Under Construction: Cost Containment and Revenue Optimization Under Healthcare Reform

The transition to a value-based reimbursement incentive-payment model will require new forms of hospital–radiologist partnership to contain costs and optimize revenue

Leaders in imaging are negotiating uncharted waters in the new healthcare reform era of bundled payments, episodes of care, Diagnosis Related Groups (DRGs), accountable-care organizations (ACOs) and shrinking reimbursements. They are faced with increasing challenges to decrease costs, manage utilization and grow revenue.

Earlier this year, the 2015 Medicare Access and CHIP Reauthorization Act was passed, repealing the sustainable growth rate (SGR) and changing the way radiologists will be reimbursed. A new value-based reimbursement incentive-payment model will be transitioned in over several years. Radiologists should expect to be affected in one of two ways.

By the year 2018, one-half of all Medicare payments to physicians and hospitals will be made through participation in Alternative Payment Models (APMs) such as medical homes and ACOs.1,2 Practices functioning within a fee-for-service structure will be reimbursed under a new Merit-based Incentive Payment System (MIPS) such that 85% of all FFS payments will be linked to quality or value performance metrics by 2016, increasing to 90% by 2018.2

This new legislation finds many radiologists scratching their heads in bewilderment as they struggle to identify with how to participate in an alternative payment model. To help negotiate this transition, The Center for Medicare and Medicaid Innovation (CMMI) is promoting several investigative projects earmarked to assess which APMs are demonstrating true savings and warrant continued support. These data will then be passed on to CMS.

One promising area of action is evidence-based, point-of-order clinical decision support (CDS) integrated into computerized physician order entry (CPOE). This proven initiative possesses a strong early track record in driving cost containment and improving revenue cycle management.3,4 As part of the Protecting Access to Medicare Act (H.R. 4302), hospital outpatient facilities and physician offices will be required to use CDS tools “to help determine appropriate use of imaging, encourage physician consultation and promote the use of patient portals."2

The shifting landscape

The reimbursement model for radiologists is in evolution. Existing hospital-based physician financial practice incentives are prey due to health care reimbursement reform (e.g., bundled payments and episodes of care, expanding capitation and DRG-cost containment pressures) and general economic turmoil. This has prompted hospitals to retool their business models and to change their relationship with radiology, emphasizing alignment between their strategic and operational objectives and those of the physicians.

Forced to rethink the conventional algorithm of maximizing revenue with more discounted fee-for-service, radiologists and institutions must find ways to be rewarded for eliminating unnecessary and duplicative imaging exams and delivering only those that are appropriate at the highest quality and lowest possible cost. Clinical decision support is the enabling tool.

Early results are promising. In a 2007 comprehensive pilot program conducted in Minnesota, more than 2,300 providers participated in point-of-service decision support criteria algorithms to order high-tech diagnostic imaging. Claims for advanced imaging procedures among five health plans dropped 3% in 2007 compared to the year before with an estimated 9% decrease based on the previous 4-year trend.5

Using chart audits6 on a random sample of adult primary care patients, researchers from Health Partners Medical Group, also in Minnesota, compared orders for head CT, MRI brain and MRI lumbar spine before and after the implementation of an EHR decision support system. Appropriateness criteria for advanced imaging procedures from the American College of Radiology had been made available via the EHR. Two of the three orders (head CT and MRI spine) were associated with a 20% to 36% decrease in utilization, while MRI brain increased by 3.3%.

Maintaining profitability

DRGs and bundled payments—a single combined fee structure for all diagnostics and treatment related to an episode of care—have set the stage for the acceptance of CDS in the hospital setting. DRGs are a patient classification system developed for Medicare based on diagnosis with corresponding distinct groupings or categories to date totaling ~500.

DRGs are based on a variety of factors, including the patient’s principal diagnosis, International Classification of Diseases diagnoses, gender, age, sex, treatment procedure, discharge status and the presence of complications or comorbidities. Hospital payment is episodic and prospectively predetermined per case or type of discharge.

