The Centers for Medicare and Medicaid Services has been cutting reimbursement for radiology services since the Deficit Reduction Act in 2006, he says, with reimbursements for some studies declining by 50 percent since the act and six subsequent CMS cuts.
Add to that declining volume-the Medical Imaging and Technology Alliance estimates that studies were down 3 percent in 2010 among Medicare recipients, and a utilization study by the Health Care Cost Institute found a 5.6 percent decrease in radiology services utilization for private insurers in 2010.
Those declines are in part due to the recession, in part to the rise of non-invasive surgical procedures which no longer require as much imaging, Allen says. Regardless of the cause, you have the elements of fiscal uncertainty. "There is full employment in radiology," he acknowledges. "The American College of Radiology data show the same number of people retiring as graduating. But the idea of getting five job offers in your hometown after residency is not happening anymore. Radiologists cannot be picky about where they work." Not only that, Allen says that in the rapidly emerging quality and outcomes-conscious era of accountable care, radiologists will have to assume a new role-one wrapped around assuring appropriate utilization, rather than just churning out reports at the behest of referring physicians.
The changes are reverberating throughout the imaging industry, experts say. Many radiologists say they feel like they're in the crosshairs of payers, which often see imaging as an expensive line item that's prone to over-utilization. In addition, the rise of accountable care organizations also puts radiologists in a tenuous financial position as they struggle to gain at a voice at the table when it comes to administering new ACO reimbursement models such as bundled payments.
Radiology is an I.T.-rich environment. Digital imaging has all but replaced film, and picture archiving and communications systems have become the norm and have streamlined image gathering and report writing. But the next big I.T. wave hitting radiology will incorporate more decision support tools, data analytics and perhaps even personal imaging records as the industry transitions away from fee-for-service to outcomes-based pay.
Intense scrutiny
"Imaging is under intense scrutiny and there is a high degree of pressure from the cost and quality perspective," says Rita Numerof, a St. Louis-based consultant who advises payers, hospitals and device manufacturers. "The general belief is that there are too many procedures, and a lot of these are surgical. And whenever you have surgery, you have imaging." Payers, she contends, believe that "too much imaging is being done that is not medically necessary." Wrap that around concerns over radiation exposure (see cover story, page 20), and the challenges to imaging medical necessity will only grow-particularly as patients increasingly foot a larger share of the bill. "We are just seeing the tip of the iceberg," Numerof says. "The consumer will be less inclined to get an MRI or CT."
Payment reductions in the fee-for-service world are already having an impact on imaging practices. "Imaging is in the line of fire because it is easy for CMS to tackle," says Chad Wiggins, CEO of Radiology Associates of Northern Kentucky, a 32-physician group practice based in Crestview Hills that performs some 600,000 annual studies on behalf of eight hospitals that comprise St. Elizabeth Health Care and one smaller, stand-alone community hospital. The group offers both diagnostic and interventional radiological services needed by referring physicians at the hospitals.
The economics of imaging have come to rankle Wiggins. "One of the biggest points of contention I have with CMS is the talk about over-utilization-it is completely inaccurate," he says. "The radiologist is not the referring source. We are the recipient."
CMS price cuts have hit the practice deeply. Two years ago, CMS altered its reimbursement policy on CTs of the pelvis and abdomen, combining the formerly separate services into a single, reduced fee. "It comes back as one study, but the doctors would interpret them as separate studies," Wiggins explains. The new policy dinged the practice at about $388,000 in reduced annual revenue, Wiggins says. "It was not an elegant approach to cost reduction. It was a hatchet approach. But it saved a significant amount of money. Our fear is that we will continue to see Medicare combine procedures."
The rise of consumer-driven health plans is another challenge facing the imaging sector. "Our patients are more savvy," Wiggins says. "They have high-deductible health plans and they do the research to determine cost. We used to get two to three patient calls a week about costs, but now we're getting two or three calls a day."
Highly varied consumer-driven health plans are a thorn in the side of Jeff Ronner, chief financial officer at Shield Health Care Group, a Quincy, Mass.-based provider which runs 25 imaging centers across the state, providing some 200,000 annual procedures, mostly MRIs, on an outpatient basis. "We really need simplification," Ronner says. "Every self-insured company has its unique plan. We used to pick up a Blue Cross plan and it was fairly generic. Now every plan is different."
Beyond that, Ronner says that collecting patient co-pays and deductibles is a major challenge for the practice. "We're trying to collect small amounts from a lot of people, and when we can't do that the write-offs can be pretty staggering."
For radiology practices, trying to squeeze out more revenue via increased productivity might not have huge payoffs. CEO Wiggins says that while Radiology Associates of Northern Kentucky might be able to boost physician productivity somewhat, the practice, like many of its peers, has already made its large productivity gains, in large part due to the efficiency of the PACS set-up in place for the vast majority of its imaging studies. The practice doesn't own the PACS, but uses an enterprise system maintained by St. Elizabeth Health Care. "We do two hours turnaround on reports," Wiggins says. "Our emergency department studies are done in less than 30 minutes."
