Massachusetts has become a medical imaging mecca, a place where diagnostic scans are fueling cutting-edge medicine— and runaway health care costs.
Gov. Deval Patrick in April took the unprecedented step of rejecting double-digit rate increases being sought by most of the state’s health insurers for their small business plans. It was a popular move politically, but the governor was basically shooting the messenger because he didn’t like the message being delivered. He may have even shot himself in the foot because an appeals board within his administration later said the decision was wrong.
It was another reminder that rising health care costs are not subject to easy solutions. Health insurance rates keep rising because costs keep going up, and one of the biggest cost drivers in Massachusetts is medical imaging, the use of devices such as x-rays, MRIs, CT, and PET scans to take internal pictures of the body. These machines have revolutionized the practice of medicine, but their use in Massachusetts has grown faster than anywhere else on the planet.
Massachusetts, in fact, has become a medical imaging mecca. MRIs, or medical resonance imaging units, cost $1.5 million or more to purchase and an estimated $800,000 a year to operate. Massachusetts has 42 MRIs for every million residents, dwarfing the national average of 26, which is already higher than any other country. There are now more MRI units serving the 6.5 million residents of Massachusetts than there are for the 55 million residents of Australia and Canada combined.
At least $2 billion was spent on medical imaging in Massachusetts in 2008, up more than 20 percent from 2006. After medical procedures, imaging is the fastest growing health care expenditure in the state, exceeding the rate of increase for prescription drugs and administrative expenses.
None of this was supposed to happen. Nearly 40 years ago, Massachusetts and most other states began regulating the delivery of health care services through a statutory review process. Convinced the normal laws of supply and demand didn’t apply to health care, legislators created a Determination of Need program within the Department of Public Health, the goal of which was to make sure that expensive health care services like medical imaging were distributed evenly across the state and to rein in costs by eliminating the spread of duplicative and unnecessary technologies and facilities.
But the agency has failed to accomplish its mission. State officials say lawmakers gutted many of the agency’s enforcement powers in the early 1990s. Until recently, doctors were allowed to sidestep the agency entirely, in some cases buying their own machines and referring their patients for scans. Regulatory resources have also dried up, as the number of employees in the Determination of Need office dwindled from a peak of 25 to just three today.
Even more alarming is the lack of accurate information. The Department of Public Health’s radiation control unit, for example, lists 4,500 medical imaging machines that emit radiation at 1,360 facilities across the state, excluding the offices of dentists and veterinarians. But officials don’t know what specific machines are at each facility, making it nearly impossible to determine whether more or fewer are needed.
“There is not a centralized database of how many there are,” says Dr. JudyAnn Bigby, the state’s secretary of health and human services. “This is definitely the problem with our system. We do not have a system of care that is based on identifying needs and gaps and then planning our health resources based on those needs and gaps. Our system is fundamentally based on who can put a service in place and bill for it and justify its service.”
A medical imaging explosion
When Dr. Julian Wu was completing his residency in neurological surgery nearly 25 years ago, the most reliable ways to diagnose and treat patients were often invasive or painful. Wu, a neurosurgeon at Tufts Medical Center, said either exploratory surgery or procedures such as pneumoencephalography, where air is pumped around the patient’s brain so x-rays could better detect tumors and other abnormalities, were the only viable procedures available to doctors in his delicate field.
“In the old days, we had to do exploration,” says Wu. “You had to do surgery, open the patient to try to find the problem.”
“Imaging really, really revolutionized the way we can dissect the patient without harming them,” says Wu. “You could see things that you couldn’t see before. The beauty of having imaging–you can see the anatomy before you do anything to the patient.”
Wu and others say advanced imaging such as CT scans and MRIs, which eliminate the radiation exposure to patients, and, most recently, PET scans, which have brought cancer detection and treatment to a higher level, gave doctors a whole new set of data to work with. Small tumors that were often overlooked could be seen before they became big tumors. Vascular lesions that might escape the trained eye of a surgeon could be found on a high-resolution digital image. Cardiac imaging and circulation mapping became more precise. Early onset disease could be diagnosed before a patient becomes terminal. Orthopedic surgery treatments could be avoided or at least confined by using scans. In some ways, costs could be controlled or even reduced because less surgery and hospital stays would be needed.
With such obvious benefits, the use of medical imaging exploded. The nation now spends close to $100 billion a year for medical imaging and that figure is expected to double by 2012, according to a study by the McKinsey Global Institute. In 1994, medical imaging manufacturers shipped $5 billion of devices to buyers in the United States. That figure is estimated to be $26 billion this year.