Hospitals assume risk for both cost and quality when they agree to a bundled payment model. Profitability within this environment boils down to providing the correct, highest quality, evidence-based care the first time, including diagnostic imaging studies.

A trail of diagnostic imaging studies haphazardly leading to the “best one” to answer the clinical question will not be tolerated by ACO providers or administrators. In the new era of shared risk, the negative impact of inefficient or misguided decision-making increasingly will be “shared” by hospitals and physicians.  The cornerstone of decreasing overutilization and redundancy, and in turn, crisp streamlined care delivery, is physician education.

Even though the CDS mandate currently is limited to outpatient advanced imaging, radiologists have an opportunity to educate referring physicians about imaging appropriateness, and that has implications for DRG profitability. Elkin et al demonstrated that when clinical decision support was incorporated into the mainstay of inpatient care at a major teaching hospital, the outcome is shorter, less costly lengths-of-stay in situations of “diagnostically challenging” DRGs.7

Though preliminary, the results of the study suggest that CDS systems may help manage inpatient admissions more efficiently. “There may also be educational benefits to trainees and faculty who use a decision support system,” wrote Elkin et al. “Further studies are needed to show that our results are reproducible in other settings, to show outcomes are improved by using such a system and to understand how using a decision support system changes resident thinking and behavior.”7

Changing behavior     

Because CMS limits how much hospitals can charge for services by diagnostic code, this finding is significant for institutions with house staff caring for patients. Providing the highest quality of care per DRG entails monitoring the ordering behavior of house staff and attending physicians alike.

In the case of physicians in training (and in particular interns), there is opportunity for redundant or inaccurate ordering of tests (including imaging and in particular expensive advanced cross-sectional modalities) due to an inherent lack of experience, medical knowledge and skill. Enhancing physicians’ education through clinical decision support cannot only provide the necessary guidance and tools needed to diagnose accurately and expediently, but facilitate a cost effective environment that sustains profitability.

“Changing physician behavior to meet payor and patient expectations requires a multi-faceted approach,” according to Anupam Goel, MD, VP, Clinical Informatics, Advocate Health Care in Illinois. He said that Advocate is considering multiple strategies.

  • Real-time feedback to ordering physicians to support the choice of the best diagnostic test for the patient’s specific presentation.
  • Periodic feedback reports that compare each ordering provider’s imaging test-ordering behavior against peers. Prohibiting specific imaging test orders for high-cost and/or low-yield scenarios.
  • Using radiologists as consultants for particularly complex diagnostic cases with multiple diagnostic imaging strategies.

Implications for radiology

Reducing unnecessary imaging—estimated to be between $7.49 billion and $11.95 billion—is a target for many healthcare providers.8 In a 2014 survey of 196 hospital leaders, a majority reported that reducing unnecessary imaging was a top priority, and the larger the organization, the greater the likelihood that excess imaging is a target.8

Electronic gatekeeping is not a surefire substitute for the counsel an experienced and engaged radiologist can offer in assisting a referring physician faced with a challenging clinical presentation. Being available for consultation and real-time modification of protocols that best match the clinical question is critical for multi-disciplinary value-added collaboration.

Radiologists are poised to recapture an important leadership role in ensuring clear protocols and sound clinical judgment. For example, lung cancer screening programs with low-dose CT (LDCT) for high-risk populations have been shown to decrease mortality rates in this select patient cohort. This is in contradistinction to annual screenings for asymptomatic or low-risk individuals wherein no reduction in lung cancer mortality has been proved compared with conventional standard of care. Medicare has recently approved reimbursement for LDCT in high-risk patients.

To qualify for payment, and in accordance with The Patient Protection and Affordable Care Act, a shared decision-making interview between healthcare provider and patient must be document ed to obtain the scan. Educating and engaging individuals to become more involved and empowered in managing their care has been shown to enhance the patient experience, lower costs and improve outcomes

The question then becomes how do decreased volumes sustain optimum revenue? In the ACO shared-risk environment, this is accomplished through active radiologist participation in institutional practice improvements. Clinical decision support (CDS) is the bedrock of this methodology.

