    [House Hearing, 109 Congress]
    [From the U.S. Government Publishing Office]

                            USE OF IMAGING SERVICES:
                          PROVIDING APPROPRIATE CARE
                          FOR MEDICARE BENEFICIARIES

                                   HEARING

                                 BEFORE THE

                            SUBCOMMITTEE ON HEALTH

                                   OF THE

                           COMMITTEE ON ENERGY AND
                                  COMMERCE

                           HOUSE OF REPRESENTATIVES

                          ONE HUNDRED NINTH CONGRESS

                                SECOND SESSION

                                JULY 18, 2006

                              Serial No. 109-132

            Printed for the use of the Committee on Energy and Commerce

    Available via the World Wide Web:  http://www.access.gpo.gov/congress/house

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                        COMMITTEE ON ENERGY AND COMMERCE
                           JOE BARTON, Texas, Chairman
    RALPH M. HALL, Texas                      JOHN D. DINGELL, Michigan
    MICHAEL BILIRAKIS, Florida                  Ranking Member
      Vice Chairman                           HENRY A. WAXMAN, California
    FRED UPTON, Michigan                      EDWARD J. MARKEY, Massachusetts
    CLIFF STEARNS, Florida                    RICK BOUCHER, Virginia
    PAUL E. GILLMOR, Ohio                     EDOLPHUS TOWNS, New York
    NATHAN DEAL, Georgia                      FRANK PALLONE, JR., New Jersey
    ED WHITFIELD, Kentucky                    SHERROD BROWN, Ohio
    CHARLIE NORWOOD, Georgia                  BART GORDON, Tennessee
    BARBARA CUBIN, Wyoming                    BOBBY L. RUSH, Illinois
    JOHN SHIMKUS, Illinois                    ANNA G. ESHOO, California
    HEATHER WILSON, New Mexico                BART STUPAK, Michigan
    JOHN B. SHADEGG, Arizona                  ELIOT L. ENGEL, New York
    CHARLES W. "CHIP" PICKERING,  Mississippi ALBERT R. WYNN, Maryland
      Vice Chairman                           GENE GREEN, Texas
    VITO FOSSELLA, New York                   TED STRICKLAND, Ohio
    ROY BLUNT, Missouri                       DIANA DEGETTE, Colorado
    STEVE BUYER, Indiana                      LOIS CAPPS, California
    GEORGE RADANOVICH, California             MIKE DOYLE, Pennsylvania
    CHARLES F. BASS, New Hampshire            TOM ALLEN, Maine
    JOSEPH R. PITTS, Pennsylvania             JIM DAVIS, Florida
    MARY BONO, California                     JAN SCHAKOWSKY, Illinois
    GREG WALDEN, Oregon                       HILDA L. SOLIS, California
    LEE TERRY, Nebraska                       CHARLES A. GONZALEZ, Texas
    MIKE FERGUSON, New Jersey                 JAY INSLEE, Washington
    MIKE ROGERS, Michigan                     TAMMY BALDWIN, Wisconsin
    C.L. "BUTCH" OTTER, Idaho                 MIKE ROSS, Arkansas
    SUE MYRICK, North Carolina
    JOHN SULLIVAN, Oklahoma
    TIM MURPHY, Pennsylvania
    MICHAEL C. BURGESS, Texas
    MARSHA BLACKBURN, Tennessee

                            BUD ALBRIGHT, Staff Director
                           DAVID CAVICKE, General Counsel
        REID P. F. STUNTZ, Minority Staff Director and Chief Counsel

                               SUBCOMMITTEE ON HEALTH
                           NATHAN DEAL, Georgia, Chairman
    RALPH M. HALL, Texas                      SHERROD BROWN, Ohio
    MICHAEL BILIRAKIS, Florida                  Ranking Member
    FRED UPTON, Michigan                      HENRY A. WAXMAN, California
    PAUL E. GILLMOR, Ohio                     EDOLPHUS TOWNS, New York
    CHARLIE NORWOOD, Georgia                  FRANK PALLONE, JR., New Jersey
    BARBARA CUBIN, Wyoming                    BART GORDON, Tennessee
    JOHN SHIMKUS, Illinois                    BOBBY L. RUSH, Illinois
    JOHN B. SHADEGG, Arizona                  ANNA G. ESHOO, California
    CHARLES W. "CHIP" PICKERING,  Mississippi GENE GREEN, Texas
    STEVE BUYER, Indiana                      TED STRICKLAND, Ohio
    JOSEPH R. PITTS, Pennsylvania             DIANA DEGETTE, Colorado
    MARY BONO, California                     LOIS CAPPS, California
    MIKE FERGUSON, New Jersey                 TOM ALLEN, Maine
    MIKE ROGERS, Michigan                     JIM DAVIS, Florida
    SUE MYRICK, North Carolina                TAMMY BALDWIN, Wisconsin
    MICHAEL C. BURGESS, Texas                 JOHN D. DINGELL, Michigan
    JOE BARTON, Texas                           (EX OFFICIO)
      (EX OFFICIO)

                                       CONTENTS

                                                                           Page
    Testimony of:
         Kuhn, Herb, Director, Center for Medicare Management, Centers
              for Medicare & Medicaid Services, U.S. Department of Health
              and Human Services	                                        20
         Hackbarth, Glenn M., Chairman, Medicare Payment Advisory
              Commission	                                                27
         Douglas, Dr. Pamela S., Chief, Division of Cardiovascular
              Medicine, Duke University Medical Center	                72
         Van Moore, Dr. Arl, Chair, Board of Chancellors, American
              College of Radiology	                                        82
         Donahue, John J., President and Chief Executive Officer,
              National Imaging Associates, Inc.	                        92
         Laube, Dr. Doug, President, American College of Obstetricians
              and Gynecologists	                                       100
         Griffeth, Dr. Landis, Director, Nuclear Medicine, Baylor
              University Medical Center	                               112
         May, F. Lynn, Chief Executive Officer, American Society of
              Radiological Technologists	                               119
         Baumgartner, Robert, Chief Executive Officer, Centers for
              Diagnostic Imaging	                                       123
         Rucker, Dr. Donald W., Vice President and Chief Medical Officer,
              Siemens Medical Solutions USA, Inc.	                       137
    Additional material submitted for the record:
         Kuhn, Herb, Director, Center for Medicare & Medicaid Services,
              U.S. Department of Health and Human Services, response for
              the record	                                               165
         Hackbarth, Glenn M., Chairman, Medicare Payment Advisory
              Commission, response for the record	                       167

                         USE OF IMAGING SERVICES:
                     PROVIDING APPROPRIATE CARE FOR
                          MEDICARE BENEFICIARIES

                          TUESDAY, JULY 18, 2006

                         HOUSE OF REPRESENTATIVES,
                     COMMITTEE ON ENERGY AND COMMERCE,
                          SUBCOMMITTEE ON HEALTH,
                                                              Washington, DC.

            The subcommittee met, pursuant to notice, at 10:13 a.m., in Room
    2123 of the Rayburn House Office Building, Hon. Nathan Deal
    (Chairman) presiding.
    	Members present:  Representatives Upton, Gillmor, Norwood,
    Cubin, Shimkus, Pickering, Pitts, Ferguson, Rogers, Myrick, Burgess,
    Towns, Pallone, Eshoo, Green, Capps, Dingell (ex officio), and Deal.
    	Staff present:  Melissa Bartlett, Counsel; Ryan Long, Counsel;
    Brandon Clark, Policy Coordinator; Chad Grant, Legislative Clerk;
    Bridgett Taylor, Minority Professional Staff Member; Amy Hall,
    Minority Professional Staff Member; and Jessica McNiece, Minority
    Research Assistant.
    	MR. DEAL.  We will call the meeting to order and I will recognize
    myself for an opening statement for this hearing.
    	First of all, I am proud to say that we have two very good expert
    panels of witnesses again today.  They are going to help us examine the
    concerns that have been raised by MedPAC, CMS, and others regarding
    the rapid growth of the use of imaging services in Medicare.  Today's
    hearing will also provide a forum for witnesses to provide suggestions
    for how to determine what is proper versus improper growth of services
    and how to best control over-utilization or misuse of services.
    	Over the past few years, there has been rapid growth in the volume
    of imaging services paid under Medicare fee-for-service.  MedPAC has
    found that Medicare spending for imaging services paid under the
    physician fee schedule nearly doubled between 1999 and 2004, from
    $5.4 billion per year to $10.9 billion per year.  In addition, the volume of
    imaging services has grown at almost twice the rate of other physician
    services.  Clearly, this level of growth is unsustainable.  Some growth in
    use of imaging services is argued to be attributable to technological
    innovations that allow physicians to better diagnose disease.  However,
    many observers argue that such growth may reflect overuse or misuse of
    imaging services.  MedPAC has determined that spending for MRI, CT,
    and nuclear medicine has grown faster than other imaging services.
    Accordingly, MedPAC has identified some factors that may contribute to
    the rapid growth in volume and intensity in imaging services, including
    one, the possible misalignment of fee schedule payment rates and costs,
    two, physician's interest in supplementing their professional fees with
    revenues from ancillary services, and three, patients' desire to receive
    diagnostic tests in more convenient settings.
    	In its March 2005 report to Congress, MedPAC recommended that
    Congress direct the Secretary to set standards for physicians interpreting
    or performing diagnostic imaging services.  This is a recommendation I
    hope my colleagues on this subcommittee will carefully consider as we
    start to look at possible solutions to this problem.
    	As my colleagues are no doubt aware, the Deficit Reduction Act of
    2005 included a provision that caps reimbursement for the technical
    component of imaging services performed in a physician's office at the
    hospital outpatient payment rate.  Imaging services paid under the
    physician fee schedule involve two parts, a technical component and a
    professional component.  The technical component of the payment
    covers the cost of the equipment, supplies, and non-physician staff.  The
    DRA provision capping the technical component of physician payment
    for imaging services was intended to move toward payment neutrality
    across sites of service delivery.  This provision takes effect January the
    1st of 2007 and will save the Medicare program almost $3 billion over 5
    years.  Of course, many physician groups and industry stakeholders are
    pushing for a delay in the effective date of this provision.  However, it is
    important to remember that these savings were a major financial
    component in preventing physicians from taking the 4.4 percent
    reduction in fee schedule payments that was scheduled to be
    implemented under the SGR formula for 2006.
    	Unfortunately, few groups are offering legitimate offsets in order to
    pay for this requested delay in implementation.  It reminds me of the
    lyrics I believe from an old Bobby Gentry song that says "Everybody
    wants to go to heaven, but nobody wants to die."
    	I am looking forward to having a cooperative and productive
    conversation on this topic today and to working with my colleagues on
    both sides of the aisle to come up with effective solutions to the
    problems addressed at today's hearing.  Again, I would like to thank our
    witnesses for participating, and we look forward to your testimony.
    	At this time, I would ask unanimous consent that all members be
    allowed to submit statements and questions for the record.  Without
    objection.
    	[The prepared statement of Hon. Nathan Deal follows:]
    PREPARED STATEMENT OF THE HON. NATHAN DEAL, CHAIRMAN, SUBCOMMITTEE ON
    HEALTH

