The perfect storm

By Stuart E. Mirvis, MD, FACR
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Dr. Mirvis 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" 1 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 restrictions.

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 picture?

An article by Maitino et al 2 in Radiology 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 ships!

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The perfect storm.  Appl Radiol. 

June 04, 2004

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