Diagnostic Imaging Cost-Containment Strategies

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March 12th, 2014

Diagnostic Imaging

For most complex medical procedures, some form of diagnostic imaging is often conducted prior to administering treatment. Currently, diagnostic imaging is amongst the fasting rising area of medical expense, increasing almost twice the rate of prescription drugs at 20% growth. Almost $100 billion is spent on imaging in the US annually. Factor in its growth rate, and that figure could almost double in five years.

Cost Driving Factors

Driving this rapid growth in costs is a number of factors such as:

  • Fragmentation of Care
  • Advances in Diagnostic Imaging Technology
  • The Affordability of Imaging Equipment Saturating the Market
  • Direct Advertising from Private Imaging Facilities
  • An Aging Population

While the rising costs of diagnostic imaging continue to alarm payers, patients should be concerned over the accreditation and utilization of the services administered throughout their care cycle. Insurers and regulatory bodies have taken a narrow-minded approach to addressing the cost of imaging, that continues to miss the bigger picture – the total cost of care and the possibility of reducing unnecessary or duplicate procedures. In fact, duplicate exams accounts for 20% of annual diagnostic imaging in the US – or $20 billion in expenses.

The root of the problem lies in the increase of registered diagnostic imaging providers. For example, the number of radiologists licensed to conduct imaging procedures grew 52% between 1999 and 2005. The addition of new facilities entering the imaging market may stimulate better competition and regulate pricing, however those savings could be offset by another concerning issue – accuracy and quality of imaging and diagnostic readings. Furthermore, imaging procedures are being self-referred or ordered between physicians whom share mutual benefits – in fact 80% of todays imaging is conducted at an outpatient hospital or facility.

The disjunction between an ordering physician and the facility administering the exams can quickly lead to over-utilization, inaccurate readings, and unnecessary follow-up exams. This is where the money is going to waste and costs are being driven higher and higher.

One Resolution?

Finding a resolution to controlling the rising costs and over-utilization of diagnostic imaging must be a unanimous industry effort. Currently, a number of effective solutions have been proposed while some solutions have already begun to make an impact. Some of these include:

Traditional Managed Care Company

  • Selects imaging facilities and providers via a thorough accreditation process, including assessment of equipment and machines based on payers’ approved standards.
  • Often requires at least five different imaging services are performed on location before advanced imaging is approved.
  • Avoids utilizing non-radiologist physician groups.

Radiology Benefit Management (RBM) Companies

  • Geared towards controlling imaging orders to avoid expensive exams that fail to meet the standard requirements for medical necessity and appropriateness.
  • Attacks over-utilization through the implementation of pre-certification and prior-authorization programs.
  • Develops protocol for approving or denying imaging requests; including strategies to direct patients to a best-fit and affordable provider.
  • However, as a third-party, RBMs create administrative burdens; can interfere with doctor-patient interaction; can issue contradictory medical opinions; and disrupts communication between physician and health plan.

Cost-Transparency & Consumer Awareness

  • Develops tools to help consumers make wiser financial decisions regarding the cost of their medical procedures and exams.
  • These include publishing information about the cost or average cost of a procedure, such as an MRI, at different locations; providing consumers with access to provider contracts and fee schedules; communicating with patients throughout the entire care cycle to determine procedure preferences.

Diagnostic Imaging Specialty Network

  • Comprised of contracted imaging providers, freestanding imaging centers, reading radiologists, a variety of sub-specialists available for SMOs or specific image interpretation, and patient advocacy centers to help patients schedule exams.
  • Existing specialty networks have yielded savings of up to 60% and ensure quality procedures through accreditation protocols based on national guidelines and standards.

Health Information Exchange

  • Facilitates the secure sharing of clinical data among healthcare constituents, allowing health plans to leverage the information provided towards fighting rising costs and duplicate testing.
  • Links regional and local hospitals, imaging facilities, and physicians via a securely accessible network for sharing digital images and results.
  • Provides access to previous studies surrounding diagnostic imaging cost-containment, innovation, and growth; access to patient data and past clinical trials; access to provider data and health plan utilization analysis.

Worth the Effort…

Implementing these resolutions may seem like a lot of work and an extra expenditure, however their possible impacts can help transform diagnostic imaging into a cost-containment tool itself. By streamline imaging procedures and administration, we can eliminate more costly and invasive procedures that may be required further along a patient’s care cycle.

Properly administered diagnostic imaging will provide fast, comprehensive data for providers and medical facilities to base their diagnoses, while allowing care coordinators to create an effective treatment plan and ultimately improving the quality of care provided.

PayerFusion advocates many of these resolutions and incorporates many of these protocols throughout our case management care cycle, specifically for patients requiring advanced imaging at a facility they’ve never visited before. To learn more about how we can help reduce the costs associated with diagnostic imaging and ensure quality exams are administered, visit our Case Management page here.


  • Elliot Barry says:

    Your blog is really interesting. In many ways, diagnostic technologies differ from therapeutic medical technologies. Perhaps most important, diagnostic technologies do not generally directly affect long-term patient outcomes. Instead, the results of diagnostic tests can influence the care of patients; in that way, diagnostic tests may affect long-term outcomes.

  • Grace says:

    Such a useful post about diagnostic imaging.