Massachusetts and Health-care Reform: The Radiology Experience

While the fate and integrity of the Patient Protection and Affordable Care Act (PPACA) are likely to be clarified in this highly polarized presidential-election year, Massachusetts continues along a path (begun 5.5 years ago) to reform its health-care system under a law that shares many of the hallmarks of the PPACA—including the controversial individual mandate to buy insurance currently before the Supreme Court. Jonathan Kruskal, MD, PhD, chair of radiology at Beth Israel Deaconess Medical Center (BIDMC), Boston, provided a guided tour through that journey on December 28, 2011, at the annual meeting of the RSNA in Chicago, Illinois. His riveting presentation, “Health Care Reform: What Does It Mean for Radiology,” paid particular attention to the effects of reform on radiology. Kruskal notes that the health-care crisis is coming down to two monumental issues: providing access to high-quality care and controlling costs. “We, in Boston, will be fortunate to have had seven years of experience already when the PPACA comes into effect in 2014,” he says. “We are very much in it right now, experiencing it on a daily basis.” Since the state’s reform law was enacted in 2006, it has widened access to care, but cost continues to be an issue, with Massachusetts and Vermont leading the nation in the average monthly cost of individual health insurance, in 2010, at double the national average (at $400 per person).¹ Another issue that received considerable media coverage in 2010—and attracted the attention of government officials—was the wide price differential among hospitals in Massachusetts. “Within Boston alone, there is sometimes a threefold price difference for every type of service, including imaging services,” Kruskal acknowledges. The law established an independent public authority, popularly known as Health Connector (see figure), to act as an insurance broker that offers private plans to residents through a Web service that enables residents to do comparison shopping for individual health-insurance policies and specific medical services. Kruskal reports that costs for gall-bladder removal at various Boston-area hospitals range from $7,000 at Quincy Medical Center to $12,500 at Massachusetts General Hospital. The same comparison can be made for MRI, CT, or any other service. For patients attempting to reduce their copayments and deductibles, he notes, “It’s all there on the Web to help you make your decision to reduce your health-care cost.” A Race to the Bottom In June 2010, Martha Coakley, Massachusetts attorney general, issued a report^2, that found that spending for private health insurance in Massachusetts had climbed 6% from 2007 to 2008 and 10% from 2008 to 2010, significantly outpacing the national averages of 4.9% and 4.6%, respectively. “Not only were the premiums the highest in the nation,” Kruskal recalls, “but health-care costs were outpacing the nation’s. In fact, per-person health spending in Massachusetts was 15% above the national average.” The report also contained some sobering data on imaging services covered under MassHealth (Medicaid): Nationally, spending on diagnostic imaging for the privately insured grew at an average rate of 10% annually from 2007 to 2009 (when spending reached $1.3 billion); Medicare-covered spending increased 2% from 2007 to 2008 (reaching $451 million); but MassHealth-covered spending on diagnostic imaging increased 27% from 2007 to 2008 (reaching $113 million). “These are huge numbers, and they certainly have grabbed the attention of politicians,” Kruskal notes. “They are absolutely determined to reduce the cost of imaging services.” Just weeks prior to the 2011 RSNA meeting, Coakley outlined a three-pillared plan³ to help contain the state’s health-care costs. First, providers of health-care services would be required to disclose the full amount that consumers could be liable to pay. “If you are going to give a CT scan, there, on the wall, it must show you how much it’s going to cost,” Kruskal says. Second, when a provider reaches a certain level of market clout, it would trigger a market review. Third, if the market has not corrected unwarranted price variation by 2015, the administration would be able to reject contracts with too much or too little price variation. In response, health journalist Philip Betbeze writes, “The future of health care looks increasingly like a race to the bottom on pricing.”