    ? The Committee will come to order, and the Chair recognizes himself for an
    opening statement.
    ? I am proud to say that we have two expert panels of witnesses appearing
    before us
    this morning that will help us examine the concerns raised by MedPAC, CMS, and
    others regarding the rapid growth of the use of imaging services in Medicare.
    ? Today's hearing will also provide a forum for witnesses to provide
    suggestions for
    how to determine what is proper versus improper growth of services, and how to
    best control for overutilization or misuse of services.
    ? Over the past few years, there has been rapid growth in the volume of imaging
    services paid under Medicare fee-for-service.
    ? In addition, the volume of imaging services has grown at almost twice the rate of all
    other physician services.
    ? Clearly, this level of growth is unsustainable.
    ? Some growth in use of imaging services is argued to be attributable to technological
    innovations that allow physicians to better diagnose disease.  However, many
    observers argue that such growth may reflect overuse or misuse of imaging
    services.
    ? MedPAC has determined that spending for MRI, CT, and nuclear medicine has
    grown faster than for other imaging services.
    ? Accordingly, MedPAC has identified some factors that may contribute to the rapid
    growth in volume and intensity of imaging services, including:
            1. The possible misalignment of fee schedule payment rates and costs
            2. Physicians' interest in supplementing their professional fees with revenues
    from ancillary services
            3. Patients' desire to receive diagnostic tests in more convenient settings.
    ? In its March 2005 report to Congress, MedPAC recommended that Congress direct
    the Secretary to set standards for physicians interpreting or performing diagnostic
    imaging services.
    ? This is a recommendation I hope my colleagues on this subcommittee will carefully
    consider as we start to look at possible solutions to this problem.
    ? As my colleagues are no doubt aware, the Deficit Reduction Act of 2005 (DRA),
    included a provision that caps reimbursement for the technical component for
    imaging services performed in a physician's office at the hospital outpatient
    payment rate.
    ? Imaging services paid under the physician fee schedule involve two parts, a
    technical component and a professional component.  The technical component of
    the payment covers the cost of the equipment, supplies, and non-physician staff.
    ? The DRA provision capping the technical component of physician payment for
    imaging services was intended to move toward payment neutrality across sites of
    service delivery.
    ? This provision takes effect January 1, 2007, and will save the Medicare program
    almost $3 billion over 5 years.
    ? Of course, many physician groups and industry stakeholders are pushing for a delay
    in the effective date of this provision.
    ? However, it is important to remember that these savings were a major financial
    component in preventing physicians from taking the 4.4% reduction in fee schedule
    payments that was scheduled to be implemented under the SGR formula for 2006.
    ? Unfortunately, few groups are offering legitimate offsets in order to pay for this
    requested delay in implementation.
    ? It kinda reminds me of the lyrics of an old Bobbie Gentry song, "Everybody wants
    to go to Heaven.but nobody wants to die."
    ? I am looking forward to having a cooperative and productive conversation on this
    topic today and to working with my colleagues on both sides of the aisle to come up
    with effective solutions to the problems addressed at today's hearing.
    ? Again, I would like to thank all of our witnesses for participating today, and we
    look forward to hearing your testimony.
    ? At this time, I would also like to ask for Unanimous Consent that all Members be
    allowed to submit statements and questions for the record.
    ? I now recognize the Ranking Member of the Subcommittee, Mr. Brown from Ohio,
    for five minutes for his opening statement.

    	MR. DEAL.  I now recognize Mr. Pallone, who is standing in for our
    Ranking Member, for 5 minutes for his opening statement.
    	MR. PALLONE.  Thank you, Mr. Chairman.
    	Without a doubt, recent advancements in medical imaging, such as
    computerized tomography, magnetic resonance imaging, and ultrasound
    have greatly improved physicians' ability to diagnose and treat patients.
    These technologies have the potential to improve health outcomes and
    lower healthcare costs by minimizing the need for invasive procedures
    and improve patient safety.
    	Over the past few years, however, we have seen an explosion in the
    use of medical imaging services.  According to MedPAC's March 2005
    report, between 1999 and 2002, the per beneficiary average annual
    growth rate in the use of fee scheduling imaging services was twice as
    high as the growth rates for all fee schedule services.  Predictably, this
    type of growth has raised some eyebrows about the appropriate use of
    medical imaging technology.
    	Healthcare experts have identified several sources that are
    responsible for this growth, most of which has been attributed to the
    increased utilization in medical imaging in physician's offices as
    opposed to hospital outpatient departments where radiologists
    traditionally provided these services.  One obvious benefit brought about
    by this change is that patients no longer have to be shuttled from one
    place to another simply to have an imaging study performed.  This saves
    the patient both time and money.  On the other hand, this change has also
    raised concerns that doctors are inappropriately using medical imaging
    services, whether it is a result of insufficient training or simply to boost
    their reimbursements.  As a result, some experts have argued that as
    more and more doctors offer these types of services, Federal standards
    need to be put into place to ensure physicians are appropriately ordering
    imaging studies and patients have access to safe imaging services.
    	Such proposals are not without controversy.  As MedPAC noted, and
    I quote, "It would be a major policy change for Medicare to require that
    physicians meet standards to receive payment for interpreting imaging
    services."  But clearly, physician groups remain skeptical.  That is why I
    think it is important that we are having today's hearing, so that we can
    flesh out some of these ideas.
    	Unfortunately, Congress has already enacted significant payment
    reforms regarding medical imaging services without any debate.  In the
    final hours before Congress passed the Deficit Reduction Act, a
    provision was slipped into the bill that would limit payment for medical
    imaging services provided in physician offices.  Neither Congress, nor
    MedPAC, nor any other public forum has held a hearing or meeting on
    this proposal, and because there is no record, we don't know the impact
    this proposal will have on beneficiaries' access to medical imaging.
    	So Mr. Chairman, in the future, I would hope that you would call for
    regular order and ensure that this subcommittee and the full committee
    exercises their right to adequately review such policies before they go
    into effect.  And while we are on the subject of regular order, I would
    like to just take a minute to highlight the fact that you still have not
    responded to our request, to the Democrats' request under Rule 9 under
    the Rules of the House to have another hearing held on implementation
    of Medicare Part D.
    	Mr. Chairman, it has been about 5 months since we have made this
    request formally, and we still haven't heard back.  I think we deserve to
    hear from beneficiaries about their experiences with this program.  For
    example, I am hearing more and more now about the donut hole as more
    and more people fall into the donut hole, you know, they contact my
    office and complain because they are not really aware of the impact of
    the donut hole.  So there are problems, and some beneficiaries aren't
    getting the medications they need.  Others aren't getting the subsidies
    they are entitled to, and we should be hearing from them.
    	So Mr. Chairman, I just wanted to say in conclusion, I want to thank
    you again for holding today's hearing.  Ensuring the appropriate use of
    medical imaging services is an important topic, but so is the impact of
    Medicare Part D and its effect on beneficiaries.  So I once again urge you
    to heed our requests and hold an additional hearing on that program and
    allow Democrats to call their own witnesses.
    	Thank you, Mr. Chairman.
    	MR. DEAL.  We look forward to having another hearing on Medicare
    Part D and hear of the huge successes that that program has been, the
    great contributions that it has made to healthcare in this country, and we
    will honor that request.
    	MR. PALLONE.  Thank you, Mr. Chairman.
    	MR. DEAL.  I recognize Dr. Norwood for his opening statement.
    	MR. NORWOOD.  Thank you very much, Mr. Chairman.  I am very
    happy that we are exercising our jurisdiction over this issue.  It has been
    on the radar screen of others for some time, though they have done
    absolutely nothing about finding out the facts.  They have just simply
    written some legislation.  So I am delighted that our committee is
    beginning to look at this.
    	The New England Journal of Medicine recently identified medical
    imaging as one of the top 11 medical innovations of the past 1,000 years.
    Without hesitation, imaging has improved the health of all of our Nation
    by enhancing preventive and diagnostic medicine.  And as imaging
    technology has progressed, local doctors have been able to provide these
    services.  Has there been a growth in utilization of diagnostic imaging?
    Well, of course, yes, there has.  Should this growth come as a surprise?
    It really shouldn't to anybody.  We have an aging population, spent years
    encouraging preventative medicine.  And like the rest of healthcare
    industry, innovation does not produce savings up front.  But more than
    the quality of life issues involved, I will guarantee you that imaging
    saves money.
    	That said, in fact, I am a pretty good example of that.  That said, is
    there some unnecessary imaging?  Well, it only makes sense that there is.
    There is over-utilization in lots of places, frankly.  Should we be
    concerned about any dramatic increase in spending?  Well, as protectors
    of the taxpayer funds, we have to pay very close attention to that, and
    yes, we should be concerned.  However, if we are worried about over-
    utilization, how do we specifically target that without simply cost
    shifting?  Can we do that?
    	I know this is a general hearing, but we need to take a step back and
    reevaluate the payment adjustments in the DRA.  We can say we don't
    want Part B to pay more than a hospital for the technical component of
    the same service, but has anyone asked how the payment systems differ?
    No.  Or how beneficiary co-pays will be affected?  No.  Or how hospitals
    can spread costs?  No.  Hopefully, this committee is going to start asking
    those questions.
    	Wait times in hospital outpatient departments are too long already.
    If patients are left with fewer options, wait times are certainly going to
    increase dramatically.  What if hospitals drop cost and drive private
    practices out?  What will this do for competition, for patient care,
    especially in rural areas and for the taxpayer?  And what at the end of the
    day have we done to address the real issue?  Well, very little, I believe.
    	I hope this hearing will get to the heart of what we are trying to
    accomplish and see if what Congress has done matches that goal.
    	I thank Representative Pitts for his leadership, and agree, a
    moratorium on these adjustments is responsible, and until we get to a
    responsible policy, to do otherwise, because we haven't done our
    homework, is, in my mind, irresponsible.
    	Thank you again, Mr. Chairman, for this hearing.  It is so very
    important.  I look forward to the testimony of our witnesses, and yield
    back my time.
    	MR. DEAL.  I thank the gentleman.
    	I now recognize the Ranking Member of the full committee, Mr.
    Dingell, for an opening statement.
    	MR. DINGELL.  Mr. Chairman, thank you.  Good morning to
    everybody.
    	Mr. Chairman, while addressing the issues about imaging services in
    Medicare is certainly important, my constituents talk to me much more
    about the Part D drug benefit than they do about imaging services.  I note
    that the Minority members still have not had the opportunity as is
    afforded us under the Rules of the House to have a hearing on Medicare
    Part D drug benefit with witnesses of our choosing.  I note that we have
    made that request.  It is a matter of entitlement to us.  It has not been
    honored.  I am saddened by the inattention to the Rules of the House and
    the rights of the Minority.  The Medicare program provides health
    security for more than 40 million beneficiaries today.  Getting the
    addition of a new complicated benefit for prescription medicines where
    we have evidence that problems exist and improvements should be made,
    I believe that we must go into this matter with considerably more care,
    and that we must hear from all parties, not just administrative witnesses
    and representatives of the company and companies that are receiving
    financial gains from this program.
    	Today, the committee has chosen to focus on imaging services.  That
    is an important question.  Some of the problems that will be explored in
    today's hearing are yet another example of what goes wrong when
    legislation is cobbled together in haste and passed in haste.  The Deficit
    Reduction Act, which remains under a legal cloud because of
    irregularities in its passage, made a number of changes to Medicare
    payments for diagnostic imaging services, changes that may have
    overreached in some areas and underreached in others.  We know we are
    receiving complaints, but we do not know exactly what we have done or
    how well or poorly we have done it.
    	Payment cuts to meet a budget target are a blunt tool which may
    result in unintended consequences.  Some of the witnesses today will
    explain to us how not all imaging services are alike, that changes
    appropriate for one set of services may not be appropriate for another
    type of service.  We will also hear about quality standards to protect
    patient health and safety.  I believe this is an issue that should be
    carefully explored by the committee.  Our utmost concern should be to
    ensure that beneficiaries have access to the best quality of services, and
    we should not do anything which would create a solution which does not
    achieve that purpose.  That is an important purpose and it is a solution
    that the committee must address carefully.
    	I look forward to the testimony of witnesses here today, and to
    additional hearings on the Medicare program.  It is rapidly being put into
    something of a mess.
    	Thank you, Mr. Chairman.
    	MR. DEAL.  I thank the gentleman.
    	Mr. Pickering is recognized for an opening statement.
    	MR. PICKERING.  Mr. Chairman, I thank you for holding this hearing.
    Please excuse my voice.
    	I want to just take a moment to talk about a bill that I introduced, the
    CARE bill, 129 sponsors, and I think it helps address some of the issues
    that will be raised in this hearing.
    	As we seek to improve the quality of care, reduce costs, and improve
    safety in the use of imaging, I think that the bill can help set the Federal
    standards for the education and the credentialing then implemented by
    the States.  I am looking forward to hearing the panel today, and the
    testimony, and to see if the CARE bill and other things that we can do to
    address from the reimbursement side as well as the education side can
    begin making the progressive steps forward on how we should balance
    the great care that comes, the improved care that comes from imaging
    services, but to do it in a responsible way and to do it in the right way.
    	Mr. Chairman, I yield back.  Thank you.
    	MR. DEAL.  I thank the gentleman, and recognize Ms. Capps for an
    opening statement.
    	MS. CAPPS.  Thank you, Mr. Chairman, and thank you for holding
    the hearing today.  I look forward to the testimony of our witnesses.  I
    am pleased that we have the opportunity to discuss the importance of
    preserving access to imaging services for Medicare beneficiaries,
    because I know there is great bipartisan support for maintaining the
    current system.  I want to associate myself with two pieces of legislation,
    H.R. 5238, by my colleague Carol McCarthy from New York, who has
    asked me to ask for unanimous consent to insert a letter that she has
    written.  She has written a letter to this subcommittee regarding the
    legislation she has introduced which would repeal the cuts altogether, so
    with permission, I ask for unanimous consent to have this letter inserted
    into today's proceedings.
    	MR. DEAL.  Without objection.
    	[The information follows:]

