The New Economics of Contrast

Contrast is the number-one consumable in the radiology department, and its use is being driven by efficiency, safety, and reimbursement concerns Not too long ago, prices for contrast media could get a radiology director’s pulse racing. Now, that pulse is fairly steady, even though the flow of contrast is building all the time. Contrast, in fact, has become a billion-dollar market. It’s not a market in which there are big price swings, but that doesn’t mean that there are no savings to be had. Mervyn D. Cohen, MD, a pediatric radiologist at the Riley Hospital for Children in Indianapolis, recalls that price differentials were much greater a decade ago. “Economics is not a big issue with contrast at the moment,” he says. “It was 10 or 15 years ago when the nonionics came out; the newer agents were universally agreed to be safer, but they were a lot more expensive—5 or 10 times more. The problem was, do you switch? Every hospital tried to separate out the risk to patients and establish protocols for the new generation of nonionic agents.” Nonionic agents are almost universally used for CT today, and, as Cohen notes, “They are much cheaper, as the manufacturers have recouped their costs.” In addition to more cost-effective manufacturing, a second development over the past decade, which has driven the cost of both iodine-based CT agents and gadolinium-based MRI agents much lower, has been the proliferation of the group purchasing organization (GPO). By some estimates, GPOs were able, in the mid 1990s, to negotiate price drops for contrast to about half of the then-prevailing rates. Now, it is only the very large institutions and health networks that negotiate contrast-media prices directly with manufacturers. Most hospitals and clinics—small, medium, and large—purchase with the help of one or more GPOs. Cohen, who is also a professor of radiology at Indiana University Medical School and a member of the ACR’s contrast committee, says that, with the obsolescence of film, contrast has become “probably the biggest expense for consumable items” that a radiology department faces. Kathleen Holton, BSRT, who is director of medical imaging for St. Vincent’s Hospital in Indianapolis, agrees. She estimates that her hospital spends over $1 million per year on contrast. “Besides labor, it’s probably the highest spending category of anything that I buy,” she says. In fact, a market analysis¹ by Bio-Tech Systems, Inc (BTSI), Las Vegas, estimated 2006 contrast sales in the United States at $1.6 billion, with that figure expected to grow to $2.9 billion by 2013. Of the 2006 sales, about $1 billion represented iodine-based CT contrast, with gadolinium-based MRI contrast accounting for $364 million, according to BTSI. Despite the price drops, contrast is big business for manufacturers. Holton estimates that her hospital does about 300 CT exams per day, with 60% done with contrast. For MRI, she estimates 50 exams per day, again with 60% using contrast. Bundling The bad news is that while prices for contrast have come down in relative dollars, compared with prices a decade ago, changes on the reimbursement side have probably offset any budgetary gains from the price drops. Under the Hospital Outpatient Prospective Payment System, Medicare now treats most contrast use as ancillary and supportive of diagnostic exams, bundling the reimbursement for contrast into the payment for the imaging exam. It does the same thing on the inpatient side. Private payors have followed Medicare’s lead, so it is now customary for radiology providers to look at contrast as part of the imaging expense, much as film was prior to the digital revolution.

“Most managed care companies include the contrast in the fee schedule. Although we charge for it, there is no revenue associated with the contrast, per se,” Gerard Durney, MBA, vice president for clinical services at Lenox Hill Hospital, New York City, reports. “From my point of view, contrast has become more or less a commodity, so you look to get the best price you can.”

That doesn’t mean that contrast expenses per patient are not tracked. They are, Durney says, for two reasons. For some payors, reimbursements are based on percent-of-charge formulas in which a charge for contrast does add to the total reimbursement, so Lenox Hill does bill for contrast as a line item on all its imaging bills. “We send the same bill to all payors, but most would ignore the contrast line item,” Durney says. The other reason to record the cost of contrast administered to each patient is that it affects the cost-to-charge ratios that Medicare uses to calculate payments. The ratios are one determinant of how much hospitals are reimbursed, Durney says. “There are formulas, and some of it is geography based, so the hospital has to give an accounting of its costs each year. The cost-to-charge ratio is important.” Price Seeking While finding the best price for contrast media might seem simple, it turns out to be anything but that. “The problem is that every manufacturer has a list price,” Cohen says, “but no one pays the list price. Everybody has a different discount. It’s tough to know what anyone is paying for the agent.” Complicating the pricing picture, Cohen says, is that discounts for larger volumes can vastly change the per-mL cost.

