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Health Care Costs and Health Care Reform: Lessons from Medicare Part B Imaging Services

Health Care Costs and Health Care Reform: Lessons from Medicare Part B Imaging Services. Bruce Steinwald Director, Health Care U.S. GAO Governmental Research Association Conference July 27, 2009. Outline. GAO Mission and Organization Health Care Spending Imaging Study Health Care Reform.

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Health Care Costs and Health Care Reform: Lessons from Medicare Part B Imaging Services

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  1. Health Care Costs and Health Care Reform:Lessons from Medicare Part B Imaging Services Bruce Steinwald Director, Health Care U.S. GAO Governmental Research Association Conference July 27, 2009

  2. Outline • GAO Mission and Organization • Health Care Spending • Imaging Study • Health Care Reform

  3. GAO’s Mission Support the Congress in meeting its constitutional responsibilities and help improve the performance and ensure the accountability of the federal government for the benefit of the American people.

  4. GAO Staff and Internal Organization • About 3,150 employees • 13 “mission” teams • Locations: D.C. Headquarters (75%) and Field offices (25%)

  5. GAO’s Health Care Team • 200 staff members in D.C. and 3 field offices • Work covers all aspects of health care: • Medicare, Medicaid, and SCHIP • Public Health, Disaster Preparedness • Defense Health Care (VA, DOD) • Private Health Insurance • Prescription Drugs • 70 – 80 reports and testimonies per year

  6. Long-Term Fiscal Challenge Driven by Health Care Spending Percent of GDP Medicare Medicaid Social Security Source: GAO analysis of data from the Office of the Chief Actuary, Social Security Administration, Office of the Actuary, Centers for Medicare and Medicaid Services, and the Congressional Budget Office. Note: Social Security and Medicare projections based on the intermediate assumptions of the 2008 Trustees’ Reports. Medicaid projections based on CBO’s January 2009 short-term Medicaid estimates and CBO’s December 2007 long-term Medicaid projections adjusted to reflect excess cost growth consistent with the 2008 Trustees intermediate assumptions.

  7. Addressing long-term fiscal imbalance will require changes in federal spending and tax policies Revenue Source: GAO’s March 2009 analysis based on the Trustees’ assumptions for Social Security and Medicare. Notes: Discretionary spending other than stimulus provisions grows with GDP after 2009; stimulus provisions are assumed to be temporary. Expiring tax provisions are extended, except for expiring provisions enacted in the Recovery Act. After 2019, revenue as a share of GDP is brought to its 40-year historical average of 18.3 percent of GDP plus expected revenues from deferred taxes, (i.e. taxes on withdrawals from retirement accounts). Medicare spending is adjusted based on the assumption that physician payments are not reduced as specified under current law.

  8. Growth in Health Care Spending:Cumulative Growth in Real Health Care SpendingPer Capita and Real GDP Per Capita, 1960-2007 Percentage Health Care: Average annual growth rate of 4.7% GDP: Average annual growth rate of 2.2% Source: GAO analysis of data from the Centers for Medicare & Medicaid Services, Office of the Actuary, and the Bureau of Economic Analysis. Note: The most current data available on health care spending per capita are for 2007.

  9. Imaging Report Medicare Part B Imaging Services: Rapid Spending Growth and Shift to Physician Offices Indicate Need for CMS to Consider Additional Management Practices (GAO-08-452)

  10. Methodology • Analyzed Medicare Part B claims data from 2000 through 2007, in aggregate, and by six categories of imaging services • CT, MRI, and nuclear medicine services (“advanced” imaging) • Ultrasound, x-ray and other standard imaging, and procedures that use imaging (“other imaging”) • Expenditures include two components of imaging services paid under the Medicare physician fee schedule • Technical component, or provision of the imaging examination • Professional component, or interpretation of the imaging examination • Interviewed private health plans

  11. From 2000 to 2006, Medicare Part B Expenditures for Imaging Services More than Doubled, As Use of Advanced Imaging Services Grew • Expenditures increased across all imaging categories, but grew almost twice as fast for advanced imaging services (CT, MRI and nuclear medicine). • Advanced imaging accounted for 54 percent of total imaging expenditures in 2006 compared to 43 percent in 2000.