    	MS. CAPPS.  I also want to acknowledge our colleague, Mr. Pitts, bill
    H.R. 5704, which I am sure will be part of our discussion today.
    	Along with my colleagues, I am deeply disturbed by the cuts to
    Medicare reimbursement for outpatient diagnostic imaging services, as I
    said, that were included in the Deficit Reduction Act.  It is one of the
    very many reasons I voted against the bill, and I want to associate myself
    with the remarks of the Ranking Member of this full committee on many
    of the aspects of Medicare services that need to be addressed by this
    committee.
    	I am especially appalled that these cuts, upward of 30 to 50 percent,
    were enacted arbitrarily with little discussion, without any consideration
    for the effects of these cuts on patients, on real people.  Logically, the
    reduction of reimbursements for outpatient imaging services will mean a
    reduction in the number of physicians who are going to be able to
    provide these services.  This will mean Medicare beneficiaries traveling
    further to find providers who offer diagnostic imaging.  It may leave
    beneficiaries themselves with no option but to obtain these services at
    hospitals where waits are longer and costs are often much higher.  The
    logistical problems and higher costs may even result in patients opting
    out of diagnostic imaging services altogether, and those people who are
    practitioners out in the field, out in the communities, know that this is a
    very real threat.  There will be a lessening of the quality of healthcare we
    will be providing to America.  Diagnostic imaging includes
    mammograms, ultrasounds, bone density screenings, MRIs, which are
    key to early detection of serious, fatal diseases.  We are in an age where
    we know that early detection equals early treatment, which saves lives.
    Of course, it also saves money and great cost to our society, to families.
    	If we allow these cuts to go through, access to imaging services will
    be reduced, while wait times will be increased.  The architects of these
    cuts did so in the name of cost saving.  Well, you can be sure that the
    cost, as I mentioned, of treating a patient for advanced breast cancer
    certainly is going to be higher than the cost of a mammogram and early
    intervention.  I am sure we are going to hear today even more about the
    innovation in diagnostic imaging, and I am sure that we will jointly
    praise the accomplishments of new technologies and techniques that
    allow us to detect disease early on, but let us not just sit here and listen.
    Let us discuss.  This is our responsibility, the ways in which we can save
    access to these services and save lives.
    	I yield back.
    	MR. DEAL.  I thank the gentlelady.
    	Mr. Pitts is recognized for an opening statement.
    	MR. PITTS.  Thank you, Mr. Chairman.  Thank you for convening
    this hearing today on such an important issue.
    	Mr. Chairman, I know the focus of this hearing is not just on the
    diagnostic imaging cuts included in Section 5102 of the Deficit
    Reduction Act, the DRA.  We are also addressing the issue of over-
    utilization of imaging services, and its rapid growth in the last few years.
    	Regarding over-utilization, I am troubled by MedPAC's March 2005
    report on the skyrocketing use of imaging services, and its conclusion
    that increased use of these services is not linked to better health
    outcomes for patients.  I am also interested in CMS's and MedPAC's
    recommendations on quality standards for imaging equipment and
    radiology technicians, image quality, patient safety, and interpreting
    physicians.
    	However, I would also like to discuss the impact of these cuts.
    Section 5102 of the DRA will result in drastic cuts in reimbursement,
    upwards of 30 to 50 percent for the technical component of critical
    imaging services provided in physician's offices and independent
    imaging centers.  No analysis has been conducted regarding the impact
    that this change in policy will have on Medicare beneficiaries' access to
    imaging services in a setting that allows for more timely diagnosis and
    treatment.
    	Barring any statutory change, these cuts will go into effect on
    January 1 of next year, and that is why I have introduced a common
    sense, fiscally responsible bill, H.R. 5704, the Access to Medicare
    Imaging Act of 2006, which would simply delay implementation of these
    cuts by 2 years, to January 1, 2009.  This delay will give the GAO time
    to conduct a study, required by the legislation, on the impact these cuts
    would have on patient access and service issues, with special attention to
    rural and medically underserved areas.  H.R. 5704 enjoys bipartisan
    support from over 55 cosponsors, including 12 members of this
    subcommittee--six Republicans and six Democrats.  Additionally, my
    bill is supported by the Access to Medical Imaging Coalition, which
    represents more than 75,000 physicians and providers and patients, as
    well as medical imaging manufacturers who employ tens of thousands of
    workers.  In fact, several of today's witnesses, Dr. Donald Rucker,
    testifying on behalf of the National Electrical Manufacturers Association,
    Dr. Arl Van Moore from the American College of Radiology, and Mr.
    Robert Baumgartner, testifying on behalf of the National Coalition of
    Quality Diagnostic Imaging Services, represent organizations which are
    a part of this coalition.
    	Mr. Chairman, I look forward to hearing from our distinguished
    witnesses and learning their views and recommendations on these
    important issues.  I would like to extend a special welcome to Donald
    Rucker from Siemens Medical Solutions, USA, and a resident of my
    home State of Pennsylvania.
    	I yield back the balance of my time.
    	MR. DEAL.  I thank the gentleman.
    	Mr. Green is recognized for an opening statement.
    	MR. GREEN.  Thank you, Mr. Chairman, for holding the hearing on
    imaging services on Medicare.  I would like to welcome our first panel
    today, and the following panel.
    	There is no question the volume of imaging services increased
    dramatically over the last couple of years.  In fact, from 1999 to 2003,
    imaging volume grew twice as fast as other physician services.  The
    potential explanations for this growth are numerous: quality of imaging
    technology improving so it is being utilized more; more physicians
    investing in imaging technology so they can diagnose diseases right in
    their offices; and there is a growing trend among physicians investing in
    freestanding imaging facilities which can lead to increased referrals.
    	While there are a number of plausible explanations, they are
    accompanied by even more questions.  Are the imaging services being
    delivered in the most efficient manner?  Are the payment rates
    appropriate?  Are patients better off, that is, is the volume growth in
    imaging services leading to quicker detection and treatment of disease?
    Does increased utilization necessarily mean over-utilization?
    	Despite all these questions, conferees and the Deficit Reduction Act
    rush to include payment cuts for imaging services without the benefit of
    stakeholder input or an in-depth analysis of the issue.  In fact, the
    provision wasn't even in the House or the Senate versions.  It was a last
    minute inclusion in the conference report.  That is why I am a cosponsor
    of Congressman Pitts' H.R. 5704 to delay these cuts for 2 years so we
    will have time to analyze its impact.  This policy, which is set to go into
    effect in January of 2007, will have tremendous impact on physicians
    offering imaging services.  Those utilizing ultrasound for guidance
    procedures will see their reimbursement rates fall by approximately 35
    percent.  Reimbursements for PET or CT scans used to diagnose cancer
    would be reduced by 50 percent.  Can we estimate the effect of this
    policy on the physician, but what impact will it have on the Medicare
    beneficiaries, the very folks who depend on this technology for their
    healthcare?  I know personally, Mr. Chairman, that a lot of physicians
    use imaging particularly in our effort on aortic aneurysms to screen for
    those.  If this policy leads physicians to term if they one, cannot afford to
    offer these services or two, can't afford to accept Medicare beneficiaries,
    we find ourselves with an access problem.  Our office hears from
    Medicare beneficiaries who already find it difficult to make it to the
    doctor for their appointment.  What effect would this policy have on
    them if they are forced to schedule multiple appointments for imaging?
    	We also need to look more closely at the quality of imaging services
    and how the proliferation of non-radiologist imaging is affecting quality,
    if at all.  There hasn't been enough analysis of these issues and I am
    concerned that the Deficit Reduction Act may be cutting the meat and
    not just the fluff.
    	To look deeper into the issue, I, like I said, joined my colleagues on
    this subcommittee in cosponsoring Mr. Pitts's legislation.  I would also
    like to see more analysis of the appropriateness of any imaging
    utilization.  I look forward to hearing from our witnesses in the amounts
    of charges of over-utilization.
    	I yield back my time.
    	MR. DEAL.  I thank the gentleman.
    	Dr. Burgess is recognized for an opening statement.
    	MR. BURGESS.  Thank you, Mr. Chairman.  I also want to thank you
    for holding this hearing today.
    	Medical imaging is, of course, extremely important technology.  It is
    entering into its second century of existence.  We have seen
    embellishments of old technology and we see new technology emerging
    almost daily in the challenges to adequately reimburse for both.
    	In my practice, the use of ultrasound was pretty much a standard
    practice of medicine in OB/GYN.  OB/GYN practices are kind of
    unique, and ultrasound is ubiquitous to our ability to deliver care to our
    patients.  In fact, probably 90 percent of OB/GYN practices across the
    country possess their own in-office ultrasound machines.  It is analogous
    to the use of a stethoscope in clinical practice.
    	New modalities allow doctors to identify and diagnose disease in a
    manner that was unthought of even as much as 2 years ago.  I hope this
    hearing today will help us understand where medical imaging technology
    is assistive and where there may be opportunities to gain efficiency and
    subsequent savings in the Medicare program.
    	I am pleased that we have today with us Dr. Douglas Laube, the
    President of the American College of OB/GYN.  I have been a fellow of
    the College for nearly 25 years, and know very well the fine work of this
    specialty organization.  Dr. Laube chairs the Department of OB/GYN at
    the University of Wisconsin Medical School in Madison, and he also
    holds a medical education degree from the University of Iowa.  He has
    been teaching and training OB/GYNs since the mid-'70s.  He has chaired
    the Council on Residency Education for OB/GYNs, as well as the
    National Board of Medical Examiners.
    	I am also pleased to welcome from Dallas, Dr. Landis K. Griffeth,
    M.D., Ph.D., who is the Director of Nuclear Medicine at Baylor
    University Medical Center in Dallas.  He is also the National Medical
    Director for Positron Emission Tomography at U.S. Oncology.
    	Mr. Chairman, I also just want to take one moment, and other
    Members have talked about issues with the coverage gap in the Medicare
    prescription drug program.  I would point out, in my home State of
    Texas, there are five companies that offer generic medicine coverage in
    the gap.  There is one company that offers both generic and branded
    medicines in the gap.  I think it is a shame that other members didn't take
    the time to educate their constituents about these very valuable programs.
    They are not necessary for every senior on Medicare, but certainly, they
    are valuable and assistive to many patients who take a variety of
    medications to meet their healthcare needs.
    	With that, Mr. Chairman, I will yield back.
    	MR. DEAL.  I thank the gentleman.
    	Ms. Myrick is recognized for an opening statement.
    	MS. MYRICK.  Thank you, Mr. Chairman.  I look forward to the
    discussions all the rest today, and welcome all of our panelists, but I
    especially wanted to recognize Dr. Arl Van Moore, who is a friend and a
    constituent from Charlotte, North Carolina.  Dr. Van Moore has over 20
    years experience as a radiologist, and he can share not only his expertise,
    but his real world experience in dealing with the payment system in
    Medicare.  We are glad you are here today.
    	We haven't really gotten our arms around the growth in the imaging
    services in Medicare, and a lot of stakeholders don't think that the
    technical cap in the DRA was the most effective way to do so.  Particular
    specialties may be affected more than others, and it is not clear that the
    hospital outpatient codes are always accurate when it comes to reflecting
    actual cost.
    	With that said, we need to recognize the scope of the problem.  It is
    not a bad thing that Medicare beneficiaries are using more MRIs, CT
    scans, et cetera.  Imaging can detect disease and save lives, and many of
    us know firsthand.  I am a breast cancer survivor, and I had three
    mammograms and five doctors examined me, and they all told me I was
    fine.  It wasn't until I had an ultrasound that they found my tumor, which
    saved my life.  I am very thankful for that.  Nevertheless, doctors have a
    responsibility to use these technologies appropriately, and we have a
    responsibility to the taxpayers to make sure that the Medicare payment
    structure makes sense.
    	So I hope this hearing is going to give us some direction going
    forward, and I want to say thanks again to both panels.
    	Mr. Chairman, I yield back my time.
    	MR. DEAL.  I thank the gentlelady.
    	Mr. Ferguson is recognized for an opening statement.
    	MR. FERGUSON.  Thank you, Mr. Chairman.  Thank you for
    convening this very important hearing concerning an issue that is
    important to physicians and also to patients who benefit from imaging
    services.
    	There is no doubt that there have been tremendous advances in
    imaging over the last decade, but along with those advances have come
    increases in utilization of services and subsequently, costs to Medicare
    and the healthcare system.  The payment policy included in the DRA for
    medical imaging procedures has raised a lot of concern from
    stakeholders, and I believe for good reason.  As I understand it, the
    policy says that with regard to the technical component, more cannot be
    paid under the Medicare physician fee schedule for a medical imaging
    procedure done in a physician's office than what is paid if that procedure
    were done in the hospital outpatient setting.  This policy appears to make
    the assumption that the hospital outpatient perspective payment system
    more accurately reflects the true cost of a medical imaging procedure.  If
    this is the case, then I am puzzled as to why in those cases where the
    hospital outpatient payment is higher than what is paid in a physician
    office for the same medical imaging procedure that this policy does not
    increase the payment in the physician office setting.  This strikes me as a
    case where the OPPS is only more accurate when it pays less than a
    Medicare physician fee schedule, but not accurate when it pays more.
    This reminds me of the old saying "Tails, I win, heads, you lose."
    	I hope that the witnesses from CMS and MedPAC today will shed
    light on what I see as a troubling aspect of the policy included in the
    DRA.  It is vital that we spend the time to get this right and that is what
    this hearing is about.
    	I look forward to hearing from our panelists today, and to hear their
    proposals and ideas on how to control and manage utilization of imaging
    services properly.  These are important issues to discuss, but I believe
    they must be discussed under the context of what was done in the Deficit
    Reduction Act.  Above all, I look forward to working with you, Mr.
    Chairman, to craft a policy that can more accurately reflect proper
    payment for these services without encouraging over-utilization.
    	Thank you very much, Mr. Chairman.  I yield back.
    	MR. DEAL.  I thank the gentleman.
    	[Additional statements submitted for the record follow:]

