April 6, 2009

By Kathy Hardy
Radiology Today
Vol. 10 No. 7 P. 14

Referrers, imagers, and an RBM executive weigh in on prior approval for imaging exams.

Everyone can agree that preauthorization in healthcare is the process of obtaining advance approval of a treatment plan proposed by a medical professional. The disagreement begins when deciding whether preauthorization is about providing patients with the best possible quality of care or reducing healthcare costs. Is the process meant to reduce the number of inappropriate imaging orders or to make physicians aware of the cost of imaging? Or is it all of the above?

“Preauthorization at face value is a simple concept but with RBMs [radiology benefits managers], there are some hidden elements that physicians need to be aware of,” says John A. Patti, MD, FACR, vice chair of the ACR’s Board of Chancellors.

“Preauthorization has mixed results,” says Ted Epperly, MD, FAAFP, president of the American Academy of Family Physicians. “For the most part, it helps make sure the right test is done for the right patient at the right time. It has achieved its intended goal from that perspective.”

However, Epperly, a family physician practicing in Boise, Idaho, notes that the preauthorization process comes with administrative issues that require more time dealing with insurance companies and ultimately slows down the process of patient care.

RBMs and Referrers
To date, preauthorization is a regular part of the private health insurance picture. In imaging, preauthorization is most often necessary for high-end exams such as MRI, CT, and PET. RBMs contend that it’s difficult for physicians and radiologists to keep up with the fast pace of sophisticated, high-tech imaging tools introduced into the marketplace. According to David Soffa, MD, senior vice president of medical affairs for American Imaging Management, the purpose of RBMs is to make sure physicians think about whether an imaging exam is necessary and not just jump on the latest technology bandwagon.

“RBMs were established to increase physicians’ awareness that they should be thinking about whether or not the exam they’re ordering is necessary,” Soffa says. “It’s important that these technologies be used in the proper way. There’s a perception that if it’s new, it must be better. That’s OK in some cases but not for everybody.”

Soffa cites the false-positive findings that can occur with new technology as another reason for physicians to think about what’s appropriate for a patient’s condition. For example, he says a common benign liver cyst found in one out of every 10 patients may be discovered during an unnecessary CT scan.

“If you have a CT scan that you didn’t need and one of these cysts was discovered, you’d be sent for more exams, possibly even a biopsy,” he says. “The patient could end up undergoing many unnecessary procedures. There are a lot of bad things than can happen when you’re imaging for the wrong reason.”

While appropriateness may be the intention, the topic of increased imaging spending is never far from the news. Recent government reports show five-year growth rates of 104% for Medicare imaging spending alone. A December 2008 Congressional Budget Office report projects that, without any changes in federal law, total spending on healthcare will increase from 16% of the gross domestic product in 2007 to 25% in 2025 and close to 50% in 2082. In addition, net federal spending on Medicare and Medicaid will increase from 4% of the gross domestic product to almost 20% over the same period.

With that, the government is considering the adoption of preauthorization criteria as a way to reduce costs. The recommendation is coming from everywhere in Washington, D.C.—from the General Accounting Office to the Oval Office.

RBMs for Medicare
Due to major fiscal and policy changes associated with healthcare, the Congressional Budget Office expanded its regular reporting to lawmakers to include options for managing federal spending in that area. In the 115 options outlined in its December 2008 report, Option 41 calls for the implementation of preauthorization for advanced imaging services. Specifically, the budget office recommends instituting a policy requiring prior authorization for the use of and payment for advanced imaging services in the Medicare program. Under this option, Medicare would hire RBMs to make decisions on its behalf about whether to approve payment for a specific imaging service ordered by a physician. Those decisions would be based on criteria formulated from recommended guidelines for clinical practice, including guidelines developed by medical specialty societies, and Medicare would not pay for unapproved services.