Advocate’s Goel adds: “The challenge for radiologists and hospitals in an environment of decreasing volumes is to provide value that other competitors cannot deliver. From the radiologists’ perspective, paying-for-value should mean that any expected savings from making the best initial imaging choice through either decision support or formal radiology consultations should flow back to them. For hospitals that participate in risk-sharing, fewer radiology tests should mean more dollars saved to keep the business running. Both perspectives have deeper implications to how each entity sustains itself long-term.”

The Advocate experience

Advocate Health Care, the largest integrated delivery network in Illinois, has been proactive in embracing innovative methodologies to meet the challenge of new reimbursement models. Debra O’Connor, MD, vice president, clinical effectiveness, states: “At Advocate, our Clinical Effectiveness division has been working to create value for every patient encounter. The key drivers of our projects are always safety and quality first and foremost, and then we look for a value-based benefit.”

While Advocate has several vehicles for value creation, diagnostic imaging is one that the organization has just begun to explore. This activity is undertaken in conjunction with the Advocate Radiology Council, a committee comprised of physician and non-physician imaging leaders across the enterprise.

“Currently, we are completing the vetting process for decision-support software that will actively assist physicians so they can consistently make safe and optimal choices with respect to the imaging they choose for their patient’s care,” she reports. “We are all aware that exposure to radiation and contrast media is not without potential for patient harm. This software/technology will provide the physician with updated, evidence-based reference materials to guide decision-making and reduce unintended consequences and harm to patients.”

O’Connor adds that monitoring and trending of ordering patterns at the physician level to allow for feedback and education is an important functionality for CDS. “We have met with the Advocate Radiology Council and they have suggested promoting the ‘Choosing Wisely’ recommendations for physician consideration when ordering imaging,” she says. “Physician communication will be key in creating awareness. We have created an IT solution that prevents serial ordering of chest x-rays. This does not prevent a physician from ordering a follow-up x-ray, but is meant to assure that the physician is aware of the results of an x-ray study before deciding whether a follow-up is warranted.”

These initiatives in radiology are focused both on preventing unnecessary radiation exposure for patients and reducing waste. “There is an upcoming project around the appropriate use of contrast media in radiology and interventional cardiology procedures that we are beginning,” she reports. “We are in the process of exploring the criteria for use with our nephrology content experts. There will be more to come as we review variation in physician practice and look at additional avenues to optimize imaging across our health system.”

Advocate is championing value-added contributions from the field of medical imaging through a dedicated radiation dose-management program. Chaired by a radiologist physician champion, the Dose Management Project Steering Committee is comprised of a cross-sectional representation of administrators, radiologists, technologists, medical physicists and industry leaders handpicked to identify and address issues related to radiation dose-reduction strategies and procedure optimization.

New value-based pay world

Radiologists are entering new terrain under value-based reimbursement. As Bibb Allen, Jr., MD, FACR, chair of the ACR Board of Chancellors, recently explained, “The ACR is quickly mobilizing to guide members through this legislative implementation and the opportunities and challenges it presents. Members from the new ACR Commission on Patient Experience, the ACR Commission on Economics, the ACR Commission on Quality and Safety and the ACR Commission on Informatics are spearheading this effort. They are gathering information and meeting with experts to define quality outcomes, determine metrics, develop APMs, and prepare recommendations for submission to CMS later this year. They also will collaborate on educational and informational tools to help members transition to value-based incentive payments.”1

Radiology practices identified as affiliates of Pioneer ACOs and the Bundled Payments for Care Improvement Initiative (BPCI) are providing meaningful feedback to the ACR Radiology Integrated Care (RIC) Network about these new payment models. In addition to incorporating the foundational constructs of clinical decision support, radiologists must actively pursue effective strategies that demonstrate value to internal and external stakeholders.

