Under the Influence of RBMs

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It’s no secret that utilization control has emerged as the method of choice for private payors focused on reining in imaging costs. What is surprising is the speed with which radiology benefit management (RBM) companies have brought the commercial-payor market under the influence of precertification. At the end of 2005, RBMs covered approximately 25% of all lives in the commercial-payor market, but by the end of 2008, market penetration surpassed 60%, Shay Pratt, practice manager, The Advisory Board, Washington, DC, believes. Pratt addressed Advisory Board members in his Outlook for Imaging Payment on December 3, 2008, at the University of Chicago’s Gleacher Center. “For 2009, we can probably expect a bit of a slowdown for further precertification adoption, but we are approaching 70% of the commercial market covered by precertification,” he notes. “These programs are here to stay; they are entrenched.” Precertification loomed large in Pratt’s outlook, due in part to the growing influence of RBMs and their impact on volume. The top five companies—National Imaging Associates, CareCore, American Imaging Management, MedSolutions, and HealthHelp—together cover an estimated 130 million lives. Based on the premise that RBMs are denying an average of 15% of referrals in the outpatient imaging market, Pratt estimates that precertification blocked more than 2.5 million CTs and 1.5 million MRIs from getting to outpatient scanners. Just how great an effect precertification is having is best understood when those losses are translated into dollars. Precertification eliminated more than $1 billion in CT and MRI revenue in 2008 alone. The Advisory Board based these estimates on rates of 150% of Medicare payment levels. The Models In formulating his overall outlook for imaging, Pratt took into account three factors: volume, price, and provider supply. Even here, however, RBMs and precertification figured largely. “With volume, one of the most important questions is this: Will private payors still cling to precertifications, or are there any alternatives that are emerging that might give providers some relief?” he asks. “Precertification is having a very real effect on hospital bottom line,” Pratt notes. In modeling annual procedure volumes to calculate how much volume and revenue hospitals are losing to precertification, Pratt estimates that a radiology department doing 30,000 CTs annually is losing 1,942 exams, or $1.08 million in revenue. Hospitals with an annual MRI volume of 13,500 would lose an estimated 1,014 MRI procedures to precertification, or $806,117. Because RBMs require referring physicians to obtain the precertification, hospitals often find themselves in the difficult position of either withholding imaging procedures or absorbing the cost if the paperwork is not in order. “Hospitals are being held accountable financially for referring physicians getting this right, but at the same time, we are barred, technically, from participating in this process,” Pratt explains. “There is a lot of experimentation across the country, with hospitals as well as imaging centers trying to take a more active role in the process.” Pratt outlines four models that The Advisory Board has observed providers using to obtain precertification for imaging examinations. The first is the precertification-initiation process. The provider’s staff contacts the RBM or payor to initiate the precertification process on behalf of the referring physician. The referring physician must conclude the process with each request. The second model is a precertification-acquisition service. The provider’s staff contacts the RBM or payor for the referring physician and acquires the precertification number for the referring physician. The third is an external precertification office. The provider establishes an independent office to acquire precertifications for referrers, and referrers pay a fee, at fair market value, per order. The fourth model is outsourced precertification acquisition. A third-party entity with no financial relationship to the imaging provider or referring physician obtains the precertification on a fee-per-order basis. Pratt warns providers to proceed with caution in participating in the precertification process, as RBMs have been inconsistent in their acceptance of these models, and some may cause hospitals to run afoul of anti-kickback regulations. “The waters are being muddied here in terms of what is allowable, what is not,” Pratt notes, adding that a recent OIG opinion appeared to approve of the outsourced precertification model. “We have yet to see a case go to court on this, so right now, it is a bit of a free-for-all,” Pratt adds. The Outlook While Pratt believes that precertification is here to stay, he also sees signs that the door is opening to decision support. Blue Cross of Massachusetts has three types of programs for radiology ordering, including an alternative radiology-management program that excuses physicians from the regular precertification process if they run their orders through a decision-support tool, Pratt reports. He also cites a program in Minnesota that permits referring physicians to order outpatient imaging procedures using decision support in lieu of precertification. “The overall message that decision support may be a viable option in the future is encouraging, even if it does potentially require some investment on your part,” he says. “Playing a more active role in the appropriateness of imaging is going to be increasingly important in relationships with payors, and also in demonstrating overall quality: right scan, right patient, and right time.” Despite the obstacles, Pratt’s outlook is fairly sanguine for imaging providers. Imaging volumes continue to grow, and radiologic procedures continue to contribute the lion’s share of profit among hospital-based outpatient services. “For hospitals, especially, it is still key to remember how important imaging is to overall financial health,” Pratt notes. “I think we are still in that golden period of physicians learning what imaging can do for them, particularly on the advanced imaging side.”