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 SteinwaldDirector, 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

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.

GAO Staff and Internal Organization

• About 3,150 employees• 13 “mission” teams • Locations: D.C. Headquarters (75%) and Field

offices (25%)

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

Long-Term Fiscal Challenge Driven by Health Care Spending

0

5

10

15

20

25

30

2008 2020 2030 2040 2050 2060 2070 2080

Social Security

Medicaid

Medicare

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.

Percent of GDP

0

10

20

30

40

50

2008 2019 2030 2040Fiscal year

Percent of GDP

Net interest Social Security Medicare & Medicaid All other spending

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.

Growth in Health Care Spending:Cumulative Growth in Real Health Care SpendingPer Capita and Real GDP Per Capita, 1960-2007

Percentage

0

100

200

300

400

500

600

700

800

1960

1962

1964

1966

1968

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

Real health care spending per capita Real GDP per capita

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.

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)

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

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.

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.

23.2

10.38.5

4.1 3.4

36.0

19.1

9.5

5.9 5.4

20062000

0

5

10

15

20

25

30

35

40

Cardiology Vascular surgery Orthopedic surgery Urology

Physician specialty

Percentage of total Medicare Part B revenue

Primary carea

Substantial Variation of In-Office Imaging Use Across Geographic Regions, 2006

Source: GAO analysis of Medicare Part B claims data, Map Resources (map).

Office-based imaging services per beneficiary

$1 to $99 $100 to $199 $200 to $299 $300 to $399 $400 to $499

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.

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.

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.

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 . . .

2000 2001 2002 2003 2004 2005 2006 2007

0

50

100

150

200

250

300

350

400

450

Expenditures per beneficiary in dollars

Year

$220$255

$268$303

$353$392

$419

$375

Imaging Expenditures per Medicare FFS Beneficiary, 2000-2007

Source: GAO analysis of Medicare Part B claims data.

Total imaging expenditures Other imaging expenditures Advanced imaging expenditures

2000 2001 2002 2003 2004 2005 2006 2007

0

0.5

1.0

1.5

2.0

2.5

Number of tests per beneficiary

Year

1.411.52 1.55

1.621.77

1.891.99 2.05

Imaging Tests per Medicare FFS Beneficiary,2000-2007

Source: GAO analysis of Medicare Part B claims data.

Total tests Other tests Advanced tests

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

Drawing It Together:Health Care Reform 2009

• White House• Congress• Interest groups

Health Care Reform 2009: Congress

House:• Tri-Committee Bill: America’s Affordable Health Choices Act

• Ways & Means, Education & Labor, and Energy & Commerce Committees

• July 2009Senate:• HELP: Affordable Health Choices Act.

• July 2009• Finance Committee: “Call to Action” and whitepapers

House/ Senate Conference: ?

Enactment: ?

Elements of Health Care Reform 2009

• Coverage and access• Financing

• Revenues (taxes, etc.)• Savings (Medicare, etc.)

• Delivery and payment system reform

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