GAO Recommends That Medicare Require Prior Authorization for Medical Imaging Services at Physician Offices

Medicare spending on medical imaging increased to $14 billion from 2000 to 2006, and CMS should require prior authorization for imaging services to discourage physicians from ordering the tests for personal profit rather than patient benefit, according to a Government Accountability Office report released Monday, CQ HealthBeat reports (Reichard, CQ HealthBeat, 7/14). The review of medical imaging payments was requested by Senate Finance Health Subcommittee Chair Jay Rockefeller (D-W.Va.) and Senate Committee on Aging ranking member Gordon Smith (R-Ore.), who expressed concerns that Medicare payment cuts made by the Deficit Reduction Act of 2007 may have been too severe.

GAO found that the portion of Medicare spending for imaging services provided in physician offices increased from 58% to 64% between 2000 and 2006, while the percentage of spending on hospital imaging declined from 35% to 25%. The report stated, "The shift in imaging services to physicians' 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" (Edney, CongressDaily, 7/15). GAO said that spending on advanced imaging -- such as CT scans, MRIs and nuclear medicine -- "rose substantially faster than other imaging services, such as ultrasound, X-ray and other standard imaging."

In addition, the report stated, "In-office imaging spending per beneficiary varied substantially across geographic regions of the country, suggesting that not all utilization was necessary or appropriate" (CQ HealthBeat, 7/14). GAO noted that there was nearly an eightfold difference in in-office spending per beneficiary across the states, from $62 in Vermont to $472 in Florida (Rubenstein, "Health Blog," Wall Street Journal, 7/15).

The report also reviewed 17 private health plans and found that costs typically decreased from between 10% and 20% to less than 5% after prior authorization for medical imaging was required (CongressDaily, 7/15).

HHS questioned the findings related to private plans, suggesting that decisions by radiology benefits managers -- who are hired to control imaging costs -- could be "based on proprietary systems, the use of which could be inconsistent with the public nature of the Medicare program." HHS added that "it does not appear that GAO conducted any independent reviews of the methodology or data used by plans to determine that the use of RBMs was successful or the manner in which RBMs make their prior authorization determinations." Medical imaging suppliers said prior authorization would result in beneficiaries losing access to needed medical scans, while RBMs praised the report, CQ HealthBeat reports (CQ HealthBeat, 7/14).

The report is available online.