The rapid deployment of the technology is now raising concerns. Since 1980, a typical American’s exposure to radiation has increased 600 percent from advanced medical imaging such as CT and PET scans as well as increased use of mammography and x-rays, according to the National Council on Radiation Protection and Measurement. Medical imaging now accounts for more than 50 percent of all radiation exposure in the United States, up from 15 percent in 1980.
In Massachusetts, a study earlier this year for the state Division of Health Care Finance and Policy found that 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.
“This is a treatment that can be quite useful,” says Stanley Wallack, executive director of the Schneider Institutes for Health Policy at Brandeis University and the study’s lead author. The question facing health care officials, he says, is determining “when’s the appropriate time to use it?”
As the overall cost of medical imaging has soared, so has the debate about what’s driving it. The price for an MRI ranges from $350 to $1,400. Most health insurance plans in Massachusetts pay about $700 to doctor-owned and free-standing facilities. Hospital imaging facilities tend to charge fees toward the higher end of the scale. A report issued earlier this year by Attorney General Martha Coakley, while not specifically mentioning imaging, said hospitals leverage their market power to get favorable payments from health plans. Hospital officials say their higher prices are needed to offset the lower reimbursements they receive for handling Medicare and Medicaid patients.
Local health plans say their imaging costs are rising largely because hospitals are doing more of the scans. According to Blue Cross Blue Shield of Massachusetts, payments for MRIs performed in hospitals rose to nearly half the imaging claims submitted in 2008, up from 40 percent just two years before. At Fallon Community Health Plan, per-member imaging costs increased 33 percent between 2006 and 2009, with 56 percent of imaging expenses being paid to hospitals last year.
A growing body of research suggests medical imaging costs are soaring simply because the technology is so readily available. Bigby borrows the theme from the movie Field of Dreams to explain the phenomenon. “If you build it, people will come,” she says. “Part of the reason we have this demand is the general public thinks having an MRI when they have a headache or a lower back pain is a good thing. More is not always better.”
Dr. John Patti, a radiologist at Massachusetts General Hospital and chairman of the American College of Radiology, says many patients have what radiologists refer to as “pro-athlete MRI syndrome.” They see reports of tests being routinely performed on an injured sports star and want the same treatment. “Referring physicians want to make sure no stone is left unturned,” says Patti. “That has driven physicians to order inappropriately.”
Doctors also practice defensive medicine, ordering tests and scans that aren’t really necessary but can be helpful in easing patient concerns. Dr. Lowell Rosman, a retired physician from Andover who remains a shareholder in a medical imaging company, says he sometimes ordered scans for patients just to protect himself. “They’ll say, ‘What if it turns out to be a brain tumor, don’t you think we should be sure?’ There’s always the threat of litigation if you’re wrong,” Rosman says. “Sometimes, realistically, you can’t say no. It may be difficult to deny them that test.”
Paul Levy, CEO of Beth Israel Deaconess Medical Center, says many medical providers have an infatuation with technology, particularly imaging equipment. “There’s a tendency for academic medical centers to want to have the best, latest, highest-resolution medical imaging and to always buy that new machine,” Levy says. “I think we have to be realistic. While some of that is driven by medical necessity, a lot of it is driven by the desire to have the latest and the best.”
Robert Adams, owner of South Carolina-based InMed Diagnostics, which operates 10 freestanding imaging facilities, including four in Massachusetts, is one of the beneficiaries of America’s love affair with medical imaging. He says imaging is among the safest investments one can make in these troubled economic times. “It’s not necessarily recession-proof, but I see it as recession-resistant,” says Adams, a Brockton native who now lives in Florida. “It’s a great field to be in. From a job security standpoint, it’s a growth area.”
Faulty Determination of Need process
For the state’s Determination of Need program to work, regulators need to know how many machines are out there and where they are located. They also need to be able to restrict the deployment of new machines in areas where there is sufficient capacity. But that hasn’t happened in Massachusetts, largely because regulators have lacked the resources and tools to do their job.
When the Determination of Need program was launched in 1972, its charge was to regulate hospitals and ambulatory surgical centers that were spending more than set minimums for different types of capital expenditures. While Massachusetts was one of the early adopters of need-based oversight, Congress passed a mandate in 1974 for all states to get on board. The idea was to rein in runaway health costs by having government regulate how health care resources are distributed and to ensure all segments of the population—rich and poor, urban and rural —had access to care when they needed it.
Congress repealed the law in 1987 and at least 14 states followed suit because the process had become embroiled in politics, with decisions being made as much by connections as need. Massachusetts didn’t do away with its law, but lawmakers did significantly change the oversight guidelines in 1991.
“The whole [determination of need] process was pretty much deregulated back in the early ’90s by the Legislature to basically be one where, quite frankly, the most important factor the DPH is allowed to look at is whether or not the provider who is offering the service can afford it,” says Bigby.