⁴Kruskal explains, “This is what we, as an imaging department in Boston, are increasingly experiencing on a daily basis. The government and the attorney general are determined to start cutting the cost of health care, and right up there in health care are all imaging services.” The Massachusetts Plan Former Massachusetts governor W. Mitt Romney’s bid for the Republican presidential nomination (coupled with the fact that President Obama used Romney advisors to develop the PPACA) has resulted in a heightened interest in Massachusetts health care. Kruskal offers a brief summary of the Massachusetts health plan. A cornerstone of the plan is Health Connector, an electronic exchange that enables individuals to compare prices for health care. Blue Cross Blue Shield and Tufts are among the many companies that have signed up to offer competitively priced health-care products. Consumers also can shop for an MRI exam of the brain, and if the provider has ACR® accreditation, then its quality score would be high. “Patients are looking at this, and when they do come, they come because they know what it’s going to cost them,” Kruskal notes. The introduction of the exchange has had a significant impact on market dynamics in Massachusetts, and BIDMC has seen patients previously covered by Blue Cross Blue Shield move to plans offered on the exchange because the prices are lower and the coverage is better. Many state workers, including teachers and police, also are moving to these plans. “The number of patients moving has been large, and they are all going to these competitively priced plans, across the state,” Kruskal says. At the same time, unemployed patients are moving to the free plan, and hospitals are no longer reimbursed by the state for serving the poor (which amounted to several million dollars for BIDMC alone). “Has this been successful?” Kruskal asks. He cites a 2011 poll,5 conducted by the Harvard School of Public Health and the Boston Globe, which found that 63% of residents favor the plan. “Break it down into political groups: 77% of Democrats like it, 60% of independents like it, and 40% of Republicans like it—which is interesting, because it is actually a Romney plan,” he adds. The effect, in aggregate, is that 98% of the residents of Massachusetts have health insurance, and the highest growth in the past three years has been among unemployed adults, Kruskal reports, driven by the economic downturn in the state. Massachusetts has resolved the problem of covering more patients, but health-care costs have continued to rise. “Our governor has been quite clear that he wants to revamp the way physicians and hospitals are paid radically,” Kriskal says. “He wants to pay us for taking care of patients and keeping them healthy, rather than for what we actually do.” Late last year, the state secretary of Health and Human Services directed a subcommittee to explore moving 95% of the state’s health care to global payments within the next five years. “In my own experience, when they attempt to do something, they seem to succeed,” Kruskal says. Markets Reverberate Massachusetts health-care reform not only has brought health-care pricing into stark relief, but also has triggered a wave of consolidation, the introduction of strong for-profit competitors, and a proliferation of provider health plans. “There is a furious consolidation of hospitals taking place in Boston. I’ve never experienced anything like this,” Kruskal observes, identifying Partners HealthCare and Steward Health Care as the two most active players. “Steward didn’t exist a year ago,” he says of the new 800-pound gorilla on the Massachusetts health-care scene. Owned by a New York venture-capital group, Cerberus Capital, it now has many member hospitals in and around Eastern Massachusetts, it is offering high-quality care and insurance discounted by 20% to 30%, and it is sending its patients to Partners HealthCare for surgery and care, if needed. Late last year, Steward bought a 150-physician IPA formerly associated with BIDMC to accommodate primary-care visits, costing BIDMC 25,000 covered lives. Tiered programs and narrow network plans are flourishing all over the state, Kruskal reports. Customers get breaks on premiums by agreeing, in advance, to go to certain physicians and hospitals. One Blue Cross Blue Shield plan specifies 15 high-cost hospitals to avoid, and if patients don’t do so, they will pay (for instance) an additional $450 out of pocket for an MRI exam. The narrow networks have significant implications for hospital—and imaging—referral patterns. Kruskal reports that a letter was sent to all BIDMC physicians by Blue Cross Blue Shield advocating that patients be sent to freestanding laboratories and outpatient imaging providers, where they would receive more affordable care at greater convenience. Two days later, a letter from the Beth Israel Deaconess Physician Organization arrived; it stated that the group had signed an agreement for outpatient laboratory services with Quest Diagnostics, which meant that patients who made outpatient visits to primary-care physicians associated with the hospital would no longer be referred to the hospital for testing. Kruskal reports that Shields Health Care Group, with 31 imaging sites in Massachusetts, has approached the hospital’s physician organization about offering considerably lower-priced CT and MRI exams to BIDMC patients. “This is what the physicians want to do, and this is what the patients want to do,” Kruskal says, “so things are moving very, very rapidly in Eastern Massachusetts.” Providers also are launching their own plans. Massachusetts General Hospital, Brigham and Women’s Hospital, and several other hospitals have created the Neighborhood Health Plan, which will give them an additional 240,000 covered lives. Boston Medical Center has also entered the fray, with a new HMO. Shared Savings and Costs Massachusetts providers are getting a taste of shared savings, a