Radiology contributes less than thought to the national healthcare spend

Advanced imaging is not infrequently singled out as a major and disproportionate driver of the ever-rising national health expenditure (NHE).

However, an analysis of CMS data has shown radiology had little to do with increases in Medicare costs over a 10-year period ending in 2019.

In fact, the specialty may have been disproportionately affected by cost containment policies during that period, not least by CMS’s push to achieve budget neutrality across medicine. Requirements around this goal seek to offset rising reimbursement for evaluation and management (E&M) codes by decreasing payments to providers who don’t regularly bill for E&M.

The findings and context are presented in a study published in the July-August edition of Current Problems in Diagnostic Radiology [1].

Researchers at University Hospitals Cleveland Medical Center and Case Western Reserve University reviewed imaging expenditures and utilization using Medicare Part B data.

The project’s prime objective was to assess trends in Medicare Physician Fee Schedule for Service (Part B) payments and utilization for imaging relative to other services from 2009 through 2019.

Findings ‘Contradict Statements’ on Imaging’s Role in the Rising NHE

After adjusting dollar values for inflation and calculating price elasticity of supply and compound annual growth rates (CAGRs), corresponding author Keval Parikh MD, MHA, and colleagues found:

  • Throughout the analyzed 10-year period, imaging services represented a minor fraction of Medicare Part B (7%) and of NHE (0.28%). The authors note these numbers are consistent with a previous analysis.
  • While NHE, overall Medicare and overall Part B had positive growth rates of total expenditures, imaging did not.
  • Imaging had the most negative CAGR compared to all other categories, including drugs, procedures, E&M and durable medical equipment.

These findings and others the team uncovered “contradict statements that physician services and imaging are a significant contributing factor for the growth of expenditures and the disproportional amount the United States spends in healthcare compared to other countries,” Parikh and co-authors comment in their discussion.

They cite a 2018 Harvard study showing that, from 2013 to 2016, the U.S. had comparable numbers of hospital beds (2.8 per 1,000) but higher utilization of MRI (118 per 1,000) and CT (245 per 1,000) vs. other countries [2].

The authors also note that CMS’s most recent update to advance Medicare Part B budget neutrality “proposed an increase in reimbursement in one of the categories (e.g., E&M), which was offset by a decrease in the other categories, including imaging.”

As for utilization per se, Parikh and colleagues suggest growth discrepancies may owe to the negative and relative inelasticity of imaging services.

“The negative elasticity of supply indicates that there is an inverse relationship between volume and price,” they write, adding that this “could indicate that providers increased volume to recapture lost revenues, a phenomenon called the behavioral offset or volume response.”

‘Unintended Consequences of Reduction in Fee Services’

More from the team’s discussion:

If price control leads to decrease in reimbursements to unsustainable and unfair levels, it may cause unintended consequences such as shortages of physicians and physician services, rationing, deterioration of quality (e.g., burnout), the creation of additional fees to patients and/or the increase in out-of-pocket expenditures. In fact, there is evidence that patients very commonly pay coinsurance when undergoing advanced imaging, both in and out of the network. This could be a sign of the unintended consequences of reduction in fee services beyond the equilibrium point for suppliers of imaging services.

Parikh et al. conclude that annual adjustments in physician fees aiming for budget neutrality as a final goal may confound efforts to assess the impact on categories such as imaging and specialties such as radiology.

“Further understanding of the relative contribution of price vs. other factors on the changes in utilization may help refine models that are used to create cost containment policies,” they write.

The journal has posted the study in full for free.

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