From the outset, one large loophole in state regulations was an exemption allowing physicians to purchase and operate equipment without going through the Determination of Need process. The reasoning was that relatively few doctors could afford to purchase such expensive machines and, if they did, the accessibility and immediacy of a doctor’s machine were in a patient’s best health interests. But, with financing from equipment manufacturers, doctors began purchasing the new and costly imaging technology in greater and greater numbers.
When the Legislature revamped the Determination of Need process in the early 1990s, lawmakers tried to close the physician loophole by prohibiting doctor ownership of imaging devices. But they didn’t shut the door completely. Doctors who declared their intention to buy an imaging machine were given a “physician exemption letter” from the Determination of Need process, essentially an entitlement to buy one machine sometime in the future. The doctor didn’t even have to buy the machine himself; he could sell the letter and the right to own a machine to anyone else. Some sold them immediately; others held on to them like money in the bank until the law was changed again to set a 2008 expiration date for the letters.
There was no limit on exemption letters. The medical director of Shields Health Group, one of the largest imaging companies in the state with 24 sites, obtained 12 exemption letters for MRIs for the company.
Members of Concord Radiologists, a now-defunct medical group practice in Concord, obtained an exemption letter for an MRI machine in 1991. In 2008, a year after the practice dissolved, the letter was transferred to Harbor Medical Associates, a Weymouth practice made up primarily of cardiovascular, internal medicine, family medicine, and other non-radiology practices. It’s unclear whether money changed hands; neither of the doctors listed as president or the CEO of Harbor Medical Associates returned calls.
Joan Gorga, director of the Determination of Need program, says her department uses a licensing process to regulate new purchases of imaging equipment by hospitals and medical centers, but the agency can do little to prevent an existing license holder from adding more machines. “We may be limiting competition but [operators] can get them through expansion,” she says.
Despite the various regulatory flaws, Gorga says the once-rapid expansion of imaging facilities is no longer happening. “That’s all pre-2008,” Gorga says, drawing a line in the calendar for when she says the state began “to ask the tough questions” of applicants.
Gorga says there have been no applications for new MRI or CT units for several years. She says the enhanced oversight her office is now exerting over the application process is a “deterrent” that likely keeps prospective operators from attempting to open a facility where one may not be needed.
But even without new approvals the stockpile of machines keeps growing. According to records obtained by CommonWealth, at least 21 MRI units have been added around the state since January 2008, through expansion and physician exemption letters.
Gorga also acknowledges the Determination of Need process is flawed because she doesn’t know how many advanced imaging units are in use in Massachusetts. I reviewed applications and other paperwork going back as far as 1986 and concluded the state has 268 MRI facilities as well as at least 103 CT units, which includes the cutting-edge positron emission tomography (PET) technology used to detect cancer and other diseases in organs. Asked if my number is correct, Gorga says matter-of-factly: “It very well could be.”
Self-referrals raise concerns
Dr. Jonathan Kruskal has been watching the growth of medical imaging for nearly 30 years, since graduating from medical school in his native South Africa. He marvels at the benefits of imaging and how it has helped both doctors and patients. But he’s troubled by a dark underside to medical imaging spawned by the big-money lure of the technology.
As chief of radiology at Beth Israel Deaconess Medical Center, he has watched as a number of doctors, including some at his own hospital, sent patients to imaging facilities where they have a financial stake. Like many in his field, he says the self-referral phenomenon is driving up costs unnecessarily and endangering patients through potential misdiagnoses and overexposure to radiation.
Kruskal says some physicians send higher-paying privately insured patients to imaging centers where the doctors have a financial interest while referring government-paid or indigent patients—who carry a much lower reimbursement rate or even none at all—to hospital facilities. Kruskal would not name names but says “there is a lot of nastiness” because of the money involved.
“It’s immoral and unethical,” says Kruskal. “I’m made aware on almost a daily basis where physicians are owners of CT scans… It’s pretty much out of control. Physicians don’t seem able to police themselves. Something has to be done at the legislative level.”
A 2008 national study by Harvard-affiliated doctors and public health analysts suggested patients were more likely to be referred for medical imaging if they were being seen by a physician with a financial stake in an imaging facility or a colleague of that physician in the same specialty. The study said patients being seen by those types of physicians were as much as three times more likely to be sent for scans than if they were treated by a doctor who refers patients to radiologists for imaging procedures.
“The magnitude of our findings and their consistency with those of other studies suggest that financial incentives may play a role,” wrote the researchers from Harvard and the Institute for Technology Assessment at Massachusetts General Hospital.