    PREPARED STATEMENT OF THE HON. JOE BARTON, CHAIRMAN, COMMITTEE ON ENERGY
    AND COMMERCE

            Good morning.  I would like to welcome all of our witnesses here today.  I look
    forward to hearing your perspectives on a troubling trend in Medicare: the  year-in and
    year-out growth in spending for  imaging services ordered by doctors.
            Physician spending for imaging services has more than doubled in the past five
    years, accounting for a significant portion of total increased physician spending each
    year.  Why is this so?  What accounts for this rapid growth?  These are questions that are
    front and center for today's hearing.
            The current rate of Medicare spending on Part B services is simply not sustainable.
    Overall, Part B spending increased by 11 percent in 2005, while expenditures for
    physicians' services alone grew by 10 percent.   According to CMS, such rapid growth is
    driven by more use of more intensive physicians' services, including imaging services,
    among others.  In addition, CMS has found that use of many of these services varies
    substantially across practices and geographic areas without any clear associated impact
    on patient health.
            More importantly, overuse or misuse of physician services has a direct impact on the
    health and well-being of the patient.  Such use also has a direct impact on the costs of
    Medicare Part B services, reflected by the copayments beneficiaries must pay for services
    that may not be necessary or inappropriate.  Rapid growth in utilization of services
    spending on Part B services also causes the Part B premium to rise each year.  It is simply
    not fair for our seniors to shoulder the costs of improper growth in physician spending.
            We need to better understand what drives the growth. Is it medically beneficial or
    misuse of technology, or both?  I understand that some growth may be attributed to
    technological innovations that allow physicians to better diagnose disease.  To this extent,
    I applaud physicians for seeking out the best, most effective care available for our
    seniors.  However, it is also my understanding that the rapid growth in volume and
    intensity of imaging services may be driven by the possible misalignment between fee
    schedule payment rates and actual costs.  If that is true, how do we control for this? We
    must also examine the effect of defensive medicine on the increased use of these services.
            These are some of the questions I have for our witnesses today as we begin to look
    at one area of physician spending that continues to grow unsustainably each year.  As we
    look ahead to how to best address problems with the underlying physician payment
    system, one important consideration is how to best control for overutilization of services
    that are not necessary or possibly harmful to patients.  The SGR was designed to control
    for such overuse of services, but it appears it has not done the trick.  As we look at
    building a new physician payment system, questions about how to control physician
    spending must be addressed.  Today's hearing is an important first step at looking at this
    issue.
            I want to thank Chairman Deal for calling this hearing, and reiterate my thanks to all
    the witnesses for coming today.  I look forward to their testimony.

    PREPARED STATEMENT OF THE HON. ANNA ESHOO, A REPRESENTATIVE IN CONGRESS FROM
    THE STATE OF CALIFORNIA

            Thank you, Mr. Chairman.
            Medical imaging has transformed the way modern medical care is delivered.  The
    successes of medical imaging technologies are due in part to the research conducted by
    the National Institute of Biomedical Imaging and Bioengineering at NIH.  This Institute
    was established in 2000 by the National Institute of Biomedical Imaging and
    Bioengineering Establishment Act, which then-Representative Richard Burr and I
    sponsored.
            The benefits and promise of medical imaging are immense.  Imaging technologies
    can often detect critical illnesses at their most curable stage when they are also less costly
    to treat.  Less-invasive care, fewer complications, shorter hospital stays, and better patient
    management have also fostered greater efficiency and savings throughout the healthcare
    delivery system.
            Medical imaging is an essential tool of modern medicine.  Physicians rate CT and
    MRI as the most important medical innovations in providing quality care for their
    patients.
            In the case of aging populations, imaging is particularly useful in preventing patients
    from undergoing invasive surgeries, avoiding extended periods of recuperation or
    disability.
            I'm eager to hear the testimony of our expert witnesses today who will explain the
    new and emerging imaging technologies that will help revolutionize the way health care
    is delivered.
            The Deficit Reduction Act (DRA) included severe cuts in payments for medical
    imaging in the Medicare physician fee schedule.  These cuts were not included in either
    the House or Senate-passed versions of the DRA bill, but were added to the Conference
    report at the last-minute in order to increase revenue.
            Today, imaging comprises roughly one-tenth of Medicare spending, yet the cuts to
    imaging in the DRA comprise roughly one-third of the total Medicare savings in the bill,
    a highly disproportionate and unfair slice of the pie.  Specific categories of imaging
    services fare no better:
             Reimbursement for ultrasound guidance procedures, performed as part of a
    minimally invasive biopsy for the diagnosis of breast cancer, would be reduced
    by 30%.
             Reimbursement for PET/CT exams used to diagnose cancerous tumors and
    determine the effectiveness of cancer treatment would be reduced by upwards
    of 50 percent.
             Reimbursement for bone densitometry studies necessary for the diagnosis of
    women at risk for osteoporosis, a recently enacted Medicare screening benefit,
    would be reduced by over 40%.
             Reimbursement for MRIs of the head used to detect the location of aneurysms
    would be reduced by 42%.
            Because of the increased risk of disease and illness in aging populations, these cuts
    will affect the ability of Medicare beneficiaries to receive potentially life-saving imaging
    procedures and diminish the quality of care patients receive.
            The devastating effects these cuts will have are unfounded and unacceptable.  That's
    why I urge my colleagues to join me in supporting H.R. 5704, the Access to Medicare
    Imaging Act of 2006.  This bipartisan bill places a 2-year budget-neutral moratorium on
    the cuts while GAO does a study on the impact of these provisions.
            Thank you, Mr. Chairman, I look forward to hearing from the witnesses.

    	MR. DEAL.  I believe all the opening statements have now been
    concluded.  It is my pleasure to introduce our first panel.  First of all, Mr.
    Herb Kuhn, who is the Director of the Center for Medicare Management,
    that's CMS.  Mr. Glenn Hackbarth, who is the Chairman of the Medicare
    Payment Advisory Commission.  Gentlemen, we are pleased to have
    both of you here.  Your written testimony has been made a part of the
    record.  We would ask you to use your 5 minutes to summarize that
    testimony for us today.
    	Mr. Kuhn, we will start with you.

    STATEMENTS OF HERB KUHN, DIRECTOR, CENTER FOR MEDICARE MANAGEMENT, CENTERS FOR
    MEDICARE AND MEDICAID SERVICES, U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES;
    AND GLENN M. HACKBARTH, J.D., CHAIRMAN, MEDICARE PAYMENT ADVISORY COMMISSION

            MR. KUHN.  Chairman Deal, Representative Pallone--
    	MR. DEAL.  Turn your microphone on, please.
    	MR. KUHN.  Thank you.
    	Chairman Deal, Representative Pallone, members of the
    subcommittee, thank you for the opportunity to discuss with you some of
    the changes in payment for imaging services under the Medicare
    physician fees schedule.  Spending for these services has risen
    dramatically in the past several years, prompting a number of
    recommendations by MedPAC, many of which we have implemented,
    and of course, the subsequent actions we have heard about today by
    Congress to address the increased spending associated with the rise in
    both the volume and intensity of these services.  We want to ensure that
    Medicare's payment mechanisms encourage clinically appropriate use of
    resources and the highest quality of care, and we welcome input from
    this subcommittee, the physician community, and others interested in this
    issue.
    	Medicare's spending for imaging services has grown rapidly.  As we
    have heard, it is nearly doubled over the last 5 or 6 years.  New
    information from CMS shows that between 2000 and 2005, spending for
    imaging services paid under the physician fee schedule doubled from
    $6.6 billion to $13.7 billion, an average annual rate growth of 15.7
    percent.  This compares to the overall annual growth in physician
    services of 9.6 percent.  We also see more extensive geographic variation
    in spending for imaging services than for other physician services.
    MedPAC has also found similar findings in terms of variation.  This
    significant variation in use of imaging services, even among contiguous
    States, appears to be with no evidence towards better outcomes for the
    patients, as we see right now.  The rapid increase in Medicare spending
    for imaging services, coupled with extensive geographic variation in
    their use, raises question about whether such growth is appropriate and
    whether all imaging services are used appropriately as well.
    	Currently, we estimate that spending for physicians grew by 10
    percent during 2005.  Seven percentage points of this growth is
    attributable to the volume and intensity of physician services, a rate that
    is in line with the past few years.  In March, we estimated that the
    increase in spending for imaging accounted for 27 percent of the increase
    in physician-related spending.  This level of growth is adding additional
    pressure to the sustainable growth rate system.
    	As noted in last week's mid-session review of the budget, growth
    and spending for physician services is a notable contributor to the
    increase in the Part B premium, which is now projected to be $98.40 in
    2007, an increase of almost $10 from the 2006 Part B premium.  Rapid
    increases in spending for imaging services contributes significantly to the
    increase in spending for physician services, and thus help also fuel the
    Part B premium.
    	To address this situation, CMS, as I indicated earlier, has taken
    several steps.  First, in response to a MedPAC recommendation, we
    added nuclear medicine services to the list of services for which a
    physician is prevented from making a self-referral under Medicare and
    Medicaid under the STARK law.
    	Second, in the physician fee schedule rule in 2006, we indicated that
    we would look at multiple imaging procedures, and we looked at 11
    families of related codes that are performed on contiguous body parts.
    Basically what we did was make a particular proposal and a
    recommendation that we would reduce the subsequent procedure by 50
    percent, 25 percent this year and an additional 25 percent next year.
    Under requirements for budget neutrality, we took the step of increasing
    payments for all 2006 physician fee schedule services in order to balance
    out those reductions.
    	The Deficit Reduction Act of 2005 contains two major provisions, as
    we have heard about today.  The first one is on the contiguous body part
    recommendation that we made on last year's rule, dealing with the
    technical component of that one.  Instead of being budget neutral, there
    are savings associated with that and we will take those savings as part of
    the DRA.  The second, of course, as we have heard is the provision
    dealing with the OPPS cap, and therefore reducing physician imaging
    services in physician offices to the level that is in the OPPS payment
    rate.  Basically a side neutral payment system is what was envisioned in
    that particular legislation.
    	We realize that significant technology advances in imaging
    capabilities have made a difference in clinical practice and the lives of
    patients.  I think this committee has well-articulated that in their
    openings statements.  However, we want to ensure that our payment
    system rewards clinically appropriate care and does not provide
    inappropriate incentives for growth in volume and intensity of services
    with limited clinical benefit.  To that end, CMS will continue to work
    with the physician community, other interested parties, and of course,
    this subcommittee and others in Congress as we refine our payment
    systems for medical imaging.
    	I thank the subcommittee for this time, and I look forward to your
    questions.
    	[The prepared statement of Herb Kuhn follows:]

    PREPARED STATEMENT OF HERB KUHN, DIRECTOR, CENTER FOR MEDICARE MANAGEMENT,
    CENTERS FOR MEDICARE & MEDICAID SERVICES, U.S. DEPARTMENT OF HEALTH AND
    HUMAN SERVICES

            Chairman Deal, Representative Brown, distinguished members of the
    Subcommittee; I thank you for the opportunity to discuss with you some of the changes
    in payment for imaging services under the Medicare physician fee schedule.  Spending
    for these services has risen dramatically in the past several years, prompting a number of
    recommendations by the Medicare Payment Advisory Committee (MedPAC), some
    proposals by CMS, and subsequent actions by the Congress to address the increased
    spending associated with the rise in the volume and intensity of these services.  We want
    to insure that Medicare's payment mechanisms encourage clinically appropriate use of
    resources and the highest quality of care, and we welcome input from you, the physician
    community, and other interested parties as we do so.

