David Pike

MedSolutions – Medicaid Agencies Can Successfully Address Increasing Costs with Radiology Benefits Management Programs 

While the current recession has impacted Americans, businesses, and government programs throughout the nation, few are experiencing the financial strain more than Medicaid agencies. According to the Kaiser Commission on Medicaid and the Uninsured, “since the start of the recession, Medicaid enrollment has grown by 8.8 million,” pushing overall enrollment to 51.5 million.1  Maintaining this level of enrollment has forced states to seek ways to save money without negatively impacting member benefits.

Some states are controlling costs, while continuing to support this unprecedented growth, by implementing radiology benefits management (RBM) programs. RBM programs reduce the overuse of advanced diagnostic imaging procedures. The procedures addressed by RBM programs typically include computerized tomography (CT) scans, magnetic resonance imaging (MRI), and positron emission tomography (PET). 

RBM programs have been adopted by commercial health insurance companies for decades and are successfully used by some of the nation’s largest insurers, including Aetna, CIGNA, UnitedHealthcare, and Humana. According to an article published in the Radiology Business Journal in July 2009, it is estimated that RBM programs cover approximately 100 million to 130 million health insurance members in the United States and have saved health insurance companies hundreds of millions of dollars.2 

Despite the success of RBM programs in the commercial health insurance sector, states have been slow to adopt them, but that has changed due to the pressures placed on Medicaid agencies to become more financially efficient. Medicaid agencies that have adopted RBM programs have significantly decreased costs associated with beneficiary imaging services, while increasing the quality of patient care and maintaining high levels of physician and beneficiary satisfaction.

When an RBM program is implemented by a health plan, providers submit authorization requests to the RBM organization prior to patients receiving advanced imaging procedures. These requests are reviewed for appropriateness. Ideally, these appropriateness decisions are determined using evidence-based guidelines created through the integration of well-known and widely accepted medical society standards and current medical literature, as well as input from recognized clinical subject matter experts.  High-quality RBM programs also support the prior authorization process with clinical staff experienced in the appropriate use of diagnostic radiology, offering providers additional resources to assist with their advanced imaging requests.

RBM programs have become a necessity for insurers seeking to decrease costs due to the increased growth in advanced imaging utilization. America’s Health Insurance Plans (AHIP) has stated that diagnostic advanced imaging costs are reported to be the fastest growing component of medical technology, with spending approaching $100 billion annually. Several factors contribute to this increase in imaging, including:

  • Use of services previously unavailable or difficult to access.
  • Adoption of emerging technologies without education on their appropriate use and how they contribute to clinical situations.
  • Quality issues resulting in the duplication of procedures due to the ineffectiveness of initial scans.
  • Rise in self-referrals, with providers ordering advanced imaging procedures for their patients and either performing the procedure themselves or having the procedure completed at a facility from which they receive a financial incentive. According to a 2002 article in the American Journal of Roentgenology, self-referring physicians performing their own imaging “are at least 1.7–7.7 times as likely to order imaging as non-self-referring physicians in the same specialty who see patients with the same problems.” Advanced imaging procedures were ordered as much as 54% more often by physicians with ownership interests in outside facilities than by non-self-referring physicians.3
  • Defensive medicine practices, with physicians ordering procedures to protect them against litigation in the event of an unfavorable patient outcome. According to one report, it has been estimated the practice of defensive medicine costs the United States healthcare system from $60 billion to $108 billion dollars annually.4 

RBM programs offer more than just financial benefits to Medicaid programs. Many patients and healthcare providers are unaware of the significant health risks associated with some advanced imaging procedures. HealthLeaders Media stated in 2009 that “the National Cancer Institute estimates nearly 30,000 excess cancers occurred from the 72 million CT scans in the U.S. just in 2007. About half of those cancers may be lethal.”5  By evaluating a provider’s advanced imaging request and confirming its appropriateness, RBMs help eliminate unnecessary radiation exposure, which reduces patient safety risks and future healthcare issues, as well as the costs of treatment.

RBM programs have been proven to reduce the financial burden of advanced imaging overutilization within our healthcare system. RBM programs are so successful that in June 2011, the Medicare Payment Advisory Commission (MedPAC) recommended that the U.S. Congress implement a prior authorization program in Medicare to address practitioners who order a substantially larger number of advanced imaging services than their peers.6  In addition to assisting with the financial burdens experienced by Medicaid agencies, states have also applied prior authorization services to state employee health plans, resulting in significant savings.

States considering an RBM program should thoroughly review several factors before choosing an appropriate organization to provide these services. Medicaid programs operate differently from commercial insurers, so selecting an RBM organization with extensive experience with both fee-for-service and managed Medicaid programs would be ideal. Various contracting models are available, so states should thoroughly review their options. One example is an administration-only model where the state pays the RBM organization fees to operate the program, with the state remaining at risk for possible fluctuations in costs.  Another example is a capitation model where the RBM organization manages the advanced imaging program for the state and assumes any financial risks due to cost fluctuations. This second model is more advantageous because the RBM organization provides the state with guaranteed savings, removing uncertainty from the budget requirements to operate the program. This allows the state to know definitively how much they will spend on advanced imaging during the contracted period. The RBM program assumes the financial risk if the program’s requirements exceed the established budget. 

Medicaid programs will continue to experience increasing populations as eligibility expansion begins in 2014, based on the new rules established by the Patient Protection and Affordable Care Act. According to the Centers for Medicare and Medicaid Services, Medicaid programs are projected to add 11.6 million people, a 21% increase, to existing enrollments in 2014, and almost 20 million people, a 34% increase, by 2019.7 To address these enrollment increases, states must seek ways to reduce costs, while continuing to offer services vital to their populations. RBM programs are a viable and proven option. States should take note of the successes experienced by other insurers that have implemented RBM services and consider the potential benefits for their Medicaid programs and beneficiaries.

1Kaiser Commission on Medicaid and the Uninsured, “Medicaid Enrollment: December 2010 Data Snapshot,” (December 2011): http://www.kff.org/medicaid/upload/8050-04.pdf.
2Wiley, George, “RBMs: The Debate Heats Up,” Radiology Business Journal (July 01, 2009): http://www.imagingbiz.com/articles/view/rbms-the-debate-heats-up/.
3Brian E. Kouri, R. Gregory Parsons, and Hillel R. Alpert, “Physician Self-Referral for Diagnostic Imaging: Review of the Empiric Literature,” American Journal of Roentgenology (October 2002): http://www.ajronline.org/content/179/4/843.full.
4John Carroll, “Going on the Offensive against Defensive Medicine,” Managed Care Magazine: http://www.managedcaremag.com/archives/0503/0503.regulation.html.
5Clark, Cheryl, “The Five Best Things and Five Worst Things About Healthcare in 2009,” HealthLeaders Media (December 23, 2009): http://www.healthleadersmedia.com/page-2/LED-243951/The-Five-Best-Things-and-Five-Worst-Things-About-Healthcare-in-2009.
6Medicare Payment Advisory Commission, “Improving Payment Accuracy and Appropriate Use of Ancillary Services,” (June 2011): http://www.medpac.gov/chapters/Jun11_Ch02.pdf.
7Centers for Medicare and Medicaid Services, “2010 Actuarial Report on the Financial Outlook for Medicaid,” (December 21, 2010): http://www.cms.gov/ActuarialStudies/downloads/MedicaidReport2010.pdf.


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