Are we willing to continue to pay for a health care entitlement program for our elderly? This is a question we cannot continue to ignore. Over the next 75 years, our estimated unfunded long-term liability for Medicare is $27.7 trillion, a figure that dwarfs the $3.7 trillion exposure for Social Security during the same time period. 1

Into this chasm steps the Medicare Payment Advisory Commission (MedPAC) with some strategic initiatives designed to slow the growth of the Medicare behemoth, outlined in its March 2005 Report to Congress, Medicare Payment Policy2 (see story in this month’s STAT Read). Central to its proposals is reigning in imaging costs, identified as the fastest-growing service paid under the physician fee schedule between 1999 and 2002: 10.1% versus the 5.2% annual growth rate for all services. MedPAC points out that certain MRI, CT, and nuclear medicine procedures grew at an annual rate of 15% to 20% during that same period. The report cites the likely contribution of self-referral to this escalation.

Several strategies proposed to help slow the rise in imaging costs play into organized radiology’s agenda to end self-referral. MedPAC recommends the development and implementation of standards to ensure that both providers and practitioners are worthy of the task, which is also good news for patients. And to stamp out the use of unnecessary health care services (including imaging), MedPAC recommends that the government adopt utilization-management techniques used by private payors, such as the profiling of physicians.

MedPAC also suggests that the technical component for imaging studies on contiguous body parts be reduced. This last recommendation represents a direct hit on the income of all technology owners; but most radiologists and radiology administrators would agree that, particularly with CT, a reduction of the technical component for such services is not unfair. Is, however, payment of 50% for the second study and 25% for the third based on a true analysis of the real cost, or is it an arbitrary number plucked from the Medicare policy for surgeries? It would behoove radiology to perform this analysis and arrive at the true cost of performing a second and third MRI and CT study on a contiguous body part. Some providers are already fielding such incursions from private payors, and the impact on revenue has been significant.

Furthermore, MedPAC’s recommendations to both include nuclear medicine and PET as designated health services under the Ethics in Patient Referrals Act, and to expand the Act’s definition of physician ownership to include interests in an entity that derives a substantial proportion of its revenue from a provider of designated health services, can only help to close one of the more popular loopholes in medicine today. Though they could be disruptive to some interspecialty joint ventures, such measures will help ensure that a study ordered is necessary and not for personal gain.

Cheryl Proval


  1. Simon R, Alonso-Zaldivar R. Drug Benefit’s Cost Estimates Soar, Surprise. Los Angeles Times. February 10, 2005:A10.
  2. The Medicare Payment Advisory Commission. Report to Congress, Medicare Payment Policy. March 1, 2005. Washington, DC.