    Background
            Medicare spending for imaging services has been growing rapidly.  Between 2000
    and 2005, spending for imaging services paid under the physician fee schedule more than
    doubled from $6.6 billion to $13.7 billion, an average annual growth rate of 15.7 percent.
    This compares to an annual growth rate of 9.6 percent for all physician fee schedule
    services.
            As we noted in a letter to MedPAC on April 7, 2006 (see table 1), while imaging
    services represented an estimated 14 percent of 2005 spending included in the sustainable
    growth rate calculation (SGR-related spending), they represented 27 percent of the total
    increase in such spending between 2004 and 2005.  Spending for imaging services
    contributed 2.3 percentage points of the 8.5 percent increase in SGR-related spending
    reported in our April 7th letter to MedPAC.  No other service category affects the increase
    in SGR-related spending so disproportionately.
            Table 2 shows growth rates for imaging services for calendar years 2003, 2004 and
    2005, overall and for four subcategories of imaging services: standard imaging, advanced
    imaging, echography, and imaging procedures.  Overall, spending for imaging services
    grew at 16 percent per year for each of these years.
            The "standard imaging" category includes services such as chest x-rays, contrast
    gastrointestinal imaging, nuclear medicine procedures, and PET scans.  Spending for
    standard imaging procedures increased by an estimated eight percent during 2005 and by
    43 percent from 2003 to 2005.  This category represents an estimated five percentage
    points of the 14 percent share that imaging represents of 2005 SGR-related spending.
    This category contributes an estimated 0.4 percentage points to the 2.3 percent increase in
    imaging spending and to the 8.5 percent increase in SGR-related spending.
            Spending for the "advanced imaging" category, comprised largely of CAT scans and
    MRI procedures grew by 25 percent during 2005 and 82 percent from 2003 to 2005.
    This category represents an estimated five percentage points of the 14 percent share that
    imaging represents of 2005 SGR-related spending.  This category contributes an
    estimated 1.3 percentage points to the 2.3 percent increase in imaging spending and to the
    8.5 percent increase in SGR-related spending.
            The "imaging procedures" category includes services such as cardiac
    catheterization, fluoroscopy, and 3-D holographic reconstruction.  Estimated spending for
    the imaging procedures category of services increased by 20 percent during 2005 and 47
    percent from 2003 to 2005.  This category represents an estimated one percentage point
    of the 14 percent share that imaging represents of 2005 SGR-related spending.  This
    category contributes an estimated 0.1 percentage points to the 2.3 percent increase in
    imaging spending and to the 8.5 percent increase in SGR-related spending.
            Estimated expenditures for the "echography" category of services increased by 17
    percent during 2005 and grew 49 percent from 2003 to 2005.  This category represents an
    estimated three percentage points of the 14 percent share that imaging represents of 2005
    SGR-related spending. This category contributes an estimated 0.6 percentage points to
    the 2.3 percent increase in imaging spending and to the 8.5 percent increase in SGR-
    related spending.
            No matter how one looks at it, Medicare spending for imaging services under the
    physician fee schedule is growing very rapidly and more rapidly than spending for other
    services tracked under the SGR system.  While MedPAC suggested that some imaging
    services have shifted from being furnished in facilities, such as hospitals, to physicians'
    offices, MedPAC also observed that about 80 percent of the growth in the volume and
    intensity of these services is unrelated to a shift in setting.  The rapid increase in
    Medicare spending for imaging services, coupled with extensive geographic variation in
    their use, raises questions about whether such growth is appropriate and whether all
    imaging services are used appropriately.
            Last week the Administration released the Mid-Session Review of the Budget.  Part
    B spending was up from prior estimates.  Spending for physicians' services is estimated
    to have increased by 10 percent during 2005, and 7 percentage points of this growth was
    attributable to the volume and intensity of physicians' services.  The volume and intensity
    of physicians' services has increased at rates of 6 to 7 percent per year for the past few
    years.  Growth in spending for physicians' services has been a notable contributor to the
    increases in the Part B premium.  Rapid increases in spending for imaging services
    contribute significantly to the increase in spending for physicians' services.

    MedPAC Recommendations and the 2006 Medicare Physician Fee Schedule
    Limiting Physician Self-Referrals
            Section 1877 of the Social Security Act, known as the "Stark Law," prohibits a
    physician from making a referral for certain designated health services, payable by
    Medicare or Medicaid, to an entity with which the physician or one of his/her close
    family members has a financial relationship, unless one of a specific list of exceptions
    applies.  Among other things, the statute defines designated health services to include
    "radiology services, including magnetic resonance imaging, computerized axial
    tomography and ultrasound services" and "radiation therapy services and supplies".
            In its March 2005 report to Congress, MedPAC recommended inclusion of nuclear
    medicine services in a list of services for which a physician is prevented from making a
    self-referral under Medicare and Medicaid.
            In the notice of proposed rulemaking (NPRM) for the 2006 physician fee schedule,
    we pursued this MedPAC recommendation and proposed including diagnostic and
    therapeutic nuclear medicine procedures under the designated health services categories
    for radiology and certain other imaging services, and radiation therapy services and
    supplies, respectively.  After considering comments on this proposal, we finalized this
    policy in the 2006 physician fee schedule final rule.  To provide time for the industry to
    adjust, we deferred the effective date of this policy until January 1, 2007.
            Despite this change, most physicians in groups that own imaging equipment will be
    able to continue to make self-referrals for imaging services within their own group by
    qualifying for one of the broader exceptions to the law -- the "in-office ancillary services"
    exception.  Thus, defining a given service as a designated health service and making it
    subject to the prohibition against self-referrals does not mean that it will no longer be
    delivered pursuant to a self-referral in all cases.  This change in policy will therefore be
    only partially effective in addressing growth in the volume and intensity of that particular
    type of imaging services.

    Taking Efficiencies into Account
            In general, payment amounts under the Medicare physician fee schedule are
    calculated using the assumption that each service is furnished independently.  Prior to
    2006, fee schedule payments for imaging did not take into account efficiencies that occur
    when multiple services are furnished sequentially.  For example, the fee schedule
    amounts for CT scans of the pelvis and abdomen are established as if each imaging
    service were the only one being furnished to a beneficiary during a given encounter.  The
    March 2005 MedPAC report recommended reducing the technical component of fee
    schedule payments for multiple imaging services performed on contiguous body areas.
    The technical component of an imaging service captures the administration of the test; it
    does not include the professional interpretation of the test.
            In the NPRM for the 2006 physician fee schedule, we proposed revising payment
    amounts for the technical component of certain imaging services in order to more
    accurately reflect the economies of subsequent procedures when multiple imaging
    services are furnished within one of 11 families of imaging procedures on contiguous
    body parts in the same session with the patient.  Specifically, we proposed establishing
    payment amounts at 50 percent of the technical component of any subsequent imaging
    procedures performed on a single patient during a single session if the initial and
    subsequent services were performed on contiguous body parts within one of 11 families
    of imaging procedure codes.  The 50 percent figure was based on our view that most of
    the clinical labor and supplies are not furnished twice.  In response to comments on the
    proposal, we indicated in the final rule for the 2006 physician fee schedule that we
    planned to phase in the 50 percent reduction over two years, beginning with a 25 percent
    reduction in 2006.  However, we indicated that we would continue to accept comments
    and any supporting information from the public, and consider whether it would be
    appropriate to modify the 50 percent payment reduction policy scheduled to take effect
    for 2007.
            The statute requires that we make physician fee schedule changes, such as the
    multiple imaging policy, in a budget-neutral fashion relative to overall physician fee
    schedule expenditures.  If changes result in increased spending compared to spending that
    would occur without them, then a reduction in payments is needed to achieve budget-
    neutrality.  Similarly, if changes result in decreased spending compared to spending that
    would occur without them, an increase in payments for all services is needed to achieve
    budget-neutrality.  Since the multiple procedure policy resulted in a decrease in spending,
    we increased payments for all 2006 physician fee schedule services in order to achieve
    budget-neutrality.

    Assumptions Used in Setting Fee Schedule Payments for Imaging
            The methodology for determining practice expense relative values for services that
    involve equipment such as that used in furnishing imaging services involves assumptions
    about how frequently the equipment is used.  In its September 30, 2005, comments on the
    NPRM for the 2006 physician fee schedule, MedPAC raised concerns about the
    equipment utilization assumption for imaging services.
            CMS's method of calculating payments for the technical component of imaging
    services assumes that imaging equipment is used only 50 percent of the time.  MedPAC
    suggested that imaging equipment could be assumed to be used more than 50 percent of
    the time, given the rapid growth in imaging services.  In its June 2006 report to Congress,
    MedPAC continued its analysis of the equipment utilization assumption for imaging
    services and indicated: "If a machine is actually used most of the time, its cost is spread
    across more units of service, resulting in a lower cost per service than if it were operated
    half the time.  Such equipment is currently overvalued by CMS".  In its June 2006 report
    to Congress, MedPAC also raised questions about the estimates of the cost of capital to
    purchase equipment such as imaging equipment.
            MedPAC argues that the upshot of CMS's equipment utilization and capital cost
    assumptions is that Medicare payments for imaging services are too high.  The June 2006
    MedPAC report indicates, "increasing the equipment use assumption and lowering the
    interest rate assumption would reduce PE payment rates for services like CT and MRI
    studies."  The report contains a table with examples of alternative assumptions; payments
    for imaging services could be reduced by 40 to 50 percent with alternative assumptions.
    However, data to substantiate alternative equipment utilization assumptions are not
    available.

    The Deficit Reduction Act of 2005
            The Deficit Reduction Act of 2005 contains two major provisions that directly affect
    Medicare payments for imaging services.

    Eliminating Budget-Neutrality for the Multiple Imaging Policy
            Subsequent to the publication of the final rule for the 2006 Medicare physician fee
    schedule, section 5102(a) the Deficit Reduction Act (DRA) of 2005 exempted the
    multiple imaging savings from budget-neutrality.  In other words, the DRA requires that,
    for the 2007 physician fee schedule, we do not offset the savings attributable to the
    multiple imaging payment reduction policy for 2006 and 2007 by increasing payments
    for other physician fee schedule services in 2007.

    The Hospital Outpatient Department Cap on Physician Fee Schedule Imaging Payments
            DRA establishes caps on physician fee schedule payments for certain imaging
    services at the payment levels established in Medicare's hospital outpatient prospective
    payment system (OPPS).  The provision requires that Medicare not pay more under the
    physician fee schedule than Medicare would pay under the OPPS for furnishing the same
    imaging procedure.  This policy applies to the technical components of imaging services
    including X-ray, ultrasound, nuclear medicine, MRI, CT, and fluoroscopy services.  A
    physician's interpretation of the test for which Medicare will pay a separate fee is not
    affected by the provision.  Screening and diagnostic mammograms are exempt from this
    policy change.  This policy will begin in 2007.
            An example of how this policy works can be seen in the case of an MRI of the brain
    or an MRI of the abdomen.  In 2006, the Medicare physician fee schedule payment is
    $903 for the technical component of either of these MRIs.  At the same time, Medicare
    pays hospital outpatient departments $506 for the exact same test.  Thus, Medicare is
    paying almost $400 or 78 percent more for doing these MRI imaging tests purely
    depending on whether the test is performed in a hospital outpatient department or in a
    physician's office (or other setting paid under the physician fee schedule).  These
    comparisons do not include a physician's interpretation of the test for which Medicare
    will pay a separate fee.
            Among imaging procedures, there is little consistency in the percentage by which
    payments for the technical component under the physician fee schedule exceed payments
    under the OPPS.  The percentage difference varies by procedure.  We are still working on
    the proposed rules for 2007 for both OPPS and the physician fee schedule.  The fee
    schedule NPRM will contain the specific impacts of the DRA imaging provision.