Massachusetts is one of 17 states that have no prohibition on physician self-referrals. The most recent effort to regulate self-referral in Massachusetts was legislation filed in 2006 by state Rep. Paul Kujawski, a Webster Democrat. The bill died in committee, but the following year a special legislative commission issued a report bolstering the contention that doctors who had imaging investments were ordering unnecessary scans and, in many cases, rescans because the initial ones were botched or read improperly.
“We learned many doctors were buying second-hand machines and referring their patients to these facilities where they had a stake,” Kujawski says.
In 1992, Congress passed the so-called Stark Law, which prohibits physicians in most cases from being reimbursed if they refer Medicare or Medicaid patients to facilities in which they have a financial self-interest. At least 33 states have passed some version of the law, named for its original sponsor, US Rep. Pete Stark of California, but Massachusetts only prohibits self-referrals by physical therapy services.
Some private insurance plans in Massachusetts have begun to clamp down on medical imaging by requiring preauthorization for all scans, certification of the facility by the American College of Radiology, or both. The goal is to reduce unnecessary scans by requiring physicians to provide more evidence of why they are needed.
Patti, the American College of Radiology chairman, says the relative minor restrictions on self-referrals are having limited impact. “Minor regulatory changes are like throwing darts at the big elephant sitting in the room. The problem needs to be solved at its core,” he says. “Patients may be receiving unnecessary procedures on the basis of a physician’s financial interest.”
Efforts to speak with physicians who have a financial interest in an imaging facility were unsuccessful. I called 16 practices around the state where physicians own imaging machines, and 15 never returned my calls. One doctor I reached said he would call back, but never did.
Physicians can also acquire a financial interest in an imaging facility through block leases. Under these arrangements, which are difficult to document, doctors pay an imaging facility a set price for a block of time at an imaging facility and then bill their patients or health plans directly for any services provided.
Adams, the InMed owner, says he leased blocks of time to Massachusetts physicians but ended the practice four years ago on the advice of his attorney because it violated updated Medicare and Medicaid prohibitions on self-referral and could adversely impact his ability to remain certified. But he acknowledged it is still likely going on at other facilities, although he says he has no evidence.
“Physicians are always looking for alternative ways to improve their income because it keeps going down,” he says, citing lower reimbursements from Medicare and Medicaid as well as pressure from health plans to cut payments.
In Illinois in 2007, the attorney general brought action against 325 doctors who had similar arrangements. But a spokeswoman for Attorney General Coakley said there is no ongoing effort to ferret out similar arrangements here.
Bigby, who supports moving to a system of paying for patient outcomes instead of individual services, says not having a reliable inventory of imaging machines and their utilization precludes public understanding of how the soaring use of the procedures is contributing to spiraling health care costs.
“I think if you asked the American public, ‘Would you rather us spend our resources to make sure the state has more MRIs than Canada and Australia combined versus making sure we have enough pediatricians, or orthopedic surgeons or ob/gyns?’ I think people would wake up and take notice,” she says. “Why is it we have more MRIs than most countries yet we have a primary care physician shortage? Because MRIs pay better and generate more revenue than primary care doctors do.”
Medical Imaging Primer
Computed Tomography (CT also known as CAT): A CT scan is a three-dimensional look inside the body that combines x-ray and computer technology to create detailed, cross-sectional pictures. The procedure, which involves more radiation than a regular x-ray, is used for treatment and diagnosis of such things as brain injuries, tumor detection, muscle and bone disorders, and complex fractures.
|Mammogram: A low-dose x-ray specifically designed to capture a picture of breast tissue. A more recent development, not widely in use, is digital mammography, which allows a computer to view and manipulate the x-ray image of the breast.|
|Magnetic Resonance Imaging (MRI): An alternative to CT scans that takes a three-dimensional image using magnets and radio waves rather than radiation. An MRI is used for detecting chest or abdominal tumors, heart abnormalities, or liver disease. It is also used for pediatric diagnoses where radiation carries a greater risk.|
|Positron Emission Tomography (PET scan): A radioactive isotope is injected into a patient and then traced by the PET scan to detect cancers and organ function. It can also be used to determine brain function, diagnose heart problems, and find areas of poor blood flow to the heart.|
|Ultrasound (also known as sonography): An image is formed from sound waves rather than ionizing radiation. A computer captures the sound waves after they are reflected off body structures to create a picture. Ultrasound is often used for fetal monitoring, to guide a biopsy needle, diagnose thyroid problems, and detect prostate abnormalities.|
|X-ray: The most common form of medical imaging, x-rays send particles called photons through the body to capture an image. Structures that are dense, such as bone, block most of the x-ray particles, and they appear white in the image. Structures that contain air appear black. Muscle, fat, and fluids will appear as shades of gray in an x-ray image. X-rays are used to determine if a bone is broken, diagnose arthritis and osteoporosis, or locate objects accidentally swallowed by a child.|
Source: National Imaging Associates.