Audit finds medical imaging waste

Report says state must lower Medicaid reimbursements and ban physician self-referral

The state auditor today called on the Legislature to adopt the federal ban on physicians referring patients to medical imaging facilities in which the doctors have a financial self-interest.

The report from State Auditor A. Joseph DeNucci’s office said millions of state dollars are being wasted on unnecessary Medicaid imaging reimbursements. The report said a significant portion of the waste could be curtailed if Massachusetts adopted the ban. Massachusetts is one of 17 states without the ban.

“We have made great medical advances through the use of advanced imaging services in recent years, but the increase in the use of these services could leave our Medicaid program vulnerable to charges for unnecessary services,” DeNucci said in a press release.

The audit comes on the heels of a CommonWealth magazine investigation that cited an unchecked explosion in the use of medical imaging and its impact on health care costs. The magazine reported that, in Massachusetts, privately-insured outpatient imaging costs increased 26 percent between 2006 and 2008. Less than half of the increase was attributable to cost increases, while more than 60 percent was pegged to the rising number of images taken. The CommonWealth report found there were more MRI machines in the state of Massachusetts than in all of Canada and Australia combined.

The CommonWealth report also highlighted the problem with physician self-referrals, citing studies that showed an inordinate amount of tests ordered by doctors who had a financial stake in the facilities where they sent their patients.

The federal government enacted a law commonly referred to as the Stark Law that prohibits payments to physicians who refer their patients to facilities they own or in which they have a financial stake. There are some loopholes that Congress is being pushed to close but many states have adopted the Stark language and added additional measures to close loopholes at their levels.

Massachusetts only forbids doctors from referring patients to physical therapy services where they have a financial interest. Also, unlike many other states, Massachusetts does not have a law requiring doctors to disclose to their patients if they have an ownership stake in a facility where the patient is being referred.

The state audit focused solely on Medicaid and MassHealth claims but found similar increases in the cost and utilization of medical imaging. According to the report, MassHealth paid more than $94 million for radiology services. Nearly one third of that — $30 million – went for advanced imaging such as MRIs and CT and Pet scans for nearly 600,000 patient claims. The report said the advanced imaging cost represented a 35 percent increase from 2004 and nearly 76 percent hike in the number of tests performed.

The main reason the cost increase stayed lower is the reduction in federal reimbursement for such claims, but DeNucci’s report said the state’s reimbursement rates were above Washington’s and cost taxpayers more than $8 million in unnecessary payments for so-called “crossover” patients, those patients who are eligible for both Medicare and Medicaid benefits.

But the audit also said the lack of regulations preventing physician self-referral also contributed to the increase in utilization. The audit referred to studies, which were also cited in the CommonWealth story, that showed doctors with a financial self-interest were as much as three times more likely to refer their patients for an advanced imaging test as physicians who did not have a stake in an imaging facility.

Meet the Author

Jack Sullivan

Senior Investigative Reporter, CommonWealth

About Jack Sullivan

Jack Sullivan is now retired. A veteran of the Boston newspaper scene for nearly three decades. Prior to joining CommonWealth, he was editorial page editor of The Patriot Ledger in Quincy, a part of the GateHouse Media chain. Prior to that he was news editor at another GateHouse paper, The Enterprise of Brockton, and also was city edition editor at the Ledger. Jack was an investigative and enterprise reporter and executive city editor at the Boston Herald and a reporter at The Boston Globe.

He has reported stories such as the federal investigation into the Teamsters, the workings of the Yawkey Trust and sale of the Red Sox, organized crime, the church sex abuse scandal and the September 11 terrorist attacks. He has covered the State House, state and local politics, K-16 education, courts, crime, and general assignment.

Jack received the New England Press Association award for investigative reporting for a series on unused properties owned by the Catholic Archdiocese of Boston, and shared the association's award for business for his reporting on the sale of the Boston Red Sox. As the Ledger editorial page editor, he won second place in 2007 for editorial writing from the Inland Press Association, the nation's oldest national journalism association of nearly 900 newspapers as members.

At CommonWealth, Jack and editor Bruce Mohl won first place for In-Depth Reporting from the Association of Capitol Reporters and Editors for a look at special education funding in Massachusetts. The same organization also awarded first place to a unique collaboration between WFXT-TV (FOX25) and CommonWealth for a series of stories on the Boston Redevelopment Authority and city employees getting affordable housing units, written by Jack and Bruce.

About Jack Sullivan

Jack Sullivan is now retired. A veteran of the Boston newspaper scene for nearly three decades. Prior to joining CommonWealth, he was editorial page editor of The Patriot Ledger in Quincy, a part of the GateHouse Media chain. Prior to that he was news editor at another GateHouse paper, The Enterprise of Brockton, and also was city edition editor at the Ledger. Jack was an investigative and enterprise reporter and executive city editor at the Boston Herald and a reporter at The Boston Globe.

He has reported stories such as the federal investigation into the Teamsters, the workings of the Yawkey Trust and sale of the Red Sox, organized crime, the church sex abuse scandal and the September 11 terrorist attacks. He has covered the State House, state and local politics, K-16 education, courts, crime, and general assignment.

Jack received the New England Press Association award for investigative reporting for a series on unused properties owned by the Catholic Archdiocese of Boston, and shared the association's award for business for his reporting on the sale of the Boston Red Sox. As the Ledger editorial page editor, he won second place in 2007 for editorial writing from the Inland Press Association, the nation's oldest national journalism association of nearly 900 newspapers as members.

At CommonWealth, Jack and editor Bruce Mohl won first place for In-Depth Reporting from the Association of Capitol Reporters and Editors for a look at special education funding in Massachusetts. The same organization also awarded first place to a unique collaboration between WFXT-TV (FOX25) and CommonWealth for a series of stories on the Boston Redevelopment Authority and city employees getting affordable housing units, written by Jack and Bruce.

In addition to calling on MassHealth to adopt the federal Medicare reimbursement rate for advanced imaging, the audit recommends lawmakers revisit their earlier attempts to “piggyback” on the federal Stark Law, which prohibits physician self-referral, as well as an anti-kickback statute, which would prevent doctors from receiving payments or gifts for referring patients to a facility.

“Our review found that (a) unlike many states, Massachusetts does not regulate self-referral for advanced imaging services to prohibit or, at least, disclose self-referrals to patients, which could potentially result in significant negative consequences, and (b) increases in MassHealth’s reimbursement rate and the rate-setting methodology for advanced imaging services may have caused potential lost savings of $8,587,612 in Medicare crossover payments in fiscal years 2007 through 2009,” the audit states.