"Most managed care companies include the contrast in the fee schedule. Although we charge for it, there is no revenue associated with the contrast, per se. From my point of view, contrast has become more or less a commodity, so you look to get the best price you can." —Gerard Durney, MBA Lenox Hill Hospital, New York City

“Say, for a given contrast, I buy 10-mL doses; the cost of a 50-mL unit may only be twice that. Most units for adults are 50 mL. Along comes a three-pound baby who only uses 6 mL, so I have to throw 44 mL away,” Cohen says. “The most important thing is to check with the supplier. You may be buying 50 mL when 60 mL is cheaper. That crazy paradox occurs.” Another consideration is that while purchasing directors or administrators will be keenly aware of the price of contrast media, clinicians may be only vaguely aware, or not aware at all. Michael W. Vannier, MD, professor of radiology at the University of Chicago Medical Center, says, “Pricing is fairly complex. Some agents are more expensive than others, but you can’t tell how much more, because prices may be based on volume use and on total hospital expenses done through a consortium. In many cases, individual practitioners are shielded from this.” Vannier says that budgets for contrast can quickly be thrown out of balance by unforeseen imaging demand. Administrators then want to know why the budget is being exceeded. “We do have a budget,” he says. “We track utilization and total exams and how much contrast is ordered at our multiple sites. We track exams per month, exams per machine, and a whole set of metrics on contrast and compare those to our anticipated use.” Vannier adds that there is a direct relationship between the amount of contrast used and the number of imaging studies performed. If the number of studies performed goes up by 10%, then contrast use will grow by the same percentage. If that imaging growth is unanticipated and the contrast budget balloons, though, administrators may challenge the contrast increase. “There can be a big discussion if you run over,” Vannier says. “That’s a key issue. We often track expenditures independent of income, but that’s not the way the world works.”

"We track utilization and total exams and how much contrast is ordered at our multiple sites. We track exams per month, exams per machine, and a whole set of metrics on contrast and compare those to our anticipated use." —Michael W. Vannier, MD, professor University of Chicago Medical Center, Chicago

He continues, “When you start any fiscal year, you don’t know what your cost will be. The reconciliation is an end-of-the-year thing. You may have variances month to month. If utilization goes up, it sets off alarms, so you may exceed your budget, but if the number of exams goes up by 10%, there’s no way around that.” The trouble is that price contracts with manufacturers may be based on anticipated volumes, so changes in actual volumes can affect contract compliance. If compliance is threatened, doctors might be asked to adjust usage. “It might mean you have fewer choices for different contrasts,” Vannier says. Enter the GPOs John Sutton, RT, is senior contract manager for diagnostic imaging at Amerinet, Inc, St Louis, one of the country’s largest GPOs. He says that the company has more than 26,000 health care provider/members, including about 2,200 hospitals. Other member facilities include imaging centers, clinics, physician practices, and nursing homes. Prior to requests for proposals, Amerinet posts the opportunity on its Web site, seeking inquiries from contrast manufacturers regarding the bid process. Each contract is typically effective for three years; a contrast-media agreement could include CT, general imaging, MRI, or all, Sutton says. He notes that every contract is designed to give members a choice between two vendor products in each category. Amerinet develops master contracts to which all members have access. With contrast media, the end user elects to purchase a certain percentage of its contrast usage from the specified vendor. “We are confident that our pricing is among the best in the industry for contrast media,” Sutton says. He says that member savings have proven to range up to 50%, compared with buying directly from the vendor. He acknowledges that while some large health networks may seek to negotiate with manufacturers on their own, Amerinet agreements include opportunities for facilities of all sizes to save. Sutton also notes that Amerinet contracts typically include protection against price increases over the terms of the contract. In addition, Amerinet looks at factors other than price in negotiating its contracts; these include delivery charges, packaging in bulk or in prefilled syringes, and product acceptability. A second GPO, Premier, Inc, San Diego, is another major company owned by its members. Mike Alkire, president of the Premier Purchasing Partners division of the parent company, says that Premier’s primary objective for its members is “the highest level of savings, coupled with the highest level of product availability and coverage.” He says, “We start by researching which products and suppliers our members use. We involve our member committees extensively in the product-planning and negotiation processes. Market conditions often dictate strategy with regard to the number of suppliers on a contract. In a highly consolidated market such as contrast media, for example, it benefits our members when we limit the number of suppliers on contract for products that are equivalent.” Alkire continues, “Our sourcing process is designed to ensure that all clinically important products are included in the category, but obviously, clinical outcomes should and do take precedence.” Clinical Outcomes Price versus patient safety is often the point where the financial aspects of contrast use start to get complicated. Both iodine-based and gadolinium-based contrast can cause side effects. Vannier says, “We track all kinds of things with contrast: stopped IVs, minor reactions like hives, and nausea. These minor things may be fairly common.” Uncommon, but much more worrisome, are CT and MRI contrast effects on some severely ill patients, especially those with compromised heart and kidney function. Bodies of literature and lengthy protocols have been developed to prevent contrast-induced nephropathy (CIN) and nephrogenic systemic fibrosis (NSF). Both conditions can be fatal. CIN can occur with either iodinated or gadolinium contrast.² Cardiac patients with CIN have two to five times the mortality rate of cardiac patients who don’t develop it. Hospital stays for CIN patients are lengthened, as dialysis sessions also may be. Three factors have been associated with increased risk of CIN: renal insufficiency, diabetes, and reduced intravascular volume. NSF, first observed in 1997, is less common but often fatal. It is associated only with patients who have pre-existing kidney disease. It appears to be triggered by gadolinium contrast. Four of the five FDA-approved gadolinium contrast media have been implicated in NSF (some more than others). Together, the threats of CIN and NSF have caused radiology departments and hospitals to implement rigorous screening procedures to prevent at-risk patients from receiving what could be debilitating injections of contrast. “It’s just a totally different world now,” Vannier says. “The clinicians, patients, and all of us are aware of the risks. We won’t protocol a patient without a signed form. We need information from those ordering contrast. They have to assure us that the patient is not in a risk category. That’s a total departure from what we used to do, which was much less formal.” All institutions are involved in protocols to eliminate CIN and NSF. “One of our biggest initiatives is our Safe Kidney Program,” Holton says. “We did a lot of research and came up with a process to screen patients and use appropriate amounts of contrast.” She adds that it can affect efficiency, saying, “We find ways to do it and it has worked very well, but it has taken a team approach. We have the technologists, the radiologists, and everybody on board.” Attention to contrast use is coming from those who accredit hospitals. “Medication management is high on the list for the Joint Commission,” Durney says. “Contrast is considered a medication now, and there is more and more scrutiny.” Contract Changes The attention on CIN and NSF has affected some contrast vendors, and GPOs have been forced to adjust to swings by doctors toward or away from certain contrast agents as research continues. In this landscape, price loses primacy. Charles T. Stanley, CRA, RT (R)(CT)(MR), is imaging manager, divisions of MRI, CT and 3D imaging, for the University of Virginia Health System, Charlottesville, Va. “In the field of contrast media, there are absolutely times when clinicians feel that from a clinical standpoint they need to use a different product,” Stanley says. “It could be newly discovered adverse events. There are a number of things that have caused physicians to have different responses, and even within the same clinical picture, different physicians have responded in different ways.” Stanley continues, “That becomes kind of a dance between how much you want to use clinically” and its economic impact. “That’s constantly a back and forth. Generally speaking, our physicians do what they feel is best clinically and then try to line the economics up with it.” As one contrast medium or another is implicated in CIN or, especially, in NSF, swings in usage away from some manufacturers have forced GPOs to respond. “If you look at market shares, especially in gadolinium, they’ve been all over the place,” Stanley says. “People who were dominant aren’t dominant anymore. People who had a foothold are going away; people who were hanging on are suddenly getting bigger. All that is a reaction to what a physician feels it is best to do for the patient clinically.”