cornerstone of the federal government’s accountable-care organization (ACO) program. In December 2010, BIDMC signed an alternative quality contract with Blue Cross Blue Shield, under which the hospital’s physicians agreed to try to keep care costs under specified targets, in exchange for an opportunity to share equally in the savings with the insurer. “What wasn’t mentioned up front, however, was that any budget surplus would go to the primary-care physicians,” Kruskal reports. “As much as we, as radiologists, could minimize unnecessary imaging, any benefit that comes out of that, financially, is directed to the primary-care physician.” Kruskal acknowledges that any service that occurs benefits radiology, and speculates that the ability to manage utilization could result in rate increases, as well as an opportunity to prevent patient leakage out of the hospital system. It also entails a much greater alignment among caregivers. “This means we have to work very, very closely with our primary-care physicians,” he says. There were, however, costs associated with participating, including costs incurred to administer the utilization program. The radiology department had to hire 15 nurses, and income dropped as a result of reducing volumes in CT, MRI, and PET by 11%. Putting a dollar amount on savings was a key strategy in reducing utilization, Kruskal says. Ordering physicians received monthly reports on the cost of their imaging orders, linking progress to the dollars at risk. BIDMC also distributed a one-page list of 56 common tests and procedures with their prices, further raising awareness of the cost of care. Unfortunately, 11% was just shy of the 12% target specified in the alternative quality contract. Kruskal says, “Guess what: If you don’t hit your target, there is a big fine, and our physicians had to contribute to paying this $2.5 million fine because we didn’t reduce imaging enough.” The experience, however, is likely to be helpful as BIDMC physicians prepare to participate in the government’s pioneer ACO program, as one of 33 groups selected nationwide. “We have no idea what pioneer ACOs are and how this will affect us,” Kruskal says. What he does know is that it will be provider led, with a focus on delivery systems (not health plans). Many health-plan functions will be moved to the delivery system, and payment will be based on outcomes, not services. Physician alignment will be critical, but how the program will affect the hospital is a big question mark. “This pioneer ACO is not with our hospital; it is with our physician groups, which is a whole new ball game,” he says. The cost of administering the program—and financing the requisite IT purchases—is another unknown. The Impact on Radiology Kruskal addresses the effect that Massachusetts health-care reform has had on radiology, given the long-standing mandate to improve value to patients while maintaining quality and reducing cost. “You have to look at this from two perspectives. How is this going to affect academic medical centers, as well as the larger imaging audience of private practitioners, hospital-based radiologists, and those working for larger groups?” Kruskal says. “Each of these is going to be affected to different degrees.” Volume reductions are a certainty. Kruskal reports large volume reductions in the past year or two due to utilization management and patient leakage to low-cost providers. He is projecting greater volume reduction for 2012 and beyond. Funds flowing from the hospital to the radiology practice have also gone down, and with them, the department’s ability to support research and provide critical services that it is required to provide. “Grant support is down, institutional support is down, and now, our medical school has given us a target of $218 per square foot we have to hit in order to keep our research space,” Kruskal reports. “In 2011, we had to give up 3,500 square feet of research space because we couldn’t hit this target. We had some very well-funded departments that were just sitting there waiting to take our space, so it has become a very competitive market: Whoever gets the grant money gets the space, and our school is no longer supporting that space.” Price sensitivity is also a major issue, fueled (in part) by aggressive marketing campaigns directed at patients by low-cost, high-quality providers. Kruskal reports many calls from primary-care physicians and patients who want to know the cost of an imaging procedure. In general, less-acute cases are being pushed to the community, where the care is cheaper and more convenient—and for the first time, academic institutions are feeling great competition from for-profit providers. A positive result of declining reimbursements in Boston is that it has inspired conversation among physicians about joint ventures. “For the first time, we, as a group of physicians, are going to talk seriously with others about what kind of options we have for joint ventures, so that we can try to deal with this together and try to match what is happening out in private practice with some of these low-cost providers,” Kruskal reports. Bent Cost Curve and Mission Another positive result, from the state’s