X-rays and other standard imaging services, CT,  and certain nuclear medicine services, such as positron emission  tomography (PET), use radiation; ultrasound uses sound waves; MRI uses  magnets and radio waves. Medicare Spending on Imaging Increased across the Six Imaging Modalities but Grew Faster for Advanced Imaging Services

Medicare spending on imaging services paid for under the Part B physician  fee schedule more than doubled from 2000 through 2006, increasing to  about $14 billion. 1.) The proportion of Medicare  beneficiaries receiving at least one imaging service increased from   63 percent to 66 percent during this period. Several factors account for the rest of the growth in Medicare spending for  imaging services. 2). Third, in-office imaging spending per beneficiary varied  substantially across geographic regions of the country, suggesting that not  all the spending was necessary or appropriate. Physicians Generated an Increasing Share of Revenue from In-Office Imaging Services

Consistent with these trends, physicians in specialties other than radiology  who billed Medicare for in-office imaging services obtained an increasing  share of their Medicare revenue from imaging services from 2000 to 2006. We found that per beneficiary spending on imaging  services provided in physician offices varied almost eight-fold across the  states in 2006—from $62 in Vermont to $472 in Florida (see fig. To Manage Imaging Expenditures, Private Health Care Plans in Our Study Use Certain Practices to Constrain Spending Growth

Similar to Medicare, private health plans in recent years have experienced  rapid growth in imaging services, particularly in advanced imaging. Officials of the plans or the RBMs they use told  us that prior authorization, which requires physicians to obtain some form  of plan approval before ordering a service, was the practice most  important to managing their physicians’ use of imaging services. This practice was in addition to retrospective payment  safeguards commonly used to identify medical claims that do not meet  certain billing criteria. Instead,  CMS employs, through its claims administration contractors, an array of  retrospective payment safeguards, or activities, that occur in the post- delivery phase of monitoring services. With respect to rapidly growing imaging  services, the experience of the private plans in our study suggests that the  benefits of front-end management of these services exceeded their costs. We believe CMS may be able to improve its prudent purchaser efforts by  adopting strategies such as prior authorization and privileging. To examine the relationship between spending growth and the provision  of imaging services in physician offices, we analyzed Medicare claims data  from 2000 and 2006. To examine the approaches used by private payers that may have lessons  for Medicare in managing spending on imaging services, we selected 17  private payers known to be active in managing imaging benefits that  included a combination of national and regional payers.
Why GAO Did This Study

The Centers for Medicare & Medicaid Services (CMS)--an agency within the Department of Health and Human Services (HHS)--and the Congress, through the Deficit Reduction Act of 2005 (DRA), recently acted to constrain spending on imaging services, one of the fastest growing set of services under Medicare Part B, which covers physician and other outpatient services. GAO was asked to provide information to help the Congress evaluate imaging services in Medicare. In this report, GAO provides information on (1) trends in Medicare spending on imaging services from 2000 through 2006, (2) the relationship between spending growth and the provision of imaging services in physicians' offices, and (3) imaging management practices used by private payers that may have lessons for Medicare. To do this work, GAO analyzed Medicare claims data from 2000 through 2006, interviewed private health care plans, and reviewed health services literature.

What GAO Found

From 2000 through 2006, Medicare spending for imaging services paid for under the physician fee schedule more than doubled--increasing to about $14 billion. Spending on advanced imaging, such as CT scans, MRIs, and nuclear medicine, rose substantially faster than other imaging services such as ultrasound, X-ray, and other standard imaging. GAO's analysis of the 6-year period showed certain trends linking spending growth to the provision of imaging services in physician offices. The proportion of Medicare spending on imaging services performed in-office rose from 58 percent to 64 percent. Physicians also obtained an increasing share of their Medicare revenue from imaging services. In addition, in-office imaging spending per beneficiary varied substantially across geographic regions of the country, suggesting that not all utilization was necessary or appropriate. By 2006, in-office imaging spending per beneficiary varied almost eight-fold across the states--from $62 in Vermont to $472 in Florida. Private health care plans that GAO interviewed used certain practices to manage spending growth that may have lessons for CMS. They relied chiefly on prior authorization, which requires physicians to obtain some form of plan approval to assure coverage before ordering a service. Several plans attributed substantial drops in annual spending increases on imaging services to the use of prior authorization. In contrast, CMS employs an array of retrospective payment safeguard activities that occur in the post-delivery phase of monitoring services and are focused on identifying medical claims that do not meet certain billing criteria. The private plans' experience suggests that front-end management of these services could add to CMS's prudent purchaser efforts.