Trends in Managed Care Cost Containment: What Will They Think of Next?

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A former managed care executive predicts that accreditation/credentialing and cost transparency are next up in insurers’ campaigns to contain imaging costs

Over the past few years, the imaging industry has come under attack by managed care companies. Many people in the industry still wonder why imaging has become such a target. Imaging, when done properly, can be an extremely cost-effective diagnostic tool that, in many cases, can help eliminate more costly and invasive procedures. If imaging is less invasive and less expensive than other diagnostic procedures when used appropriately, why are the managed care companies doing so much to curtail its use rather than promote it?

It is imperative to recognize that not all imaging being done is appropriate. For example, when I was working for a large managed care company, we learned of a neurologist with his own MRI machine who had scanned a patient more than 30 times in one year. Anecdotal cases like these cause managed care companies to enact procedures that ultimately affect everyone.

Another factor is the fixation by the managed care companies on the trend. In the world of managed care, everything revolves around being able to predict the trend (or inflationary nature of health care costs). If you can predict it, you can rate for it. In addition, if you can influence (reduce) the trend, you can improve your bottom line. For managed care companies, it is all about profit.

In the area of imaging, we have seen cost increases of more than 20% for the past several years. Managed care companies look at this figure and immediately go into reaction mode. They do not consider the fact that increased use of imaging, if done correctly, can actually reduce the total cost of care. Rather, they focus on an area where costs are increasing at a rate higher than that seen anywhere else, and they develop strategies that attempt to combat that rate of increase.

The first strategy employed by managed care in an attempt to attack overutilization was the development of precertification and prior-authorization programs for high-end imaging such as CT, MRI, and PET studies. This mother-may-I approach is right out of the standard HMO playbook. In the arena of imaging, this strategy got a strong dose of steroids from the explosion of radiology benefit management (RBM) companies. RBMs like MedSolutions (Nashville, Tenn); National Imaging Associates/Magellan (Avon, Conn); American Imaging Management (Chicago); and others sprang up to help managed care companies counter imaging increases.

The RBMs took prior authorization to a new level. They not only developed clinical protocols for the approval or denial of imaging requests, but also developed tools and strategies to direct patients to the lowest-cost provider in the area. By doing this, they could affect the trend even if they were unsuccessful in reducing utilization.

Consider the busy front-office person at a primary care physician’s office. The physician orders an MRI for a patient and assumes that the study will be done at the local imaging center, staffed by radiologists that he or she knows and trusts. The front-office person realizes that this scan requires precertification and calls the RBM. After a time-consuming exchange of information, the scan is finally approved. At this point, the RBM staff member offers to schedule the patient at one of the network’s facilities, as a service to the requesting office.

Looking at the pile of work on the desk, the front office person is grateful for the assistance and agrees, not knowing that the RBM is going to schedule the patient’s examination at a less costly mobile machine that has remote radiologists doing the interpretation. The result may be a nondiagnostic study, but it will produce a reduction in cost. This is just one example of how RBMs are employing new strategies, above and beyond the simple clinical review of imaging requests.

What’s next? By now, radiology providers are familiar with RBM tactics and have adjusted their practices to either combat or deal with them. What will be the next set of strategies to face?

The next wave of attacks on imaging will come in two main areas: accreditation/credentialing and cost transparency. Depending on the provider’s position in the marketplace, these approaches could have a positive or negative impact on business. What is clear is that everyone in this industry should understand these approaches and develop strategies to address them