Looking at trends in imaging service costs among private insurance plans that employ RBMs, the Congressional Budget Office anticipates an estimated reduction in net federal spending of $220 million between 2010 and 2014 and about $1 billion between 2010 and 2019 with the implementation of preauthorization. The savings estimate takes into account any rebound in spending as a result of physicians adapting to the new procedures, as well as any costs incurred in hiring RBMs.

The argument for this option is that it would reduce the number of advanced imaging services provided to Medicare patients that are of little or no clinical benefit, thereby reducing the program’s expenditures.

While limiting the amount of imaging results in reduced costs, Epperly notes that a review of high-end imaging service fees is another option. If certain exams were not so expensive, the need for preauthorization would be reduced, he says.

“MRIs, for example, are way overpriced,” he says. “If the cost was dropped to between $100 and $250 each vs. the cost now of well over $1,000, preauthorization would not be needed.”

From the medical technology perspective, it’s not about the cost of the exam but whether it’s being used effectively in the diagnosis and treatment of patients.

“With the proper scan, early diagnosis of a patient’s condition saves money in the long run,” says Ilyse Schuman, managing director of the Medical Imaging and Technology Alliance (MITA). “A proper diagnosis results in fewer tests and less hospitalizations.”

The MITA is part of the National Electrical Manufacturers Association and serves as the voice of medical imaging equipment manufacturers and developers. Overall, Schuman believes that preauthorization interferes with the doctor-patient relationship by introducing a third party into the decision-making process.

Back to 2005
Government scrutiny of imaging spending took off in 2005 with the Medicare Payment Advisory Commission (MedPAC) report to Congress on the increasing number of imaging exams being ordered. The Centers for Medicare & Medicaid Services (CMS) then adopted some of MedPAC’s recommendations in 2006. Then came the Deficit Reduction Act (DRA) of 2005, which placed further restraints on imaging services spending. In 2007, a Government Accounting Office report noted that the enactment of the DRA resulted in reduced federal imaging spending of $1.8 billion from 2006 to 2007, a decrease of 12.7%.

In June 2008, the Government Accounting Office reported increases in Medicare imaging costs of from $6.89 billion to $14.1 billion between 2000 and 2006. In this report, the accounting office made a comparison between how preauthorization helped constrain rising imaging costs for private health insurance providers and recommended that the CMS add more preauthorization mechanisms in an attempt to manage imaging services costs in that sector as well.

With the June report, Health and Human Services raised concerns about the administrative burden of implementing prior authorization for imaging services under Medicare Part B. The criteria used to deny claims may be proprietary and stricter than what Medicare calls for, leaving those denials open to being overturned by the Medicare claims appeals process. A high rate of overturned denials would suggest an ineffective policy tool.

Many industry experts consider preauthorization unprecedented in Medicare, where carriers currently review claims for payment after procedures have been performed. The CMS would have difficulty approving procedures and payments on a prior authorization basis and then subsequently determining during a postpayment or fraud-and-abuse review that the claim should not have been paid.

Introducing preauthorization to the CMS is a complicated process from the standard of care perspective as well, Patti says. Most private health insurance payers are used to dealing with a younger population, one that is less frail and less prone to illness. Medical conditions in older patients can more likely reach critical stages faster than with younger subjects.

“Any process that creates delays in treatment is inappropriate for CMS,” Patti says.

Politics and Preauthorization
Soffa also sees challenges with preauthorization for Medicare in providing real-time support. Calls will most likely happen more frequently due to the nature of medical problems that older patients face, he says.

He is also concerned about the role politics may play in the process of determining nationwide appropriate care standards for Medicare patients. In this case, he believes it’s not “just about the science.”

“Whose ox will be gored?” Soffa asks. “If a manufacturer has a vested interest in the technology, will they lobby to have that technology included in the appropriate care criteria?”

According to Epperly, educating physicians about the criteria used for approval or denial of imaging studies would go a long way toward helping the preauthorization process run smoothly. He suggests that RBMs make their criteria for certain conditions available to physicians so, for example, they can know in advance what steps need to be taken before ordering an MRI for a patient’s lower back pain.

