Paying for technology performance

In these days of right-sizing and second-hand scanners, it may not be politically correct to say it, but as long as we are paying for performance, why not consider paying for technology performance.

I raised this old saw recently in an editorial in Radiology Business Journal while speculating about what value-based payment in radiology might look like. After the issue had circulated, I had an email exchange with a colleague on the equipment side, Dennis McLaughlin, senior manager of market intelligence, imaging systems, Philips Healthcare. During this exchange, we established that the September 26, 2014, memo sent to CMS from the ACR, the Lung Cancer Alliance, The Society of Thoracic Surgeons, the American Thoracic Society and the American Cancer Society’s Cancer Action Network recommended that the LDCT lung-cancer screening study be acquired on a helical spiral CT scanner capable of performing the study in a single breath hold. I don’t know what the state-of-the-art in CT technology was in 1990, but that was when this technique was introduced.

If a four-detector (or less) helical CT is better than a chest x-ray for detecting lung-cancer, I wonder by how much? If a 32-detector or a 64-detector CT has a higher yield when it comes to exam information, should we pay more for that exam? They do in Japan, McLauglin said.

A price sheet he provided from April 2014 revealed that a CT exam acquired on a 64-slice CT was reimbursed at 10,000 yen, or roughly $92 dollars at current exchange rates. Scans acquired on CT scanners with 16- to 32-slices were paid 9,000 yen or $83; scans acquired on scanners with 4- to 8-slices were paid 7,700 yen or $70; and a scan acquired on a 4-slice or less scanner was reimbursed at 5,800 yen, or $53.

Those prices do not include the cost of administration, contrast or reconstruction. And yes, they are considerably lower than prices in this country, but that's not the point.

It’s an interesting idea, and one worth exploring. Precision pricing could have a positive overall impact on value generation in healthcare.

Cheryl Proval