perspective, is that all of these developments finally have resulted in something that has eluded policymakers since reform was launched: A study⁶ released by the Commonwealth Fund in 2011 reported that the average cost of Massachusetts health-care premiums had declined. “We’ve finally fallen from being at the top, in health-care costs, to being ninth in the country,” Kruskal reports. “Health-care costs are being reduced in Massachusetts, while simultaneously going up in other states.” As the chair of an academic radiology department, Kruskal is concerned about the impact of reform on the educational mission of the specialty. He wonders, “Are we, as a profession, still as attractive as we were?” He notes the reduced applicant pool for radiology residencies last year and the 41 positions that were unmatched nationally (for the first time in many years). He also mentions the increasing expectations of teaching without an increase in support, with $6 billion in support for graduate medical education and $680 million in federal research funding still at risk. “We are going to have to start teaching our residents about strategic planning, the Physician Quality Reporting System, and maintenance of certification. All of these are going to have to become part of the standard vernacular of all clinical radiologists,” he says. “The number of research papers on outcomes, effectiveness, and appropriateness is increasing tremendously, and this will become important, going forward.” Kruskal also is concerned about the clinical mission, in the wake of reduced FTEs, salaries, and benefits, as well as a general sense of uncertainty that prevails among Massachusetts physicians (and radiologists, specifically). “Massachusetts isn’t the state with the lowest cost of living, so salary and benefit reductions in Massachusetts have certainly had their impact. The financial viability of academic medical centers has been questioned, for the first time. A lot of our information is being shared with people developing joint ventures or determining how much we should be paid. At our own institution, the physicians are literally waiting to see who we are going to be in business with,” he says. Kruskal is seeking appropriate measures of productivity for clinical and academic work in this new environment, as well as the success factors and skills that radiologists will need to thrive. Flexibility and a willingness to be helpful are among those requisite skills, he believes. Radiology’s Marching Orders In Kruskal’s experience, flexibility and the ability to respond to change might be the most important skills for the future. Radiology also must become more patient focused, must find ways to reduce charges in the inpatient setting, and must explore joint ventures with a variety of partners. “We have to be ready to mount a nimble response to change,” he advises. “We also need to recognize that accurate and timely market and financial data—all of the data that we have—now need to be used to forecast and monitor change, and to model the impact and response.” This will require new modeling tools that will incorporate the standard measures of productivity and financial data and will enable leaders to use the data in new ways to measure and forecast both the impact of change and the response to it. Kruskal notes that the ACR and the RSNA have long recognized the need for the face of the radiologist to be seen by more health-care stakeholders. The time has come for radiologists to embrace that sea change. “We’ve got to become patient focused,” Kruskal says. “I wish that when our hospital entered into an alternative quality contract, we had been invited to the table. We needed to be there to say, ‘Why are you going with a 12% reduction? We’d settle for 5%, but why don’t you have us work as consultants to help reduce imaging utilization?’ We need to get radiologists to the table to help with these imaging problems.” Kruskal has been charged, by his hospital, with trying to eliminate inpatient imaging. The challenge is to take cost out of individual DRGs by shifting as much imaging as possible to the outpatient setting. This attempt is being made using decision-support tools; inpatient imaging costs are also being reduced by taking a close look at the number of scanners, technologists, and faculty needed, as well as how often a contrast agent is used (and the size of the dose). “We’ve got to reduce charges. There is no doubt about it,” he emphasizes. “The for-profit groups are at much lower cost levels than we are. We need to try to do this, and we need to look at joint-venture options.” Kruskal advises his colleagues to be proactive about imaging utilization management. “We don’t control the volume of our studies right now; that is done by the ordering physicians, but we can work with them to order the appropriate studies,” he notes. “Rational utilization actually can be achieved.” The key, he says, is to reiterate the role of imaging in reducing surgical procedures, facilitating diagnosis and care, and saving lives. “We need to keep pushing the basic idea: Appropriate imaging utilization provides tremendous value today,” he concludes. Cheryl Proval is editor of Radiology Business Journal.