“Making the criteria available to physicians would start to affect doctors’ behavior and accomplish the goal of appropriate imaging,” he says. “If you consider the definition of education, it is a series of items that change one’s behavior.”

Patti, a radiologist who practices at Massachusetts General Hospital in Boston, agrees that the proprietary nature of criteria and algorithms used in the preauthorization process leave questions regarding how preauthorization decisions are made.

“The criteria are not published,” Patti says. “They’re not open to scrutiny. They claim to be evidence based, but I don’t know.”

Complicated Issue
With more data, Epperly says, physicians can make better-informed decisions and not overorder tests. As an example, he cites a recent case in which he had a patient complaining of a severe headache. He was concerned about a potential aneurysm or brain hemorrhage and ordered an MRI. Because she was a patient in his office rather than in the emergency department, there was trouble obtaining preauthorization for the exam in a timely manner. Rather than waiting for a decision, Epperly sent the patient for the MRI, resulting in a $1,400 bill for the patient.

“I tried to do the right thing to help her,” he says. “If preauthorization could just be more efficient, the patient and the physician could make a more educated decision.”

According to Soffa, there is no need for RBMs to post specific criteria, as professional organizations began establishing standard of care guidelines as early as the late 1980s. He also cites the ACR’s appropriateness criteria as standards to follow when considering imaging orders.

“There are a lot of criteria out there,” he says. “We don’t need to create more. They just need to be compiled and used.”

To complicate matters further, the use of CPT codes for ordering exams can cause problems if the right code isn’t used or if changes occur in the patient’s medical condition once the preauthorization process starts. Patti notes that some RBMs will approve a range of CPT codes, but others practice a single CPT code approval process. This single-code approval process places radiologists in a tight situation in the event that a change needs to be made.

As an example of what could happen with the single-code approval process, Patti cites a hypothetical situation in which a physician orders a CT scan of the pelvis and abdominal regions to include contrast for a patient suffering abdominal pain. The radiologist discovers just prior to the exam that the patient is allergic to the contrast. If the single code that covers the CT scan with contrast was approved, rather than a range of codes that includes a CT scan with contrast, the radiologist’s choice is to either have the patient reschedule the exam or perform the appropriate scan and forgo payment.

“It’s a disadvantage to the patient,” he says. “The ACR has been discussing this single-code process. We see it as poor patient care and a way to save money.”

RBM Guidelines
American Imaging Management takes a broader approach to CPT coding, Soffa says. Rather than attaching codes to an exam, the RBM uses “real language” to describe the ordered exam and does so in a range of procedures called a grouper code. For example, an order for a CT scan of the abdomen would allow for variances with or without contrast. The radiologist’s staff doesn’t have to risk locking onto one procedure and code by memorizing a system of codes for all procedures available, he says.

“Medicine is extremely variable,” Soffa says. “We’re trying to determine the medical necessity of an exam rather than tell the radiology group how to perform the exam. With our system of grouping exams, that decision is left to the radiology center.”

Steering Exams?
Another aspect of preauthorization that Patti sees as potentially altering a patient’s care is the practice of steering examinations. In this situation, a patient’s exam is approved for a particular facility that may not necessarily be where the physician wants the exam to be conducted.

“RBMs have set up a network of low-cost providers and send patients only to those facilities, referring to this as a cost-effective network of imaging locations.”

Despite pitfalls and stumbling blocks along the way, overall, medical professionals, imaging experts, insurance companies, and the federal government are all working to find the best possible solution for providing Americans with the best possible medical care at a cost that won’t bankrupt the country. Whether the issue is appropriateness or cost, one thing is clear when it comes to preauthorization: “The intent is good,” Epperly says. “We need to keep costs down and order the right tests. We just haven’t hit on the right mechanism for doing this yet.”

— Kathy Hardy is a freelance writer based in Phoenixville, Pa., and a frequent contributor to Radiology Today.