In particular, spending growth on advanced imaging, such as CT scans, MRIs and nuclear medicine far outstripped that on other standard imaging services such as ultrasound and X-ray. The GAO’s analysis cites the growth in provision of imaging services in physician offices as the major driver of the spending increases.
“The proportion of Medicare spending on imaging services performed in-office rose from 58 percent [about $4 billion in 2000] to 64 percent [about $9 billion in 2006],” writes the GAO. “Physicians also obtained an increasing share of their Medicare revenue from imaging services. In addition, in-office imaging spending per beneficiary varied substantially [almost eightfold] across geographic regions of the country [from $62 in Vermont to $472 in Florida], suggesting that not all utilization was necessary or appropriate.”
In 2000, hospitals accounted for 35 percent of Medicare Part B imaging spending and independent diagnostic testing facilities for 7 percent. In 2006, these settings accounted for 25 percent and 11 percent, respectively. Radiologists accounted for a declining share of in-office imaging spending ? 36 percent in 2000 compared to 32 percent in 2006. Physicians in specialties other than radiology accounted for an increasing share of in-office imaging ? 64 percent in 2000 compared to 68 percent in 2006. Cardiologists? spending on imaging services represented the largest share of in-office imaging spending of physician specialties other than radiology, growing from about $1.2 billion to about $3.0 billion ? 29 percent in 2000 compared to 35 percent in 2006. An array of physician specialties ? including primary care, orthopedics, and vascular surgery ? accounted for the remainder of in-office spending.
The growth in spending by physicians in specialties other than radiology is partly due to an increasing proportion of these physicians billing for in-office services, the GAO reports. While still small, this proportion has grown rapidly ? more than doubling from 2000 to 2006 (from 2.9 to 6.3 per 100 physicians), and is much higher for certain specialties, such as cardiology, though orthopedics and urology also saw increases. Although physicians generally are prohibited from referring Medicare beneficiaries for imaging services to an entity with which the physician has a financial interest, there is an in-office ancillary exception under which physicians may be paid by Medicare, for example, if the services are provided by the referring physicians in the same building where the physicians provide other services unrelated to the furnishing of imaging services.
However, “the shift in imaging services to physician offices has the potential to encourage overuse, given physicians’ financial incentives to supplement relatively lower professional fees for interpretation of imaging tests with relatively higher fees for performance of the tests,” writes the GAO. “Physician ownership of imaging equipment can generate additional revenue for a practice, even after taking into account the high costs of purchasing advanced imaging equipment. MedPAC has expressed concern about whether Medicare?s payment methodology overpays physicians for imaging equipment, because of outdated estimates of equipment use. An analysis published in 2005 of private insurance claims data on X-ray services concluded that orthopedists, podiatrists, and rheumatologists were two to three times more likely to order imaging services if the ordering physician also performed the examination, compared with those who referred patients to a radiologist. In addition, the authors found that podiatrists and rheumatologists were also more likely to order more intensive tests. Another study showed that physicians who refer patients for imaging in their own office are at least 1.7 to 7.7 times more likely to order imaging than those physicians in the same specialty who do not self-refer.27
As a result, the GAO says it is concerned about incentives for inappropriate use of imaging services, as well as how the “shifting of services from hospitals to physician offices may impact quality.” Based on an analysis of private payor models for approving and reimbursing for imaging services, the agency recommended that CMS examine the feasibility of expanding its payment safeguard mechanisms by adding more front-end approaches to managing imaging services, such as privileging and prior authorization.
