Anthem Health Insurance, the nation’s second largest health insurer behind United Healthcare, announced this week that it would limit payment for MRIs and CT scans performed in a hospital on outpatients. This policy took place in Indiana in July of this year and will be extended to all of Anthem’s markets. It will not apply to members enrolled in Medicare Advantage, BlueCard, Medicaid or Medicare Supplement.
Why This Policy? Medical imaging is a profit center for most hospitals. However, the difference in price, in hospital or outpatient, may vary by huge amounts. For example, in Michigan, the hospital price may exceed $3,000 while the outpatient price is below $1,000. In Wisconsin, a limb MRI could cost $1,500 if taken at a hospital. MRIs can vary from $350 to $3,500, depending on the region and facility.
Who is Against the Change? Caregivers, physicians, and hospitals will be burdened by time spent arranging for reimbursement. Physicians may have good reason to use a hospital location for some patients, and machines may vary in quality of image. And rural hospitals that rely on a single MRI machine–and that are already struggling with thin profits–will feel a bigger impact.
What does it mean? This is part of the war on insurance costs. But it is being carried out using a blunt instrument. In a note to health providers, Anthem said it will require hospitals to submit precertification requests for MRIs and CT scans for patients. “If it is NOT medically necessary for the member to receive the service in a hospital setting, the request for authorization will be denied as not medically necessary for that site of care,” according to a Q&A on Anthem’s website.
Anthem, in recent years, has phoned patients prior to imaging to guide them to a lower cost site. Anthem patients in five U.S. cities, including Indianapolis, spent $220 less per MRI scan after receiving those phone calls, compared with patients in nine other Anthem markets that received no phone calls. Obviously, this means lower profits for hospitals, but it also makes likely that charges for MRIs within hospitals will be lowered, as has already been seen in some markets. And for some hospitals, it may mean balancing imaging declines by increasing costs elsewhere. Along with other outpatient incentives that cause declining admissions, this is not good news for hospitals.
What to Expect: This is merely a next step using cost reviews that can lead to denial of payment–after the fact. Watch for policies both by insurers and Government (CMS) that will seek to deny Emergency Room payments for treatment not deemed to have required an emergency room. More on this later.