ACR’s Imaging 3.0 initiative provides direction and the tools needed to transition from volume- to value-based care. As Pam Kassing, senior economic advisor, ACR, writes, “Imaging 3.0 radiologists are focused on transformational change that marries patient-centered practice, quality measurement and enabling technology, supported by case studies, business plans, structured terminologies, quality improvement templates and vendor-neutral technology solutions.”2

The operational and regulatory pressures of the Affordable Care Act are intensifying. Radiology groups are in the early phases of transformational change as healthcare in the United States undergoes a long overdue metamorphosis.

To succeed in this new value-based, quality-driven environment, radiology groups must reconfigure the way they partner with hospitals. Whether as a single entity or large consortium of consolidated practices, the radiology services provider must implement processes to deliver care that adheres to the highest measurable clinical standards in the most economically sustainable way feasible. Advocate Health Care, the largest integrated delivery network in Illinois, is exploring the role of clinical decision support as an effective tool to address these issues.

Lisa Laurent, MD, MBA, CPE, is CT medical director and ultrasound co-director at Advocate Lutheran General Hospital, Park Ridge, Ill., and chair, CT Medical Directors Advocate Health Care, Chicago. Advocate Lutheran General Hospital is the first hospital in Illinois to receive American College of Radiology CT Lung Cancer Screening Accreditation.

Five Principles of Dose Awareness

Advocate Health Care is just beginning to explore value creation in medical imaging, and one model approach is the system’s Dose Management Steering Committee. Chaired by a radiologist, the committee’s goals are condensed into five principles.

  1. Protect patients against overexposure to ionizing radiation while maintaining the highest diagnostic image quality.
  2. Streamline and standardize protocols across the healthcare enterprise for both pediatric and adult populations.
  3. Provide innovative training and education to reduce variation and manage risk.
  4. Be recognized by patients, providers and payors for a commitment to quality of care and patient safety while maintaining competitive advantage in the market.
  5. Make dose management a “state of mind” that is part of Advocate Radiology’s everyday practice—one system, one enterprise.


  1. Allen B. Ensure your reimbursement under value-based care. American College of Radiology email to membership. July 13, 2015.
  2. Kassing, P. Preparing radiology for alternative payment models. Physicians Practice Web site. February 12, 2015. Accessed September 1, 2015.
  3. Dunne RM, Ip IK, Abbett S, Gershanik EF, Raja AS, Hunsaker A, Khorasani R. Effect of Evidence-based Clinical Decision Support on the Use and Yield of CT Pulmonary Angiographic Imaging in Hospitalized Patients. Radiology. 2015 Jul;276(1):167-74.
  4. Ip IK, Raja AS, Gupta A, Andruchow J, Sodickson A, Khorasani R. Impact of clinical decision support on head computed tomography use in patients with mild traumatic brain injury in the ED. Am J Emerg Med. 2015 Mar;33(3):320-5.
  5. Herman S. Radiology decisions lead to cost savings. Health Management Technology. May 3, 2010. http://www.healthmgttech.com/radiology-decisions-lead-to-cost-savings.php. Accessed September 1, 2015.
  6. Solberg LI, Wei F, Butler JC, Palattao KJ, BA; Cally A. Vinz, RN; and Melissa A. Marshall, MBA. Effects of Electronic Decision Support on High-Tech Diagnostic Imaging Orders and Patients. Am J Manag Care. 2010;16(2):102-106.
  7. Elkin PL, Lyebow M, Bauer BA et al. The introduction of a diagnostic decision support system (DXplain™) into the workflow of a teaching hospital service can decrease the cost of service for diagnostically challenging Diagnostic Related Groups DRGs. J Med Informatics. 2010;79(11):772-777.
  8. Unnecessary Imaging: Up to $12 Billion Wasted Each Year. peer60 Web site. 2014. Accessed August 26, 2015.