testimony. About 20 opponents testified without interruption or limitations on their time.

"We basically got slaughtered," Dodd said.

Although H.B. 3281 died in committee, at least one radiologist associated with the Texas Radiological Society faced retaliation afterward for supporting the anti-self-referral measure. His group practice expects to lose about $1 million worth of referrals this year from physician group practices that took exception to the radiologist's outspoken support of the bill. Fearing more retaliation, the radiologist declined to be interviewed.


Although arguments against imaging self-referral do not generate political traction in Texas, they have swayed opinion among federal policymakers, especially those concerned with rapidly rising Medicare imaging expenses.

While addressing the House Ways and Means healthcare subcommittee in March, MedPAC executive director Mark E. Miller questioned the appropriateness of some imaging services performed by nonradiologists. He cited utilization studies by Dartmouth researchers Elliot S. Fisher and John E. Wennberg that identified a wide variation in the use of medical imaging acrosss the country. They discovered that the greatest use of imaging did not occur in the communities with the highest incidences of disease but tended to concentrate in communities served by the most physicians and healthcare facilities. Miller mentioned other studies that found nonradiologists have more trouble than radiologists in properly maintaining their equipment. And according to a few controlled studies, nonradiologists are less able to render accurate diagnoses.

To address the problem, Miller recommended that Congress establish quality standards for medical imaging. He asked CMS to accredit imaging equipment and determine educational and performance standards for technologists who perform medical imaging and physicians who interpret the images.

Miller's urgency may have influenced a physician payment update and policy changes the CMS announced in August. The agency proposed a 4.3% across-the-board reduction in physician payment rates to help meet Congress's mandated 2% limit on annual Medicare spending growth for services. In line with MedPAC recommendations, CMS proposed closing a regulatory loophole that exempted nuclear medicine imaging from federal anti-self-referral law.

Also taking a cue from MedPAC, CMS announced plans to reduce the technical payments for imaging of contiguous body parts that apply to 11 types of imaging studies, including CT, CT angiography, MR, MR angiography, and diagnostic ultrasound. Faster imaging speed justifies the cuts, according to MedPAC, and CMS cited much higher across-the-board reductions that would have been necessary without the cost cuts. The ACR joined other physician groups to oppose the cuts, but unlike its peers, it supported MedPAC's stance on quality standards.

The ACR's call for regulation of in-office imaging so angered delegates at the American Medical Association meeting in May that they passed a resolution opposing all legislative or regulatory efforts that would repeal the in-office ancillary exception, which now allows referring physicians to provide diagnostic imaging in their offices.

"Virtually every medical specialty, including the AMA, agrees with us," Nissen of the ACC said. "Radiology is way out there on its own in their idea of creating a restrictive legal system that would prevent people from doing those procedures for which they are trained and appropriate."

The ACR's concern stems from inappropriate imaging performed by nonradiologists, said Dr. James Borgstede, chair of the board of chancellors. Although inappropriate referrals arise from poor physician training or consumer pressure, they increase at a much faster pace when referring physicians have a financial incentive to make imaging successful, he said.

Borgstede also fears that the economic and technological mechanisms that have made medical imaging a symbol of 21st century medicine will collapse if skyrocketing utilization growth forces payers to take action. Should this occur, other physicians will continue to practice their various specialties, but radiologists will be left with the wreckage, he said.

"We need to look at why we went into medicine in the first place. We should keep the patients' interests first," he said.

Representing the view of many physician groups whose members are beginning to perform medical imaging, the ACC considers in-office imaging the right thing for patient care, Nissen said. Combining treatment and diagnostic imaging at the same site is convenient for the patient and improves the quality of medicine.

"There are enormous advantages to having physicians who are familiar with the patient's history involved with interpreting the studies," he said. "That's why there is a strong trend toward all specialties being involved in medical imaging."

