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New Study Questions Ability of Radiology Benefit Managers to Lower Costs

WAUWATOSA, Wis., June 1, 2011 /PRNewswire-USNewswire/ -- The national policy debate on whether Radiology Benefit Managers (RBMs) should be required for physicians ordering diagnostic imaging tests for patients is analyzed in a new study appearing in the current issue of Journal of the American College of Radiology (JACR).  The study indicates that the inclusion of these third party decision-makers could actually increase cost to the health care system, largely due to the time consuming administrative burden incurred by providers.

"The Medicare Payment Advisory Commission -  MedPAC - has recommended that Medicare employ RBMs as a way to lower utilization and costs," said David Lee, Ph.D., head of health economics for GE Healthcare, Americas and senior author of Radiology Benefit Managers (RBMs): Cost Saving or Cost Shifting published in the June 2011 issue of JACR.  "However, MedPAC didn't consider the costs that RBMs impose on providers who have to expend significant resources complying with RBM policies and procedures.  Our study brings the hidden costs of RBMs to the forefront."  James V. Rawson, MDb, Sally W. Wade, MPHc co-authored the study with Lee.

RBMs are hired by health insurance companies to conduct prior authorization for advanced imaging services such as CT, MRI, PET/CT and nuclear medicine studies.  The use of RBMs is intended to reduce utilization of imaging services through a variety of mechanisms, including denial of coverage, diverting patients to less expensive imaging services, educating physicians about appropriate imaging and providing physicians feedback about their image ordering patterns relative to their peers.

The study simulated the impact of RBMs on a private health plan with 100,000 members and an annual imaging utilization rate of 135 scans per 1,000 members. According to the study analysis, physicians who order imaging studies delegate to their staffs the collection and communication of the information the RBM requires, and the study calculates the time and cost involved in responding to and addressing the requests. For a population of 100,000 insured individuals, the study estimates that RBMs shift costs of $182,066 onto physicians and their staffs. When scaled up to the approximately 88 million Americans currently covered by private health plans with RBMs, the model suggests 28 percent  of the projected RBM-related savings are shifted to providers, costing them approximately $160 million per year.  Indirect costs associated with RBM actions include decreased productivity resulting from diagnosis without imaging, delays in the provision of needed imaging services and disease progression that could have been prevented or delayed by using diagnostic imaging to determine an appropriate patient treatment course.

While Lee states, "Our conclusion that RBMs may increase rather than decrease cost is based on parameter values used in a simulation model that have not yet been substantiated," he notes there is a growing body of evidence that prior-authorization programs for drugs and other health care services are associated with both cost shifting and added costs to the health care system overall.  Specific to Medicare, Lee contends that an RBM prior authorization program would also likely result in a cost shift to private payers, as Medicare has fixed rates.

Clinical decision support tools, the study's authors contend, are one option for reducing cost shifting caused by RBMs. Similar to RBMs, they provide feedback on the appropriateness of the imaging study being ordered.  Unlike RBMs, decision support tools do not approve or deny requests; rather they provide appropriateness information electronically and on a real-time basis.

Commenting on the Lee, Rawson, Wade RBM study, Liz Quam, the co-founder of the Imaging e-Ordering Coalition, which represents leading healthcare providers, technology companies, and diagnostic imaging vendors, said, "This is one analytic step further demonstrating the need for more credible data on the efficacy of RBMs and for greater consideration of proven results with clinical decision support systems."  In response to MedPAC's recommendation, Quam added, "By referencing proven imaging clinical decision support systems, physicians are able to quickly and effectively recommend the most appropriate course of treatment for their patients at the point of order, rather than having to rely upon prior authorization in advance of treatment. Not only is this approach more efficient for patient care delivery, its provision of immediate clinical feedback and alternative imaging suggestions based on established medical society appropriateness guidelines encourages informed decision-making and significantly lowers administrative costs."  

About GE Healthcare

GE Healthcare provides transformational medical technologies and services that are shaping a new age of patient care. Our broad expertise in medical imaging and information technologies, medical diagnostics, patient monitoring systems, drug discovery, biopharmaceutical manufacturing technologies, performance improvement and performance solutions services help our customers to deliver better care to more people around the world at a lower cost. In addition, we partner with healthcare leaders, striving to leverage the global policy change necessary to implement a successful shift to sustainable healthcare systems.

Our "healthymagination" vision for the future invites the world to join us on our journey as we continuously develop innovations focused on reducing costs, increasing access and improving quality around the world. Headquartered in the United Kingdom, GE Healthcare is a unit of General Electric Company (NYSE: GE). Worldwide, GE Healthcare employees are committed to serving healthcare professionals and their patients in more than 100 countries. For more information about GE Healthcare, visit our website at

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