Recently, prominent health insurance provider, Anthem rolled out a policy ceasing reimbursement for outpatient MRI and CT scans performed at hospitals in nine states. In August, they announced plans to expand that policy to five more states by March 2018, at which point an estimated 4.5 million BCBS members will be affected.
Unsurprisingly, the policy is polarizing among imaging providers. Hospitals clearly aren't in favor of this change (a statement from the ACR calls the policy, "arbitrary and unwise" 1), seeing it as a harsh blow to their bottom line, while freestanding imaging centers see it as an opportunity to expand their services through greater referral volume.
Below we'll take a look at the facts of what Anthem has implemented as well as offer some ideas about what this move might mean as its aftershocks continue to be felt at facilities of all stripes across the medical imaging field.
What the Policy Says
A recent article published by Modern Healthcare describes concisely what Anthem's policy says it has done in nine states and will continue to do in fourteen of the fifteen states it serves: "For its fully insured members, Anthem will no longer pay for MRIs or CT scans delivered at hospitals... unless a review finds it was medically necessary to perform the scans at a hospital." 2 Anthem has, ostensibly, instituted this policy in an effort to reduce hospital costs and, thereby, control the average annual premium paid by their insured members. At the time of this writing, the policy is already in effect in Colorado, Georgia, Indiana, Kentucky, Missouri, Nevada, New York, Ohio, and Wisconsin.
How It Affects Hospitals
Being just a few years removed from the "boom time" when high-end imaging like MRI and CT was a strong (even preeminent) margin driver for hospitals, it's understandable that Anthem's policy has hospitals concerned on the financial side of things. The reimbursements lost by referring imaging to other facilities have made up a subtantial portion of profits at hospitals across the country. Many also feel these reimbursement cuts work directly against their efforts to coordinate care, forcing a third party into the equation and complicating and lengthening the turnaround of a normal diagnostic process.
How It Affects Freestanding Imaging Centers
Freestanding imaging centers tend to feel the opposite of hospitals in terms of the policy's economic implications. The policy is likely to create a spike in patient volume and an opportunity to code significantly more reimbursements for MRI and CT scanning. These imaging centers believe they can be far more cost competitive than their inpatient counterparts. So far, this has been true. Modern Healthcare reports that patients in one midwestern state could save $1,500 by having an extremity MRI conducted in an outpatient imaging center versus a hospital setting 3. Ultimately, it seems providers at freestanding centers and Anthem policymakers are of one accord. Anthem spokeswoman, Lori McLaughlin states that “Hospitals need to recognize they are competing in a market already delivering on convenience, quality and affordability” 4.
From where we at Block Imaging stand in the imaging equipment space, we see this policy setting freestanding centers up for a technological step forward in their imaging systems. Centers who were debating whether or not to upgrade their CT or MRI scanners may find that this uptick in patient volume will not only bring in the necessary capital to upgrade, but also demand that they upgrade in order to remain competitive in a diagnostic imaging market that will be turning increasingly to facilities like theirs.
How It Affects Patients
As healthcare costs continue to rise, high-deductible health plans (HDHP) are gaining market share amongst employers and employees alike. Patients/consumers will certainly be looking at ways to reduce their out of pocket expenses as these deductibles continue to climb. One way consumers will be able to manage their high deductible plan is by shopping outpatient imaging costs.
The offset in this area is one mentioned earlier, cited by hospital administrators and physicians as concerning: a disruption of care coordination and of quality consistency. In comments made recently to Radiology Business Journal, Dr. David Levin, professor and chairman emeritus in the department of radiology at Jefferson Medical College and Thomas Jefferson University Hospital in Philadelphia, said, “It can be an important quality issue in many parts of the country, where the best radiologists are those working in hospitals.” 5.
There are also concerns about patients residing in rural or inner city areas that are underserved by freestanding imaging centers. In these, and some other, locations, a hospital may be the only place MRI and CT technology are available for a considerable radius around the patient's home. Exceptions can be made in these cases, according to Anthem 6, but the burden of proof of necessity and filing the documentation that will be needed to actually receive reimbursement will likely serve as a deterrent to small hospitals.
As the reimbursement pendulum swings toward freestanding centers, hospitals will need to prepare themselves for the coming season. While Anthem only covers fifteen states, it's a relatively safe bet that other insurance providers will move in this direction. Freestanding centers, on the other hand, will need to brace themselves for impact. Whether it's time to upgrade your imaging equipment, or simply review processes at your facility for efficiency, greater volume is likely to be headed your way. And for those who receive their insurance coverage through an Anthem HDHP, expect to start shopping around for imaging services while settling in for the long wait to see if this policy shift is effective in reducing overall costs.
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