California Limits Billing Options for Diagnostic Imaging Arrangements

As diagnostic imaging has come to be seen as the “runaway train” of healthcare spending, federal Medicare regulations relating to imaging (from Stark to the Anti-Markup Rule) have gotten more and more restrictive in hopes of curbing overutilization. Now California is getting in on the act, with a new law signed by Governor Schwarzenegger in late September. The law (Assembly Bill 2794, amending California Business & Professions Code Section 655.8, which takes effect January 1, 2009, sharply restricts California physicians’ ability to bill for the technical component of imaging. With the backing of the California Radiological Society, the new law sharply limits the ability of physicians who order diagnostic imaging tests to bill directly for the technical component of diagnostic imaging services (CT, MRI and PET).

The law is calculated to cut back on the ability of physicians to enter into creative leases of imaging facility time and then bill for the technical component. The law takes aim at billing by ordering physicians, but exempts interpreting physicians, who can still bill globally as long as they didn’t order the image and interpreted it through their group.

The new law may be a model that other states adopt. Nonetheless, it is more likely to slow rather than stop the growth of diagnostic imaging. Ultimately, the driving forces behind the growth of imaging are more systemic, such as a physician payment structure that incentivizes the use of imaging in lieu of traditional, “low tech” diagnosis.

Private Payors Tighten Up Reimbursement of Diagnostic Imaging

Anna Wilde Matthews reports in the Wall Street Journal on a growing trend: health insurers are taking a page out of Medicare’s playbook and increasing measures to rein in the “skyrocketing costs of imaging scans like MRIs.” In contrast to Medicare’s strategy (confusing rules and recovery audits), private health plans have turned to so-called “Radiology Benefits Managers,” or RBM’s. The RBM’s require doctors to get permission to do a scan before the insurer will agree to pay for it. The concerns about costs are understandable:

Scans have helped drive up health-care costs in recent years. The number of computed tomography, or CT, scans, and magnetic resonance imaging, or MRIs, increased 43% in five years to a combined 96.2 million procedures in 2007, according to IMV Medical Information Division Inc., a market-research firm. Positron emission tomography, or PET scans, more than tripled from 2001 to 2005 to an estimated 1.1 million.