Study refutes figures on MRI volume, profit

May 19, 1993

A year after the General Accounting Office lambasted MRI centersfor overcharging Medicare for imaging scans, a new study commissionedby the Quality Imaging Association contradicts the GAO findings. In its 1992 report, the GAO charged that centers were

A year after the General Accounting Office lambasted MRI centersfor overcharging Medicare for imaging scans, a new study commissionedby the Quality Imaging Association contradicts the GAO findings.

In its 1992 report, the GAO charged that centers were reapinghigh profits from increased scanning volume resulting from efficiencyadvances in MRI technology. Medicare rates for MRI scans weredeveloped in part by calculating a projected daily volume of between10 and 12 scans. But advances in MRI technology have allowed centersto boost volume and thus increase profits, according to the GAO(SCAN 8/12/92).

In an industry defined by 3000 magnets, the GAO findings werebased on 14 centers with 17 magnets in four states. After thereport was issued, the agency announced an immediate review ofMedicare payments and MRI charges.

"We were enraged that the GAO was studying reimbursementdata drawn from 17 magnets at 14 centers," said CherrillFarnsworth, president of TME in Houston. "We were finallytold to provide our own data if we were going to make so muchnoise."

The resulting study, conducted by the Strategic ManagementAssociation in Washington, DC, (SMA), is drawn from data from108 respondents operating 370 MR units with a proportion of fixedand mobile units typical for industry. The figure represents 12%of the MR units operating in 1992, according to the SMA.

While the GAO projected that most centers scan an average of4000 patients annually, the SMA found that very few MR units operateat that level.

Between 1990 and 1992, annual scan volumes per MR unit averaged2550, the SMA found. Scan volumes for fixed units were higherthan those for mobile, at 2900 and 1450 scans annually, respectively.

The study also found that MR centers are open 5.4 to 5.7 daysweekly and that as a result, operating costs per MR unit average$1.2 million annually. A baseline estimate of average cost-per-scanranged from $480 to $493.

The cost-per-scan reported in the SMA study is significantlyhigher than the $390 per scan estimated by the GAO.

The SMA found that average technical charges collected perscan are about $600. Mobile sites average $564 per scan and fixedsites $618. Medicare typically pays between $276 and $485 forMRI scans, depending on locale and practice costs.

With a slowdown in scan volume growth, the increase in managedcare contracting and lower reimbursement rates, the profitabilityprojections for MR are depressed, the SMA noted in its industryassessment that accompanied the study findings.

"MR providers fear that misconceptions of policy-makersmay result in further reimbursement cuts that could put a largesegment of the industry at risk," the group added.

Farnsworth, who discussed MRI economics at the Society forMagnetic Resonance Imaging meeting in March, said the study findingswould be submitted to the health care task force chaired by HillaryRodham Clinton.

"The findings reflect what I'm seeing in my company regardingcosts, and that's good news," she said. "What it saysloud and clear to the task force is that you will not be ableto cut reimbursement by 30% and get quality MRI services."