  12. Percentage of total Medicare Part B revenue 40 35 30 25 20 15 10 5 0 Cardiology Vascular surgery Orthopedic surgery Primary carea Urology Physician specialty 2000 2006 Physicians Deriving Increasing Share of Revenuefrom In-Office Imaging Source: GAO analysis of Medicare Part B claims data. aIncludes general and family practitioners and internists.

  13. Substantial Variation of In-Office Imaging Use Across Geographic Regions, 2006 Office-based imaging services per beneficiary $1 to $99 $100 to $199 $200 to $299 $300 to $399 $400 to $499 Source: GAO analysis of Medicare Part B claims data, Map Resources (map).

  14. To Manage Imaging Expenditures, Private Health Plans in our Study Use Certain Prospective Practices • The plans in our study reported that prior authorization, which requires physicians to obtain some form of plan approval before ordering a service, was the practice most important to managing physicians’ use of imaging services. Sixteen of the 17 plans used a radiology benefits manager to administer their prior authorization program. • Seven of 17 used privileging by which a plan limits its approval for ordering certain imaging services to physicians in certain specialties. • Eight of the 17 plans used physician profiling, which entails a statistical analysis of medical claims data measuring an individual physician’s use of services relative to a desired benchmark. • As a result of these strategies, the plans reported decreased utilization and decreased growth rates.

  15. CMS’s Imaging Management Activities Rely on Retrospective Strategies • CMS administers, through its claims administration contractors, an array of retrospective safeguards designed to achieve payment accuracy. • CMS has contracted with a firm to develop efficiency measures for certain imaging services to determine whether appropriate evidence-based guidelines were adhered to.

  16. Recommendation To address the rapid growth in Medicare Part B spending on imaging services, we recommended that CMS examine the feasibility of adding more front-end approaches, including prior authorization and privileging. HHS raised concerns about the applicability of using prior authorization for the Medicare program.

  17. Since our June 2008 Report was Issued . . . • MIPPA accreditation for advanced imaging (July 2008) • GAO follow-on study of Medicare imaging payment cuts (September 2008) • MedPAC recommended further cuts (March 2009) • President’s 2010 budget requires prior authorization for advanced imaging • Health Care Reform (2009?) may require additional Medicare imaging savings . . .

  18. Expenditures per beneficiary in dollars 450 $419 $392 400 $375 $353 350 $303 300 $268 $255 250 $220 200 150 100 50 0 Year Other imaging expenditures Advanced imaging expenditures Total imaging expenditures Imaging Expenditures per Medicare FFS Beneficiary, 2000-2007 Source: GAO analysis of Medicare Part B claims data.

  19. Number of tests per beneficiary 2.5 2.05 1.99 1.89 2.0 1.77 1.62 1.55 1.52 1.41 1.5 1.0 0.5 0 Year Other tests Advanced tests Total tests Imaging Tests per Medicare FFS Beneficiary,2000-2007 Source: GAO analysis of Medicare Part B claims data.

  20. Health Care Issues Illustrated by the Medicare Imaging Controversy • Rapid spending growth, coupled with substantial geographic variation • Lack of consensus, evidence-based guidelines • Fee-for-service incentives for volume and complexity • Physician self-referral, independence • Development and diffusion of medical technology • Achieving savings without jeopardizing access or quality • Role of special interests and lobbies

  21. Drawing It Together:Health Care Reform 2009 • White House • Congress • Interest groups

  22. Health Care Reform 2009: Congress House: • Tri-Committee Bill: America’s Affordable Health Choices Act • Ways & Means, Education & Labor, and Energy & Commerce Committees • July 2009 Senate: • HELP: Affordable Health Choices Act. • July 2009 • Finance Committee: “Call to Action” and whitepapers House/ Senate Conference: ? Enactment: ?

  23. Elements of Health Care Reform 2009 • Coverage and access • Financing • Revenues (taxes, etc.) • Savings (Medicare, etc.) • Delivery and payment system reform

  24. Delivery and Payment System Reform • Prevention and primary care • Medical home • Integrated delivery systems • Accountable care organizations (ACOs) • Bundled payments • Comparative effectiveness • Electronic health records

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