Many kinds of physicians now rely on diagnostic imaging because of its effectiveness and versatility, said Dr. Kim Allan Williams, president of the American Society of Nuclear Cardiology. Even his daughter, a pathologist, performs fewer emergency autopsies, because CT and MR supply a definitive diagnosis while the patient is still alive.

Cardiologists practice more confidently because of nuclear cardiology, he said. A nuclear SPECT stress-rest test enables nuclear cardiologists to determine with certainty whether a patient needs angioplasty or bypass surgery. The growth rate for invasive cardiac catheterization dropped from 8% from 1999 to 2001 to -4% in 2002 because

cardiologists shifted to less costly nuclear cardiology. Cardiologists anticipate that the decline in catheterization use will accelerate as new MR and multislice CT technologies come online.

"This is a complete change in the way we practice medicine, because imaging gives you much more information about how to manage patients than you had before. And it becomes an addiction," Williams said.

An ACC-sponsored public opinion poll indicates that consumers strongly prefer having their medical imaging performed in a physician's office because it is more convenient and does not require a separate appointment or a wait for final results. They were equally adamant that consumers should be able to have their imaging done in a specialist's office. Individuals queried in a focus group reported feeling more comfortable with their own doctor than with an unfamiliar technologist.

A 2005 study by the Lewin Consulting Group, also financed by ACC, conceded that self-referral and utilization growth are linked, but it criticized previous studies for not examining the appropriateness of imaging services provided by self-referring physicians. The study concluded that estimates of overutilization and the costs associated with self-referral are probably overstated, and the higher utilization of imaging services by physicians who own their own equipment is at least partially due to clinical considerations and patient convenience.

So why is the ACR sticking to a position the AMA and most other professional societies oppose? According to Nissen, its stance is based on turf and the fear that radiologists are losing political control of the imaging technologies that form the basis of their practice. If healthcare quality was the central issue, more questions would be raised about the training and experience needed to competently perform procedures.

"Our position is nonexclusionary," Nissen said. "Anybody who is properly trained in performing and interpreting a study should be able to do such a study."

But if the key issue was turf, the ACR would not want to reduce utilization; it would want to shift that utilization to radiologists, Borgstede said. The ACR's definition of quality encompasses control of inappropriate utilization.

"If that affects radiologists or nonradiologists, so be it, but we are trying to control the growth," Borgstede said.

Numerous peer-reviewed studies since 1989 have repeatedly shown that self-referral increases utilization, said Dr. Alan Kaye, radiology chair at Bridgeport Hospital in Bridgeport, CT.

"Physician practice patterns affect the way they order and perform procedures, and they also have a significant negative impact on those of us who do all types of imaging, not just the types that make money," Kaye said.

No radiologist has been as persistent and productive in monitoring Medicare utilization trends as Dr. David Levin. The emeritus chair of radiology at Thomas Jefferson University has amassed evidence from the Medicare Part B database showing that nonradiologists were the main contributors to the 14.4% rise in Medicare outpatient imaging from 1999 to 2003. Among radiologists, imaging during the four-year period rose 12%, about half the growth rate of nonradiologists and four times slower than the 42% growth rate for cardiologists.

Levin's research did not initially focus on cardiologists, but they have repeatedly gained his attention because they are the worst offenders, he said.

"When we got looking at the utilization patterns, it became obvious that their utilization rates are skyrocketing compared to everyone else," he said.

Private insurer data also indicate that self-referring physicians use medical imaging more often than physicians who do not self-refer. When utilization management company CareCore National evaluated its imaging database at the request of Diagnostic Imaging, it found substantial differences in the ordering rates of self-referring physicians and those who refer their patients to radiologists for imaging (Figure 7). Focusing on one private health plan's experience for four months in 2003, it found that self-referring physicians prescribed joint MRI at 2.5 times the rate of physicians who referred their patients to a radiologist. The rate for self-referring physicians was 13.1 scans for every 1000 office visits, compared with 5.2 scans per 1000 for physicians who referred to radiologists. Self-referring physicians prescribed brain MRI and general ultrasound (excluding ob/gyn exams) at least half again more often than physicians who did not self-refer.

