Imaging Use and Spending Climb when Docs own MRIs

So I read this headline and my first thought was, “Oh no, doctors are charging patients more for an MRI simply because they have the machine in office.”  But before you go down the same thought trail I did, read this article.  Use and the billingprice went up because the Medicare reimbursement rate went up.  Doctors found a way to help their business and make things easier for patients at the same time by purchasing an MRI machine.  Some Medicare reimbursement rates are below what it costs the doctor, so by having your own MRI machine, a doctor can balance that out while the reimbursement rates are high.  When a reimbursement rate goes up, billing rates will always go up, too.  And when a doctor doesn’t have to worry about if the referral will be paid by Medicare or not (having everything in office allows them to ensure things will be smooth), they can order more MRIs for patients who need them, rather than try to go without.  It is safer for the patient.  A great win-win situation when Medicare finally let up on their rock-bottom price fixing for a change. 

The problem, of course, is that with government in the middle of health care, prices continue to go up and use increases all the time.

Now, if we all went to a free market system, the prices for MRIs would go down while the quality improved, just like it did with LASIK.  If patients were paying for the MRI out-of-pocket, they would consider if they really needed the MRI before getting on the table, and they would shop around for the best price and best quality, creating competition.  Medicare doesn’t do that.  And when the Medicare rates for an MRI go down, chances are that the bill from the doctor will stay where it is, creating a false sense of real price – like the $50,000 people pay for knee replacement in the USA.  It isn’t the real price, but one fabricated by billing rates and third party payers.

Imaging use and spending climb when docs own MRIs

MRI Imaging
Use and Billing Prices for an MRI went up with In-office Machines

by Olga Deshchenko, DOTmed News Reporter

Physicians who purchase an MRI system order significantly more scans than doctors who don’t own the modality, a new study found.

In a paper published in Health Affairs this month, author Laurence C. Baker, a professor of health research and policy with Stanford University, sought to examine the association between physicians’ acquisition of MRI equipment, use of the modality by patients and health care spending.

For the study, Baker looked at a 20 percent random sample of Medicare claims submitted between 1999 and 2005 by neurologists and orthopedists. He compared the MRI rates and costs between those specialists who didn’t bill for MRI scans and those who did bill for the exams within the study’s time frame.

Of the total 11,844 orthopedists studied, 3,535 began billing for MRI during the study. Out of the 5,993 neurologists analyzed, 706 began billing for the procedures. Imaging rates rose significantly for both specialties – per 100,000 claims, the use increased from 46 to 72 images among orthopedists and from 48 to 83 images among neurologists, according to the study.

Baker pointed out that there were no major differences in the pre-billing period for owners and non-owners of MRI equipment. “But at the time of acquisition of MRI, there was a distinct (and strongly statistically significant) increase,” he wrote in the study. “In the first quarter after they began billing, orthopedists jumped from using about 20 more MRIs per 1,000 episodes than traditional users to using about 45 more. Neurologists jumped by more, increasing their rate by about 60 to nearly 140 procedures per 1,000 episodes more than traditional users.”

When Baker looked at the effects on spending associated with beginning to bill for MRI, he found that outpatient spending for orthopedists rose by an average of $25 per case (about a 2 percent increase) and around $91 for neurologists (about a 6 percent increase).

In his discussion of the reasons for increased MRI use, Baker noted the lucrative reimbursement rates of the time. “One of the important features of the time period over which this study took place was the generous reimbursement for in-office imaging built into the Medicare fee schedule,” said Baker. “This, along with generous reimbursement by private payors, was probably an important factor driving physicians’ acquisition of the technology.”

Another potential explanation for the increase is the convenience that comes with equipment acquisition, Baker said, since it reduces the hassle of referrals and patient travel to another location. However, he also pointed out that most MRI scans in the study period required an additional visit by patients to the office.

While recognizing the continuously changing landscape of reimbursement policies for medical imaging procedures, Baker said “the results [of the study] should be a powerful reminder of the potent forces at work when physicians acquire new and advanced equipment and gain the ability to bill directly for its use.”

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