Medicare spending on imaging services has risen 50% in the past 5 years, versus a 30% rise in overall Medicare costs.
is the Editor-in-Chief of this journal and Professor of
Radiology, Diagnostic Imaging Department, University of Maryland
Medical Center, Baltimore, MD.
While lying around the swimming pool on a recent vacation, I
noticed a section of the day's
New York Times
on the next chaise lounge. Picking up the paper, I was immediately
attracted to an article with "MRI" in the title: "An M.R.I. Machine
For Every Doctor? Someone Has to Pay"
by Reed Abelson. As I read the article I could feel my sedate mood
begin to evaporate.
The article related that a large number of private physician
practices in Syracuse, NY, including neurologists, orthopedic
surgeons, and cardiologists, among others, had been purchasing MRI
machines in their group practice offices. In the 5 counties
surrounding Syracuse, there were 27 MRI units-up from 20 in 2001.
What was most interesting was that the use of MRI was two-thirds
higher in Syracuse than in nearby Rochester and higher than the
national average. In the article, a chief executive of National
Medical Associates of Hackensack, NJ, John J. Donahue, stated,
"There tends to be more self-referral in the Syracuse market." In
addition, in New York state, hospitals and licensed centers must
petition for imaging equipment through certificate-of-need laws,
while those who place machines in their offices have no such
One argument made by the nonradiologist "entrepreneurs" is that
they are offering a convenient service to their patients, who need
not travel elsewhere to have their studies done but can have them
done right away in the office. Local radiologists are troubled by
the potential conflict arising from doctors making money from every
test they recommend, rather than performing studies only on
referral from other physicians.
The article went on to note that Medicare spending on imaging
services has risen 50% in the past 5 years, versus a 30% rise in
overall Medicare costs. The article also reminds the reader that
the while the Stark Law forbids doctors from sending patients to
imaging centers or labs in which they have a financial interest, it
does not affect physicians who own and operate imaging equipment in
their offices. Excuse me, isn't there something wrong with this
An article by Maitino et al
in 2003 reviewed radiologist and nonradiologist utilization of
noninvasive imaging from 1993 to 1999 using Medicare part B claims.
They showed that over the study period there was a 3.9% decrease of
imaging procedures charged by radiologists and a 25.2% increase in
charges by nonradiologists. The relative value unit rate increased
6.9% for radiologists and 32.4% for nonradiologists during the
6-year study period. There was a reduction in the overall
percentage of noninvasive procedures performed by radiologists from
73.0% to 67.4%.
Several weeks after I read this article, I was a Visiting
Professor at Rhode Island Hospital, Providence, RI. I spent a
wonderful evening with two of their distinguished faculty with some
very thought-provoking dinner conversation. One of my hosts
described the situation of shifting imaging procedures as "the
perfect storm." First, there was the ample opportunity for
nonradiologists to purchase or lease high technology imaging
equipment from the same vendors that radiologists use, although
probably from different sales forces. Second, there was the
development of a mature PACS and teleradiology technology allowing
easy outsourcing of images for radiologist interpretation at some
set fee, or perhaps only the referral of selected "tough" cases.
Third, there was potential for nonradiologists in their offices to
collect both the technical and professional components of
reimbursement from a volume of cases they controlled-a rather
strong incentive to do a lot of self-referring, as exemplified by
the Syracuse article.
So who are the losers and who are the winners in this new
paradigm? Major hospitals who do not "partner" with such practices
will clearly see their outpatient and some in-patient imaging
procedures disappear along with a variety of other medical
procedures. The hospitals would probably retain the uninsured and
poorly insured patient base in these areas. The radiologists would
lose many of their referrals to both their referring physicians'
offices and hospital-based practices. The equipment vendors will
gain by selling more high-end products and increasing competition
for more and better equipment. The group practices using the
equipment in their offices will gain income, at least in the short
term. The patient will win by having the convenience of
"down-the-hall" studies, but may lose due to less skilled
interpretation, eventual insurance cost increases, and the
possibility of undergoing a not quite medically necessary imaging
procedure. The real losers may ultimately be all physicians who do
not have their own high-tech imaging equipment as reimbursements
are slashed across the board for the more mundane services like
office visits needed to offset the rapid rise in the size of the
imaging piece of a nongrowing pie.
It seems that the Stark Law left a glaring loophole that leaves
a large potential for self-referral and abuse in the performance of
imaging studies. The only people who can fix this are in the local,
state, and federal governments. Self-referral in all forms is an
invitation for excess use and added cost to the payers. The
American Hospital Association has a lot of members who stand to
lose a great deal, if not the whole farm. The American Medical
Association may eventually find some of its members left out in the
cold with a re-appor-tioning of dollars into imaging procedures,
the fastest growing component of the national medical bill. Some
nonradiology practices, with their high-end imaging technology,
will acquire a local competitive advantage over less well-endowed
groups. The American College of Radiology clearly sees the storm
clouds gathering and has felt the first drops of rain, and it is
working to educate concerned parties as to the potential turbulence
ahead. The third-party payers are going to get clobbered initially
by this rising storm, but soon everyone who pays for medical
insurance will feel it as a full-force gale.
This is not a small issue. Progressing along a predestined
course, this proliferation of imaging services so far beyond the
traditional referral patterns will create rough sailing for many of
the involved entities and will perhaps sink more than a few