Overtreatment in Action: $30 Billion Wasted on Unnecessary MRI, CT Scans

Last Updated Sep 1, 2008 11:36 AM EDT

The news here is a few weeks old, but I was still struck by the fact that large insurers are apparently starting to crack down on the overuse of medical imaging. According to Bloomberg, companies like WellPoint and Magellan Health Services believe that expensive and unnecessary CT and MRI scans cost them roughly $30 billion a year.

These scans cost roughly $2,000 a pop and, at least in the case of CT (computerized tomography) scans, can subject patients to serious levels of radiation. But they're giant moneymakers for hospitals and specialty clinics, which often heavily advertise the high-tech scanners in order to cultivate a "state-of-the-art" image among potential patients. Of course, the machines are also expensive, which creates incentives for doctors to use them as frequently as possible, and then stick insurers or the federal government with the bill.

There's a reason, after all, that radiologists frequently top the lists of best-compensated medical specialties.

The insurers, however, have had enough, and are now increasingly using "radiology benefit managers" to preauthorize such scans:
"We've seen radiology growth trends in the 20 percent-plus range drop to the low single digits'' when pre-screening is used in a health plan, said Wayne DeVeydt, WellPoint's chief financial officer, in a telephone interview last week. Prior authorization "is going to be a huge growth area'' for insurers, he said....

Partly because of expanded pre-screening, growth in the number of procedures using computed tomography, or CT scans, fell to 8.2 percent annually on average after 2003, down from 14 percent a year before that, said Lorna Young of IMV, a market research firm based in Greenbelt, Maryland, in a telephone interview.

In addition to requiring advance approval, screeners are negotiating discounted fees for scans, requiring imaging facilities to win accreditation and guiding consumers to cheaper test centers....

By using pre-screening, UnitedHealth cut the growth in imaging costs for certain medical plans to about 7 percent in 2007 from 12 to 18 percent annually previously, according to Sam Ho, a senior medical officer with the company. That saved $65 million, he said.

Almost $100 billion a year is spent on imaging in the U.S. and that may double by 2013 unless costs are reined in, according to the report today by America's Health Insurance Plans.
Of course, as typically happens with such cost-shifting schemes, there will eventually be a backlash. Christopher Ullrich, a radiologist who heads the managed-care committee for the American College of Radiology, previews it for us:
"You're going to find patients with a headache who turned out to have an aneurysm or who had abdominal pain that wasn't investigated and turned out to be a tumor,'' said Ullrich, a radiologist in Charlotte, North Carolina, in a July 25 telephone interview. It is "hard to live with arbitrary denials and a system with huge administrative burdens with no reimbursement for providing that.''
Oddly, Ullrich apparently had nothing quotable to say about the financial incentives that drive doctors and hospitals to overuse the technology.

But I'm not pretending this is an easy question. The basic problem with advanced medical technology is that while it often can help some people at least some of the time, the cost of deploying it widely enough to be useful in those cases is quickly bankrupting the system. So far, at least, figuring out a proper balance there appears beyond the capabilities of the parties in our whack-a-mole healthcare system.

Update: A new Government Accountability Office report finds that -- surprise, surprise -- Florida led the nation in medical-imaging costs in 2006, with Medicare recipients there averaging three scans a year compared to a nationwide average of two.

(Hat tip: Gary Schwitzer)
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    David Hamilton is the assistant managing editor of CNET News. He has been writing and editing business and tech coverage for about two decades -- the majority of that at the Wall Street Journal in both Tokyo and San Francisco. He is a two-time winner of the Overseas Press Club award and has written for numerous magazines and blogs, including Slate, Science, VentureBeat, CBS Interactive's BNET, California Lawyer and the New Republic.

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