Wednesday, November 26, 2003

New study shows technology’s role in health care costs

Growing consumer demand and an increasing supply of diagnostic imaging equipment, combined with the duplicative use of both new and older technologies are significantly driving up healthcare costs in the United States, according to a study released today by the Blue Cross and Blue Shield Association.

Diagnostic imaging costs in the United States are expected to total as much as $100 billion annually by 2005, up from about $75 billion in 2000.

Blue Cross and Blue Shield companies across the country are developing innovative collaborations with physicians and hospitals that focus on the most efficient use of high-cost medical technology while safeguarding access to needed services. For example:

• Excellus BlueCross BlueShield, Rochester Region works closely with a community technology advisory board on resource allocation.

• Anthem Blue Cross Blue Shield in Virginia encourages consumers to make informed diagnostic imaging choices through tailored co-pay arrangements.

• Blue Cross and Blue Shield of Kansas is working with the state’s medical society to establish protocols for MRI use.

“Diagnostic imaging technology is one the most important advancements to healthcare in the past quarter-century,” said Allan Korn, M.D., Chief Medical Officer for the Blue Cross and Blue Shield Association. “But it is also the most expensive technology. One of the critical questions before all of us in healthcare is how do we ensure access to medical technology and keep it affordable?”

The report found that demand may be driven in part by the development of better and less-invasive technology and consumer demand for new technology even when it is not clinically indicated. In addition, more new procedures and machines are being added to the healthcare system instead of replacing older procedures, according to the study. Increasing costs and utilization of these new technologies, coupled with growth in older technologies such as X-rays and ultrasound, suggest duplicative use. In addition, there is a strong incentive to perform more tests to help pay for the high initial cost of the newer technology.

Studies published earlier this year in the American Journal of Managed Care identified medical technology as one of the key drivers of hospital inpatient and outpatient costs and a significant contributor to rising physician costs. New technology, the report notes, expands the scope and quality of the products, which in turn enhances its use in diagnosis and treatment. In some cases, this ultimately reduces the cost of healthcare. The report also shows, however, a need to encourage effective use of technology as it advances. A study on the use of imaging for prostate cancer, for example, found that while imaging had declined over time because of the recognition that it was an ineffective diagnostic tool for some patients, more than one-half of those with intermediate risk of the disease and one-quarter of patients with a low risk, continued to have imaging tests.

To address rising costs in Rochester, N.Y., a collaborative community-wide committee of hospitals, physicians and patient representatives reviews new technologies or new uses for existing technologies and recommends whether health plans should cover the services. As a result, magnetic resonance imaging (MRI) rates in the Rochester region are 19 percent lower than the national rate and 28 percent lower than the New York State rate.

“Diagnostic imaging certainly plays a vital role in patient care,” said Jonathan Kaplan, M.D., senior vice president and corporate medical director for Excellus BlueCross BlueShield. “But the cost to consumers and the community for this technology has grown dramatically in recent years. By working with providers and others in our community to address issues such as the duplication of services and the appropriate use of technology, patients receive the treatment they need in a timely manner and our community isn't paying for unnecessary duplication of services.”

Wide variations in how often imaging is used state by state and its usage when it is not clinically effective indicates a need to promote more effective use of technology. The number of MRI scans rose by 45 percent — from 9.3 to 13.5 million between 1999 to 2001, with an increase in cost of as much as $3.4 billion. In addition, the supply of MRI machines is growing at three times the rate of the population.

Kansas, which has 47 MRI facilities across the state, has one-fourth the population of Michigan, which has 48 MRI facilities. Still, patients in Kansas sometimes have an MRI scan in one part of the state and then travel to another part of the state for treatment, where an additional MRI typically is done. To help reduce the number of unnecessary or duplicative MRIs, Blue Cross and Blue Shield of Kansas is working with the state’s medical society to establish protocols for when and how MRI should be used.

According to the BCBSA report, which includes data from the American College of Radiology and claims data from a large national group health plan with more than 3 million members, newer imaging technology costs are growing the fastest, but older technologies (X-rays and ultrasound) still constitute a significant portion of imaging expenses. Growth in outpatient diagnostic imaging cost (per-member per-month) was seen in each of the four technologies between 1999 and 2001: X-Ray, 18 percent; ultrasound, 23 percent; CT scans, 45 percent; and MRI, 47 percent.

In Virginia, Anthem Blue Cross Blue Shield introduced $100 co-pays for all expensive imaging procedures on high co-pay HMO plans. The program encourages consumers to make informed diagnostic imaging choices. Many of the cost-sensitive customers who responded were able to substitute lower-cost tests for higher-cost ones. More importantly, patients still got the tests they needed without compromising quality.

“Keeping healthcare affordable means finding what works to preserve access to these and other valuable medical procedures — and we can do it without sacrificing quality and access to the right care at the right time,” said Dr. Korn. “Blue Cross and Blue Shield companies are leaders in keeping healthcare affordable on behalf of their members and the communities they serve. We will continue that leadership, focusing on what works.”

The Blue Cross and Blue Shield Association is comprised of 42 independent, locally operated Blue Cross and Blue Shield plans that collectively provide healthcare coverage for more than 88.7 million — nearly one-in-three — Americans. For more information on the Blue Cross and Blue Shield Association and its Plans, visit www.bcbs.com.