    Conclusion
            Medicare spending for imaging services has experienced very rapid growth.  In
    addition, through 2006, Medicare is often paying significantly larger amounts under the
    physician fee schedule than the OPPS for the same imaging service furnished in the two
    different settings.  MedPAC's analysis of assumptions used to calculate payment amounts
    indicates payments for imaging services under the physician fee schedule are too high.
    However, there is a lack of information to support alternative assumptions.
            We will implement the DRA provisions through notice and comment rulemaking.
    NPRMs for OPPS and the physician fee schedule are expected to be published this
    summer.  Final rules will be published this fall and will be effective for services furnished
    on or after January 1, 2007.
            We realize that significant technological advances in imaging capabilities have made
    a difference in clinical practice and in the lives of patients.  However, we want to ensure
    that our payment systems reflect clinically appropriate care and do not provide
    inappropriate incentives for growth in volume and intensity of services with limited
    clinical benefit.  To that end, CMS will continue to work with the physician community,
    other interested parties, and the Congress as we refine our payments for medical imaging.
    I thank the Subcommittee for its time and look forward to answering any questions you
    might have.

    Table 1: Spending Growth by Type of Service from 2004 to 2005
    Type of Service
    Growth
    Rate
    Percent of
    Spending
    Contribution
    to Increase
    Percent of
    Increase
    Evaluation and
    Management
    7%
    37%
    2.6%
    31%
    Procedures
    9%
    26%
    2.5%
    29%
    Imaging
    16%
    14%
    2.3%
    27%
    Lab and Other Tests
    11%
    12%
    1.3%
    15%
    Drugs (under the SGR)
    -3%
    9%
    -0.3%
    -4%
    Other Services
    20%
    1%
    0.3%
    4%
    Total
    8.5%
    100%
    8.5%
    100%
    Source:  Table 2 in April 7, 2006 letter from Herb Kuhn, Director, Center for Medicare
    Management, CMS to Glenn M. Hackbarth, Chair, MedPAC

    Table 2: Spending Growth for Four Categories of Imaging Services
    Types of
    Imaging
    Services
    2003
    Growth
    Rate
    2004
    Growth
    Rate
    2005
    Growth
    Rate
    2003-
    2005
    Growth
    Percent
    of 2005
    Spending
    2005
    Contribution
    to Increase
    Standard
    Imaging
    15%
    15%
    8%
    43%
    5%
    0.4%
    Advanced
    Imaging
    20%
    21%
    25%
    82%
    5%
    1.3%
    Echography
    13%
    13%
    17%
    49%
    3%
    0.6%
    Imaging
    Procedure
    10%
    11%
    20%
    47%
    1%
    0.1%
    Total
    Imaging
    16%
    16%
    16%
    56%
    14%
    2.3%
    Source:  From Table 6 in April 7, 2006 letter from Herb Kuhn, Director, Center for
    Medicare Management, CMS to Glenn M. Hackbarth, Chair, MedPAC

    	MR. DEAL.  I thank the gentleman.
    	Mr. Hackbarth.
            MR. HACKBARTH.  Thank you, Chairman Deal, and Ranking
    Member Pallone, other members of the committee.  It is good to see you
    again.
    	As has been discussed already, Medicare expenditures for diagnostic
    imaging have been increasing rapidly, and having passed out to you two
    graphs from our testimony that illustrate this point, the first graph shows
    that imaging services per Medicare beneficiary increased 62 percent
    from 1999 to 2004.  This compares to 31 percent increase for all fee
    schedule services.
    	This 62 percent increase is an increase in what we refer to as the
    volume and intensity of imaging services.  In other words, it does not
    include any price effect.  This is just the increased utilization and
    complexity of the services provided.  Roughly about 20 percent of this
    increase in volume and intensity relates to the migration of services from
    hospital outpatient departments into physician offices.
    	The second graph that you have in front of you shows that there are
    substantial variations in growth rates of different types of imaging
    services, with advance imaging in nuclear medicine leading the way with
    the most rapid increases.
    	The question of the day, of course, is whether growth in imaging is a
    good thing or a bad thing.  The answer is it is some of each.  The growth
    in imaging is due to a variety of different factors.
    	First of all, as many members of the committee have pointed out,
    there have been tremendous improvements in the quality of imaging
    techniques.  Improvements that lead to better healthcare for patients may
    result in reduced expenditures in some individual cases for other
    services.  In addition to that, at least some types of equipment have also
    been falling in price and shrinking in size, making it easier to move that
    equipment from hospital settings or other institutional settings into
    physician offices.  Those convenient locations, in turn, make it easier for
    physicians and patients to do more imaging.  Some physicians also look
    to imaging to provide some protection against malpractice suits, a
    widespread concern among physicians.  And of course, some physicians
    also see income from imaging as a supplement to their professional fees,
    particularly since misalignment between the fees paid and actual cost
    may have created some unusual profit opportunities.
    	From MedPAC's perspective, two types of research suggest that
    imaging is worthy of your attention.  First, we have found three-fold
    variation across the country in the use of imaging per Medicare
    beneficiary.  This is twice as much variation as we find for major
    procedures.  In addition, researchers at Dartmouth have found that high
    use of imaging does not necessarily correlate with better outcomes, nor
    does high use of imaging correspond with lower cost for other services.
    	Let me be clear here.  For individual imaging services, the improved
    outcomes can be demonstrable, easily seen, or the substitution for other
    services is readily seen.  Research shows, however, that more in the
    aggregate is not necessarily better.
    	We have also found that other researchers, as well as private
    purchasers of imaging, have found evidence of quality problems,
    including problems with improperly maintained equipment or poor
    image quality.  In addition, there are some problems with interpretation
    of results.
    	It is difficult to gauge how prevalent these problems might be based
    on a limited number of studies with small sample sizes.  MedPAC's
    concern, however, is that whatever problems exist are likely to increase
    as imaging rapidly moves to office settings from institutional settings
    where there is more oversight, both by outside agencies and by peers.
    This risk is particularly great given the increasing sophistication of both
    the equipment and the techniques.  It is important to keep in mind that
    while good imaging can improve outcomes, if imaging is not done well
    there is great risk in that for the patient as well.
    	So what does MedPAC recommend?  With regard to quality, we
    recommend that Congress direct HHS to set standards for all providers
    who bill Medicare for performing and interpreting diagnostic images.
    This is an approach that has been successfully applied to mammography
    services.  With regard to the growing volume and intensity of service, we
    recommend that CMS develop tools that measure resource use by
    physicians--all services, not just imaging--and provide confidential
    feedback to physicians on how their pattern compares with their peers.
    	Second, we recommend that CMS expand the coding supplied to
    Medicare claims to help counteract unbundling and other billing
    problems.
    	Third, we recommend that CMS work to improve the accuracy of the
    rates paid for imaging services.
    	Finally, we recommend that CMS strengthen rules that limit
    physician financial incentives to order more imaging services.  I am
    pleased to say that CMS has, in fact, taken at least some steps on each of
    these recommendations related to volume and intensity.
    	Taken together, MedPAC believes that these recommendations about
    quality and cost will help increase the value received for the money spent
    on imaging services, both by the program and by Medicare beneficiaries.
    	Thank you.  I look forward to your questions.
    	[The prepared statement of Glenn M. Hackbarth follows:]

    PREPARED STATEMENT OF GLENN M. HACKBARTH, CHAIRMAN, MEDICARE PAYMENT
    ADVISORY COMMISSION

            Chairman Deal, Ranking Member Brown, distinguished Subcommittee members, I
    am Glenn Hackbarth, Chairman of the Medicare Payment Advisory Commission
    (MedPAC).  I appreciate the opportunity to be here with you this morning to discuss the
    quality and volume of imaging services for Medicare beneficiaries.
            Technological progress in imaging over the past years, and its promise for
    improving diagnosis, treatments, and health outcomes are impressive.  In addition,
    improvements in technology have made those services available outside the hospital in
    settings such as imaging centers and doctors' offices-with concomitant improvements in
    convenience for patients.  However, at the same time there has been rapid and sustained
    growth in the volume of imaging services for Medicare beneficiaries; and there are
    concerns about potential overuse of imaging services,  quality problems, and possible
    inaccuracies in Medicare payment rates. As an example of the rapid growth in imaging,
    according to the Wall Street Journal, there are now more magnetic resonance imaging
    (MRI) scanners in the Pittsburgh area than in all of Canada and, in 2003, there were over
    13 computed tomography (CT) scans provided for every 100 members of the largest
    health plan in the area.
            The Commission has investigated imaging quality and growth through data analysis,
    consultations with private sector experts in the management of imaging services,
    discussions with medical specialty societies, and a review of the available literature.
    After public discussion and deliberation the Commission, by a unanimous vote among
    those present, recommended in our March 2005 report that:
             the Secretary of HHS improve Medicare's coding edits for imaging studies,
             the Congress direct the Secretary to set standards for all providers who bill
    Medicare for performing and interpreting diagnostic imaging services,
             the Secretary measure physicians' use of imaging services so that physicians can
    compare their practice patterns with those of their peers, and
             the Secretary strengthen the rules that limit physicians' financial incentives to
    order more imaging services.
            Taken together, these actions should help add value to the imaging services
    Medicare buys.
            While we are pleased that some of our recommendations have been adopted by the
    Congress and the Centers for Medicare & Medicaid Services (CMS), we believe that it is
    important for all of our recommendations to be implemented. The concerns identified in
    our March 2005 report have not diminished.

    Growth has been dramatic
            Diagnostic imaging services paid under Medicare's physician fee schedule grew
    more rapidly than any other type of physician service between 1999 and 2004.  While the
    sum of all physician services grew 31 percent between those years, imaging services
    grew twice as fast, by 62 percent (Figure 1). This measure is the growth in the volume
    and intensity of services per beneficiary; we have removed changes resulting from
    increases in the number of beneficiaries and changes in prices during those years.  Not all
    imaging services grew at this rate; some grew more slowly while some grew faster.
    Advanced imaging and nuclear medicine services, which are among the most expensive
    studies, led the way:  MRI of parts of the body other than the brain grew by 140 percent;
    nuclear medicine grew 112 percent; and CT of parts of the body other than the head also
    grew 112 percent (Figure 2).
            In dollar terms, Medicare spending for imaging services paid under the physician fee
    schedule (including beneficiaries' cost sharing) grew by nearly 90 percent, from $5.8
    billion in 1999 to $10.9 billion in 2004.  Increased spending on these services has also led
    to higher Part B premiums for beneficiaries.

    Note:	E&M (evaluation and management).
    Source:	MedPAC analysis of Medicare claims data.

            Some argue that much of this increase was attributable to the movement of imaging
    from hospital outpatient departments to settings paid under the physician fee schedule.
    However, we estimate that only about 20 percent of the growth in the volume and
    intensity of fee schedule imaging services between 1999 and 2002 was related to the
    migration of imaging from facility settings (such as hospitals) to physician offices. The
    remaining 80 percent of growth was related to factors other than shifts in site of care. The
    movement of imaging from outpatient departments to physician offices raises another
    concern: the institutional standards that govern the performance and interpretation of
    studies in hospitals are usually absent in physician offices.

    Note:	MRI (magnetic resonance imaging), CT (computed tomography), cath (cardiac
    catheterization).
    Source:	MedPAC analysis of Medicare claims data.

            The growth in imaging services could be driven by various factors, among them:
             technological innovation that has improved physicians' ability to diagnose
    disease and made it more feasible to provide imaging procedures in physician
    offices,
             patients' desire to receive diagnostic tests in more convenient settings,
             physicians practicing defensive medicine,
             possible misalignment of fee schedule payment rates and costs, and
             physicians' interest in supplementing their professional fees with revenues from
    ancillary services.
            Some of these factors raise concerns that not all of the growth in the use of imaging
    services may be appropriate, and that quality safeguards may need to be put in place.