From preliminary 2004 paid-claims data from a private insurer, National Imaging Associates, an imaging utilization management company, found variations among cardiology groups in the application of echocardiography and nuclear cardiology, despite ACC and American Heart Association guidelines that cover when they should be performed (Figure 8). The utilization rate of thoracic echocardiography varied 125% among 53 cardiology practices, according to Vic Panza, senior vice president of national network management. The average practice referred about 35% of patients receiving an evaluation and management (E&M) consultation for echocardiography. The rate varied from 1.5% to 131.8% among practices. Three low-volume providers performed echocardiography more than once on every patient, but the utilization rate was less than 20% for nine of 13 providers who billed the insurer for more than 1000 patients.

"This tells me there is little consensus among cardiologists on how to apply echocardiography. I cannot think of any clinical reason for so much variation," Panza said.

Self-referring cardiologists were more consistent when prescribing nuclear cardiology (Figure 9). The utilization rate varied from 0.82% to 21.3%, with a mean of 8.4%. And remarkable consistency was observed in the use of peripheral vascular ultrasound, a procedure most often performed by vascular surgeons (Figure 10).

"The reasons for the variations are unknown, but these procedures are performed by different types of specialists who practice in different professional environments," Panza said.


In Washington, the critics of in-office self-referral understand that legislative efforts to close Stark II loopholes permitting the practice would probably be unsuccessful in the Republican-controlled Congress. Some even fear a conservative call for the law's repeal if it reached the Congressional floor for reconsideration.

Whether Congress turns its attention to these issues at all in the current session depends on whether it is willing to produce a new Medicare bill, said ACR assistant executive director Cindy Moran. The White House opposes a new Medicare bill out of concern that such legislation would invite Congress to revisit the pending Medicare drug benefit scheduled for implementation in 2006.

The ACR is lobbying Congress to pick up where MedPAC left off in recognizing the need for quality standards. The ACR does not stand alone among the medical societies in recognizing the need for standards to define who is qualified to be compensated for MR, CT, and nuclear imaging. But the AMA does not favor the ACR's support of Medicare involvement, because it does not want federal involvement in standards setting, she said.

But that is exactly what the ACR is seeking, according to Borgstede. The society recommends appropriateness criteria that identify the clinical indications for MR, CT, and nuclear imaging, accreditation programs that enforce standards for equipment performance, and privileging criteria that define the educational standards for physicians who oversee imaging operations and interpret the images.

The ACR is examining whether it should take a stance on abusive leasing arrangements and quality measurements that would track the source and deposition of in-office imaging. The college is also taking the referring-physicians' position about the potential value of in-office imaging at face value. If cardiologists believe it offers patient convenience and maintains consistently high quality, they should accept measurable standards to demonstrate that their claims are true, Borgstede said.

The ASNC's Williams agrees with Borgstede's quality initiatives.

"As soon as he is talking about quality, he and I see eye to eye. But if it is about turf and saying without supporting data that this growth is inappropriate, that's where I have a problem," Williams said.

The ACC is committed to the appropriate performance of imaging as it is defined by specific guidelines, Nissen said. Appropriateness criteria written and enforced by medical societies can eliminate inappropriate imaging.

"We are absolutely committed to training our membership on how to do these procedures and do them well," he said.

Nissen regrets failed attempts at rapprochement between radiologists and cardiologists, including an unsuccessful attempt to negotiate a joint statement of principles between the two organizations.

"Having either a radiologist or cardiologist performing procedures can be good for patients, if the physician is well trained," Nissen said.

In-office imaging is redeemable, according to some radiologists. Borgstede, however, sees a continuing impasse.

"When there is this financial motivation for a nonradiologist to do imaging, there is an inherent ethical problem and conflict of interest between the patient's best interest and the physician's financial interest," he said.

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