If You Have to Ask the Price… Radiology

One can certainly get a subsidized rate for the medicines they seek, through a pharmacy coupon. But what if I tell you there’s a way to reduce the cost of healthcare in the US by $100 million? There is. “What is it?” you ask. Read on.


As a result of some work projects, I subscribe to a couple of e-mail newsletters about radiology. One targets radiologists, while the other aims at the people (like me) who build solutions for those medical professionals. Usually I’m too busy and delete the messages without reading them, but every so often I’ll dig in a little to find out what’s coming down the road that we might need to respond to. There rarely is anything, but I find the behind-the-scenes view of healthcare fascinating.

The two biggest nontechnical issues that keep coming up are (1) shrinking reimbursement rates, and (2) increased utilization of an ever-growing number of expensive scanners. MRI and CT machines can cost in excess of $3 million each, and there’s a desire to push lots of patients through them to recoup the cost. The US federal and state governments (through the Medicare and Medicaid programs) try to rein in the unnecessary use of these devices. And a lot of private insurers follow the federal government’s lead when it comes to the rate that they will reimburse imaging clinics and radiologists. (Remember, only suckers—and the uninsured—pay the full “asking price” of medical care.)

It’s a huge problem. The radiologists feel squeezed, being asked to do more work with less money coming in for each case. The hospitals feel like they’re caught up in an arms race with each other to have the “best” equipment and with smaller imaging clinics which use older, less costly equipment and have higher reimbursement rates because they see more patients with private insurance. And patients (god bless us) don’t really know which imaging procedures we need or which imaging providers are the most cost-effective. When we’re feeling sick (or worse) and the doctor says to get a chest X-ray—and BTW here’s where to go to get it—we don’t really call around for the best deal. We just do what’s recommended.


One recurring theme is physician self-referral for radiology services. What’s that? Here’s how a 2002 article in the American Journal of Radiology described it:

Self-referral takes two principal forms. A physician who is not an imaging specialist (or a nonphysician provider, such as a podiatrist or chiropractor) directing patients to his or her own on-site imaging services was the first form of self-referral. Common examples are obstetricians (or their staff) performing sonographic examinations, internists performing and interpreting chest radiography, and orthopedists performing and interpreting musculoskeletal radiography. We include in the concept of self-referral all radiologic imaging done by nonradiologists because the financial incentives are the same regardless of whether a particular type of imaging is predominantly done by nonradiologists, which may affect its quality. The second form of self-referral consists of physicians referring their patients to outside facilities in which the physicians have a financial interest. This second form, which is often called “joint venture” self-referral, has been targeted by federal legislation with respect to services for Medicaid and Medicare patients. Some states, but far from all, have similar legislation applying to non-Medicaid and non-Medicare patients. Because coverage by legislation is incomplete and arrangements exist that attempt to avoid the effects of legislation, we include this form of self-referral in this review.

A host of claims, both positive and negative, have been raised regarding self-referral. The most prominent concern is that inherent conflicts of interest stimulate excessive utilization of health care services and thus generate excessive costs. Quality of patient care, access to services, and patient safety can purportedly be compromised because financial interest might dilute norms of care and quality assurance. Physicians who refer patients to their own services on-site are nonradiologists. Arguments are made that such physicians are generally less qualified because of a lack of relevant training and experience; order more, and more inappropriate, procedures; produce images of poorer technical quality; and are more prone to errors of interpretation than are radiologists. Self-referring physicians’ facilities may have poorer quality control of equipment maintenance, calibration, and film handling. Similar concerns are raised regarding referral to an outside facility in which the physician has a financial interest, with particular focus on higher utilization, poor access to services by underserved populations, and inadequate quality control.

Proponents of self-referral to a physician’s own on-site services argue that such self-referral is convenient for patients and physicians. Proponents maintain that some problems such as a fracture should receive imaging and treatment at a single office. Proponents also say that quality of care can be better in self-referral settings because the treating physicians are better qualified to interpret diagnostic tests relevant to their specialties and have better insight into the specific patient’s problem. Furthermore, physicians may commit diagnostic and related treatment errors as a result of foregoing tests when referral to a radiologist is inconvenient. Access to care for underserved geographic areas might be better with self-referral because of the greater availability of financing for imaging facilities. Finally, economies of scale and the presence of physician owners who are familiar with the patient and his or her financial limitations may help control costs

Okay, that’s what it is. But is it bad? Yes, says the same article:

In short, self-referral constitutes most of nonhospital radiography and sonography and results in utilization and costs usually two or more times as high as in its absence, with overutilization likely; and self-referral generally involves poorer quality.

And this is where the $100 million figure comes into play. The radiologist-focused AuntMinnie.com site reported last week that

A new report from the U.S. Government Accountability Office (GAO) takes a hard line on physician self-referral of imaging services, detailing more than $100 million in annual unnecessary spending in CT and MRI alone. The report recommends steps to curb the practice, including a pay cut for self-referred imaging studies. . . .

The report estimates that in 2010, healthcare providers who self-referred likely made 400,000 more referrals for advanced imaging studies than they would have if they were not self-referring, and these referrals probably cost Medicare $109 million. The referrals are particularly problematic for CT, as they are exposing patients unnecessarily to ionizing radiation.

The report makes several recommendations to help the U.S. Centers for Medicare and Medicaid Services (CMS) identify and rein in self-referred imaging studies:

  • The CMS administrator should insert a flag to identify self-referred imaging studies on Medicare Part B claims forms. Providers should be required to indicate whether the services for which they are billing are self-referred.
  • CMS should implement a payment reduction for self-referred advanced imaging studies to recognize the efficiencies that occur when the same provider refers and performs a service.
  • CMS should develop tools for ensuring the appropriateness of self-referred imaging services.


That $100 million is just what taxpayers kick in for Medicare. The overall impact to the health care system would be much larger if the changes could be applied to people with private insurance, too.

This entry was posted in Health Care, NaBloPoMo, NaBloPoMo 2012. Bookmark the permalink.

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