    Are all imaging services appropriate?
            The use of imaging services varies widely across the country.  In fact, the average
    use of imaging services in one area can be three times the average use in another area.
    This variation is twice that seen in the use of major procedures.  This finding raises a
    concern about the value of some of those services because geographic areas with a
    disproportionate use of health services in general do not have better health outcomes,
    according to researchers at Dartmouth Medical School (Fisher and Wennberg). Those
    researchers also find that wide variations in the use of discretionary services, such as
    imaging and diagnostic tests, are sensitive to the supply of physician and hospital
    resources.
            In a separate study for MedPAC, Dartmouth researchers found that regions
    providing more imaging services do not have higher survival rates among Medicare
    beneficiaries.  Their study examined whether long-term survival in three cohorts-
    patients with heart attacks, colon cancer, and hip fractures-was better in regions with
    higher versus lower imaging use.  They found that increased use of imaging services was
    not associated with improved survival in any of the three study groups. Although survival
    is a limited measure of quality, this analysis raises questions about the value of additional
    imaging.
            In addition, there is specific evidence that at least some imaging services are
    overused. According to the American College of Radiology (ACR), patients with
    uncomplicated low back pain (without serious risk factors or signs of serious pathology)
    should not receive imaging studies. However, the National Committee for Quality
    Assurance found that nearly one-fourth of patients with low back pain in managed care
    plans received unnecessary imaging services, based on the ACR standard. These
    unnecessary tests included plain X-rays as well as costly MRI and CT scans.

    Quality varies
            According to published studies and health plans we consulted, providers vary in
    their ability to perform quality imaging procedures.  In one study, published in Radiology
    (1998), BlueCross BlueShield of Massachusetts inspected 1,000 imaging providers to
    evaluate the quality of their equipment, technicians, and other features.  These providers
    offered a variety of modalities, including MRI, CT, and nuclear medicine. Nearly one-
    third of the providers had at least one serious deficiency, such as film processing
    problems, failure to monitor radiation exposure, poor image quality, or uncalibrated
    equipment.  Eleven percent of the providers had severe problems that could not be easily
    remedied, while 20 percent had deficiencies that could be remedied.  Although
    chiropractic and podiatric offices were most likely to have had problems, many other
    specialties also had deficiencies.
            According to a study in the American Journal of Roentgenology (2000), another
    health plan that inspected almost 100 nonradiologist offices that provided radiography
    services identified serious problems in 78 percent of the offices.  These problems
    included lack of proper image identification (e.g., noting left or right side of body) and
    use of equipment that had not been inspected during the previous year.
            In our March 2004 public meeting a panel of health plans and imaging benefit
    managers informed us that some providers fail to meet standards because their imaging
    equipment is old or not working properly.  Physician offices sometimes acquire used
    equipment from a hospital and continue to use that equipment beyond its useful life.
            Quality problems may lead to duplicative studies, inaccurate studies, missed or
    inaccurate diagnoses, and inappropriate treatment.  A study published in the Journal of
    Vascular Surgery (2004) found that vascular ultrasound providers that were not
    accredited often produced inaccurate carotid ultrasound examinations.  In that study,
    carotid ultrasound tests performed by nonaccredited labs for 174 patients were repeated
    by an accredited lab that followed standards for diagnostic criteria, testing protocols, and
    technician training.  For 61 percent of the patients, findings by the accredited lab
    contradicted findings by the nonaccredited providers in a way that would affect patient
    management.  The nonaccredited providers had either significantly overestimated or
    underestimated disease severity.  Studies that overestimated severity could have led to
    unnecessary surgery for 88 patients and studies that underestimated severity could have
    resulted in no surgery for 19 patients who needed it.
            There may also be problems with the quality of interpretation of imaging.  For
    example, in one study published in the Annals of Emergency Medicine (1995), over 500
    CT scans that were interpreted by emergency physicians were also read by radiologists.
    Radiologists disagreed with the emergency physicians' interpretations in 39 percent of
    the cases, some of which were potentially clinically significant misinterpretations (e.g.,
    major false negatives or positives). Another study by an imaging benefit company found
    physicians' interpretation reports, which are an integral part of a diagnostic examination,
    to be incomplete.  The study found half of the reports examined lacked information on
    the indication for the study and many lacked information on the views taken.

    Setting standards for imaging providers and interpreters
            The lack of quality oversight for imaging tests provided in physician offices and
    rapid volume growth lead to our first recommendation: The Congress should direct the
    Secretary to set standards for providers who bill Medicare for performing and/or
    interpreting diagnostic imaging studies.  To reduce the burden on CMS, the Secretary
    should select private sector organizations to administer the standards.  As many
    physicians integrate imaging services into their office practices, ensuring that these
    studies are done by skilled technicians using appropriate equipment and interpreted by
    qualified physicians should improve the accuracy of diagnostic tests and reduce the need
    to repeat studies, thus enhancing quality of care and helping to control spending.
            Requiring physicians to meet quality standards as a condition of payment for
    imaging services provided in their offices would represent a major change in Medicare's
    payment policy.  Traditionally, Medicare has paid for all medically necessary services
    provided by physicians operating within the scope of practice for the state in which they
    are licensed. We believe that this policy change is warranted by the growth of imaging
    studies provided in physician offices and the lack of comprehensive standards for this
    setting.  There are some limited precedents for this policy in imaging.

    Current standards
            Aside from a physician supervision requirement, no national Medicare standards for
    imaging apply to physician offices, and some imaging modalities, such as MRI, are not
    covered by any government standards.  CMS has developed national standards for
    imaging provided in hospitals and independent diagnostic testing facilities.   For example,
    hospitals that treat Medicare beneficiaries must comply with Medicare's conditions of
    participation, which include standards for radiology services.  In addition, several
    Medicare carriers have minimum standards for the quality of some types of ultrasound
    studies performed in either hospitals or physician offices, but these standards have not
    been adopted nationally.
            There are also two limited cases where Medicare has set standards for imaging
    interpretation.  First, the Medicare carrier for New York (Empire) sets standards for
    physicians who wish to bill for interpreting an echocardiography study.  Another
    exception is contained in CMS's recent decision to cover positron emission tomography
    (PET) scans for the diagnosis of patients with mild cognitive impairment and early
    dementia.  The coverage decision specifies that tests be interpreted by physicians only in
    certain specialties, such as nuclear medicine and radiology, who have expertise in reading
    these scans.
            There is a national standard for mammography. Under the Mammography Quality
    Standards Act, the Food and Drug Administration (FDA) develops and enforces quality
    assurance standards for mammography equipment, technical staff, and the physicians
    who interpret mammograms.  The GAO has credited the FDA standards with improving
    the quality of mammograms without decreasing access.  Failure rates for image quality
    decreased from 11 percent before the Act to 2 percent after.
            State radiation control boards license facilities that use radiation-producing
    equipment (such as X-ray and CT machines), but their primary mission is to ensure
    patient safety rather than the quality of images, and the standards are not always
    comprehensive or rigorously enforced.  The state boards do not regulate MRI or
    ultrasound services.
            Several of the private insurers we interviewed require that hospital outpatient
    departments, freestanding facilities, and physician offices that provide imaging services
    meet basic standards.  These standards relate to the imaging equipment, radiology
    technicians, image quality, patient safety, and interpreting physicians.  Plans and their
    vendors often require that providers become accredited by a private organization, such as
    the American Institute for Ultrasound in Medicine (AIUM), American College of
    Radiology (ACR), or the Intersocietal Accreditation Commission (IAC).

    Developing standards
            The Congress should grant the Secretary authority to develop standards.  The
    Secretary should review the criteria used by private plans and accreditation organizations,
    and consult with accreditation organizations, physician groups, and manufacturers when
    developing these requirements.  CMS should strongly consider setting standards for at
    least the following areas: the imaging equipment, qualifications of technicians,
    qualifications of the supervising and interpreting physicians, technical quality of the
    images produced, and procedures for ensuring patient safety.
            Several private accreditation programs and one government agency have already
    developed standards for physicians who interpret certain types of imaging studies and
    prepare the reports.  Accreditation organizations, such as the AIUM, ACR, and IAC,
    generally set minimum standards for some combination of professional training,
    experience, and education of physicians who interpret studies.  The IAC has
    demonstrated that it is possible to forge agreement among different specialties on
    common standards.  The IAC has convened representatives of several specialty groups to
    jointly develop facility and physician standards for echocardiography, nuclear medicine,
    and vascular ultrasound.
            Although private plans sometimes base permission to bill for imaging procedures on
    the physician's specialty, the Commission has not recommended this approach.  The
    practice of medicine is evolving quickly, and specialty training may change over time.
    Thus, CMS should develop criteria that allow physicians of different specialties to
    receive payment for interpreting studies.  Similar to the requirements set by private
    accreditation organizations for interpreting physicians, Medicare's standards should be
    based on some combination of physician training, experience, and continuing education.
    Standards will vary for each major imaging modality.
            To reduce CMS's administrative burden, the agency should authorize private
    accreditation organizations to verify that providers meet the quality standards set by the
    Secretary.  CMS should also have the authority to change the roster of organizations that
    verify compliance. Private insurers often rely on accreditation programs to certify that
    their providers meet quality standards.
            To allow CMS to implement national standards in all settings, the Congress should
    provide the Secretary with specific statutory authority to do so.  Although CMS has set
    quality standards for various types of providers (such as hospitals and skilled nursing
    facilities), there are very few examples of federal standards that apply to physician offices
    (the primary exceptions are mammography and clinical laboratory tests, which are
    authorized by statute).

    Measuring physicians' use of imaging services
            The Commission also recommended: The Secretary should use Medicare claims
    data to measure physicians' resource use and confidentially provide information to
    physicians about their resource use relative to their peers. Educating physicians about
    their resource use should encourage those who practice significantly differently than their
    peers to reconsider their practice patterns.  Measuring use of imaging services should be
    done as part of a broader initiative in which the use of a variety of types of services for
    episodes of care is measured. In our June 2006 report, we examined one method to
    achieve this-episode groupers. An episode grouper links all the care a beneficiary
    receives that is related to a particular spell of illness or episode and adjusts for patient
    characteristics. This tool could be used to provide information to physicians about their
    practice patterns and could also help us examine whether imaging substitutes for other
    types of services.

    Expanding coding edits
            The Commission's third recommendation was: The Secretary should improve
    Medicare's coding edits that detect unbundled diagnostic imaging services and reduce the
    technical component payment for multiple imaging services performed on contiguous
    body parts.  We are pleased that CMS and the Congress (as part of the Deficit Reduction
    Act, or DRA) adopted our recommendation to reduce payments for multiple imaging
    services performed on contiguous body parts in the same session.
            A number of private plans adjust payments when providers bill for multiple imaging
    services performed on contiguous body parts.  Some private insurers pay the full amount
    for the first service but a reduced amount (usually half) for the technical component of an
    additional study that is of the same modality (e.g., MRI or CT).  This strategy is based on
    the premise that savings in clerical time, preparation, and supplies occur when multiple
    studies of the same modality are performed during one patient encounter.  In last year's
    physician fee schedule final rule, CMS adopted this policy. The DRA required that
    savings from this policy go to the Medicare trust fund, rather than be redistributed among
    other physician services.
            Currently, Medicare uses edits to determine whether a claim meets the program's
    payment rules.  Some private insurers have developed their own set of coding edits that
    go beyond Medicare's existing edits.  Some plans have implemented more rigorous
    policies to address unbundling of services-that is, separately billing for two procedures
    when one is a component of the other-and billing for mutually exclusive procedures.
    For example, one imaging benefit manager does not pay for both a CT of the head and
    CT of the maxillofacial region at the same time because the head includes the
    maxillofacial area. CMS should develop more extensive edits for imaging services.

    Limiting financial incentives for physicians to order more imaging services
            The Commission also recommended strengthening the rules that limit physicians'
    financial incentives to order imaging services for their patients. Specifically, we
    recommended that the Secretary should:
             include nuclear medicine and PET procedures as designated health services
    under the Ethics in Patient Referrals Act (the Stark law), and
             expand the definition of physician ownership in the Ethics in Patient Referrals
    Act to include interests in an entity that derives a substantial proportion of its
    revenue from a provider of designated health services.
            These changes should reduce physicians' financial incentives to refer patients for
    additional imaging services, which should help control Medicare spending on imaging.
            Physician ownership of health care facilities may create a financial incentive to
    order additional services.  Studies by the GAO and others have found that physicians who
    invest in diagnostic imaging centers or who have imaging equipment in their offices refer
    their patients more frequently for MRI, CT, nuclear medicine, and ultrasound studies.
    The Ethics in Patient Referrals Act prohibits physicians from referring Medicare or
    Medicaid patients for certain services to providers with which the physician has a
    financial relationship.  It also prohibits those entities from submitting claims for services
    provided to patients referred by the physician-investor.  The law applies to a set of
    "designated health services" (DHS), which includes radiology and certain other imaging
    services (MRI, CT, and ultrasound).
            Until recently, CMS had excluded nuclear medicine from the Stark law's
    prohibitions.  This decision allowed physicians to invest in freestanding centers that
    provide nuclear medicine procedures and refer Medicare or Medicaid patients to these
    facilities.  The Commission recommended that CMS add nuclear medicine to the list of
    designated health services because of the recent rapid growth of these services and their
    similarity to other imaging services.  In last year's physician fee schedule final rule, CMS
    adopted our recommendation, effective in 2007. Prohibiting physicians from referring
    Medicare or Medicaid patients to nuclear medicine facilities they own should reduce their
    financial incentives to refer patients for these services.
            In a final rule issued in 2001, CMS created a narrow exception that is inconsistent
    with the underlying intent of the Stark law. This exception permits physicians to own
    entities that provide services and equipment to imaging centers and other DHS providers,
    as long as the physicians do not own the actual entity submitting claims to Medicare or
    Medicaid. For example, physicians can buy an MRI machine from a manufacturer, lease
    it to an imaging center, and be reimbursed a fixed amount per use.  This arrangement
    creates a financial incentive for the physicians who lease the MRI to the center to refer
    patients to that center, which could lead to higher use of services. Prohibiting these
    arrangements should help ensure that referrals are based on clinical, rather than financial,
    considerations.