"One of our biggest initiatives is our Safe Kidney Program. We did a lot of research and came up with a process to screen patients and use appropriate amounts of contrast. We find ways to do it and it has worked very well, but it has taken a team approach. We have the technologists, the radiologists, and everybody on board." —Kathleen Holton, BSRT St. Vincent’s Hospital, Indianapolis

It is definitely affecting current contracts, with GPO agreements changing as the landscape is altered. Stanley reports that one GPO just took the unusual action of awarding contract status to a new vendor right in the middle of a contracting period. “It’s not unprecedented for them to have dual awards, but it certainly is unprecedented, halfway through a cycle, for them to go back and add on—but that is, in fact, what they did,” he says, adding that the GPO had little choice because physicians were turning away from the originally contracted vendor out of concerns over NSF. Less Is More What started out as an attempt to decrease contrast dosage for high-risk CIN and NSF patients has prompted some institutions to look at lowering doses across the board. With the improvement in scanners, some practitioners are finding that image quality is retained even with lower doses. Now there is a movement afoot to document the impact on image quality of lower contrast dose. Durney says, “Say we’ve been using 100 mL; now, we only use 80 mL, and we’ve still got great image quality. That’s where we will be going.” Stanley makes the same argument. “You can use less contrast these days. There absolutely is the opportunity to use less and less,” he says. The best way to do that, he adds, is to purchase either multiuse vials or bulk bags of contrast media. Stanly says, “If you buy a 100-mL vial of iodinated contrast media and you only need 85 mL of that, what are you doing with the other 15 mL? You’re wasting it in the body or the bottle.” Buying in bags of 500 mL, for example, “You can draw out precisely what you need,” he says. Since contrast is a commodity, the best way to lower the cost is to use less. “It’s smart business to sit down and look at the amount of product you’re using and then see how much you can save,” Stanley says. Economizing on contrast revolves around taking small steps—using less, buying in bulk, purchasing through a GPO, budgeting carefully, adhering to contracts—that can trim budgets for radiology’s most expensive consumable item. Additional Reading-Here Come the RFIDs