    Assuring the accuracy of imaging payment rates
            We are also concerned about the accuracy of Medicare's payment rates for imaging
    studies. In a recent proposed rule, CMS proposed basing payments for the technical
    component of imaging services on resource use (these rates are currently based primarily
    on historical charges). These resources include clinical staff, medical equipment, and
    supplies. Equipment is a large share of the cost of many imaging services, such as MRI
    and CT. CMS's estimate of the cost of imaging equipment per use may be too high. The
    agency assumes that imaging machines (and all other types of equipment) are used 50
    percent of the time a practice is open for business. We surveyed imaging providers in six
    markets and found they were using MRI and CT machines much more frequently, which
    should lead to lower costs per use. In addition, CMS assumes that providers pay an
    interest rate of 11 percent per year when purchasing equipment, but more recent data
    suggest that a lower interest rate may be more appropriate (a lower interest rate would
    reduce the estimated cost of equipment). CMS should revisit the assumptions it uses to
    price imaging equipment.

    Impacts
            Setting standards should increase the quality of imaging services provided to
    Medicare beneficiaries, not decrease access, and potentially decrease spending by
    reducing duplication of tests and unnecessary services.  Physician resource measurement
    should educate physicians who have higher use, and has the potential to decrease
    spending in the long run.  Improved coding edits should reduce inappropriate billing and
    thus decrease spending.  Limiting financial incentives for physicians to order imaging
    services should also help control spending. Beneficiaries will not only experience higher
    quality imaging services if these recommendations are implemented, but will also benefit
    from reduced cost sharing and part B premiums.

    	MR. DEAL.  Thank you.  I will start it off.
    	Mr. Kuhn, I believe you testified that imaging services, such as CAT
    scans and MRIs, grew by 82 percent between 2003 and 2005, and that
    the equipment used to perform these services is routinely and quite
    frequently used in the physician office setting.  Is that correct?
    	MR. KUHN.  That is correct.
    	MR. DEAL.  Okay.  You also testified that the technical component
    of payment for some services performed in a physician's office, such as
    an MRI of the brain or abdomen, are currently being reimbursed at 78
    percent more than a hospital for rendering the same service.
    	Some providers would argue that the physician should be paid higher
    for the cost of this equipment, because hospitals can spread out the
    capital cost of the equipment, whereas the physician cannot.  However, I
    am interested in your testimony regarding the equipment assumptions
    indicated by MedPAC.  Specifically, you testified that if a machine is
    actually used most of the time, its cost is spread across the units of
    service, resulting in a lower cost per service.  Therefore, since you stated
    that MRIs and other advanced imaging services grew by 82 percent in 2
    years, isn't it logical to consider that perhaps the cost of the equipment
    that is highly utilized in the physician's office is, in fact, spread out over
    the cost of services that are provided?
    	MR. KUHN.  That is correct, Congressman.  There is a real marginal
    cost issue here that I think people need to think about, and the other issue
    I think this really brings forward in your question is an assumption that
    we make, and this is an assumption that goes back to 1997.  We make an
    assumption in terms of pricing in the physician office that is going to be
    used 50 percent of the time, but I think over the last decade, what we
    have begun to see, at least MedPAC has evidence that they shared with
    us, information we are starting to get from independent diagnostic testing
    facilities and physician's offices that they are using the equipment more
    and more than 50 percent of the time.
    	And so basically what you see is that the more you use it, the less it
    is going to cost to use this equipment.  So some people are saying well,
    you have got an apples and oranges comparison between the hospital
    outpatient department and the physician fee schedule that is out there, but
    if we were to update and move forward, I think, in terms of this
    utilization rate, I think you would see those numbers much more closely
    aligned than I think they currently are now.
    	MR. DEAL.  There are two components; the payment for the
    professional component and the technical component that is being paid
    separately.  Now as I understand it, you have testified that 78 percent
    higher rate in some cases for things like MRI are being paid to
    physicians in their offices versus the hospital outpatient setting.  But you
    also point out, I believe, that the physicians receive an additional fee for
    reading those images.  Is that correct?
    	MR. KUHN.  Right.  There are two parts to the physician payment, as
    you indicated, the professional component and the technical component.
    The DRA provisions only deal with the technical component, that is, the
    equipment, the staff, the information--the education, the material really
    to do the equipment component of this.  The professional component, it
    is no different between the hospital outpatient and in the physician office.
    So that is untouched by this particular provision.  It is just the technical
    part where they are trying to make sure that we have a site neutral
    payment system.
    	MR. DEAL.  Mr. Hackbarth, with regard to the private insurance
    sector, are they seeing the same type of percentages of growth in imaging
    in the private insurance area as we are seeing in the Medicare program
    and if so, what are they doing to try to curb their costs?
    	MR. HACKBARTH.  They are seeing high rates of increase in imaging
    in the private sector.  Some of our recommendations are similar to things
    being done by private payers, for example, coding edits is a widely used
    tool.  Many private payers are also engaged in efforts to develop
    information for physicians in how their use of various resources,
    including imaging, compares to their peers.  Some private payers go
    further than that to actually credential the physicians who do imaging
    and limit it to people.  They will only pay for physicians who have
    certain training.  Some insurers also require prior authorization for
    expensive imaging procedures.
    	We did not embrace those particular steps.  We limited our
    recommendations to things like the coding edits, getting the prices right,
    and providing feedback to physicians.  We did that in recognition of the
    complexity of this issue and how challenging it is to identify and
    encourage the appropriate imaging while discouraging the inappropriate.
    It is a tough task.
    	MR. DEAL.  Thank you.
    	Mr. Pallone, you are recognized for questions.
    	MR. PALLONE.  Thank you, Mr. Chairman.  I wanted to ask my
    questions of Mr. Hackbarth.
    	The witnesses on the second panel are going to focus a great deal on
    provider reimbursement and also on standards for imaging, but what
    today's testimony does not sufficiently focus on, in my opinion, is the
    effect on the beneficiary of both the growth in imaging services and the
    changes in Medicare's payments for these services.  To the extent
    Medicare is overpaying for services, the beneficiary too winds up
    overpaying because their co-sharing is based on Medicare's payment
    rates, and to the extent services are growing inappropriately, the
    beneficiaries' Medicare Part B premiums are increasing as a result.
    	So I just wanted you to comment on the effect of all this on
    beneficiaries and their out-of-pocket expenses.
    	MR. HACKBARTH.  Yes.  Well, you have well-summarized the
    impact.  It is both at the point of service, in terms of patient cost sharing,
    and in terms of the rapidly increasing Part B premium.  Herb, in his
    statement, indicated the rapid growth in the Part B premium, and a big
    piece of that growth in Part B expenditure is, in fact, attributable to
    imaging.
    	MR. PALLONE.  I don't know if you wanted to comment, too, Mr.
    Kuhn?
    	MR. KUHN.  Yes, Mr. Pallone.  It is a good point and I agree with
    Glenn.  I think you summarized it very well.  What we are seeing here is
    kind of two parts.  In addition to the beneficiary, there is the co-payment,
    and so if there is a higher fee in the physician office, the co-payment is
    going to be higher as a result of that.  But also, this is a real driver in
    terms of the Part B premium.  As indicated last week in the mid-session
    review, we came out with the latest estimates of what we think the Part B
    premium will be in 2007, and it looks like it is going to be about $98.40.
    That is about an 11 percent increase from the current rate of about
    $88.50.  There are a lot of drivers in that, but the largest drivers are
    hospital outpatient services and physician services.  And within the
    physician services, medical imaging is really a major driver as well.
    	MR. PALLONE.  Thank you.
    	I want to go back to Mr. Hackbarth again.  MedPAC has
    recommended that the Secretary of HHS establish quality and training
    standards for providers who bill Medicare for imaging services, and
    Medicare has not previously required physicians to meet quality
    standards as a condition of payment for imaging services.  Do you feel
    that imaging services uniquely require such standards, and aren't there
    already Medicare standards for imaging services provided in an
    outpatient hospital facility, and what are other payers doing in this area?
    	MR. HACKBARTH.  Right.  As a general proposition, Medicare does
    not establish quality standards service-by-service, so in that sense this
    would be breaking new ground.  But there are some precedents.  I
    mentioned, I think, earlier the mammography quality standards which, in
    fact, have been shown to improve the quality of mammography imaging
    in work done by GAO.  So that is a recent precedent for this.  There are
    also some more narrow precedents where in its coverage decision on
    PET scanning, for example, CMS included some standards related to
    qualifications, and some of the individual carriers also have quality
    standards for particular procedures.
    	It is an important step and we think it is one that is warranted
    because of the rapid growth, and as I said earlier, the migration of this
    complex and very important activity from institutional settings to
    physician offices where there is less oversight.
    	MR. PALLONE.  Okay.  You might get the impression that MedPAC
    is advocating that only radiologists should perform imaging, but I know
    that doesn't reflect your recommendations as I understand them.  Isn't
    MedPAC simply saying that physicians who are paid by Medicare for
    imaging services, regardless of whether they are radiologists,
    cardiologists, gynecologists, or others, be trained and meet certain
    standards?  Isn't that right?
    	MR. HACKBARTH.  Absolutely, and there has been considerable
    misunderstanding on this point, so I appreciate your clarifying it.
    	We are not recommending that only radiologists be permitted to do
    imaging for Medicare beneficiaries.  We are saying that all physicians
    who do, as well as the staff who do the technical component, ought to
    meet quality standards that have to do with their education, training, and
    experience.
    	MR. PALLONE.  Okay.  Do you recommend that the Secretary of
    HHS should select private-sector organizations to administer any new
    standards for imaging providers and interpreters, and what specific
    private-sector organizations would you recommend and why?
    	MR. HACKBARTH.  Well, we do recommend that the actual review of
    provider qualifications be done by private organizations.  I want to
    emphasize, though, that we think the standards ought to be set by the
    Department and then the administration of those standards be done by
    private organizations.  We recommend that in part to try to minimize the
    workload on CMS, and in part, because there are existing organizations
    who do this sort of work, among other things, for private payers.  And so
    we think that the sort of people who can do the work well are available
    and we ought to use those resources.
    	MR. PALLONE.  All right, thank you.
    	Thank you, Mr. Chairman.
    	MR. DEAL.  Thank you.
    	Dr. Norwood is recognized for questions.
    	MR. NORWOOD.  Thank you, Mr. Chairman.
    	Mr. Kuhn, I have about five questions for you.  I will submit them in
    writing.  Can you answer those in 2 weeks?
    	MR. KUHN.  We will answer you in 2 weeks, Dr. Norwood.
    	MR. NORWOOD.  That is very acceptable.  We need to move this
    quickly and we don't have months and months.  CMS, for example, takes
    months and months, but I presume you won't.
    	MR. KUHN.  We will do it in 2 weeks.
    	MR. NORWOOD.  That is wonderful.
    	MR. KUHN.  Do you yield back your time?
    	MR. NORWOOD.  No, I don't.
    	One question for you, however.  How much of the growth in imaging
    utilization is a result today of increasing the amount of women receiving
    mammograms?  How much does that contribute to the increase?
    	MR. KUHN.  I don't know if I have the specific breakdown in terms
    of mammography and how much that has led to the increase here.  It is
    obviously a very valuable service, as we heard earlier, because it saves
    lives.
    	MR. NORWOOD.  Does anybody have that number?
    	MR. KUHN.  I don't know if we have that number, but one thing I
    would just say on the mammography is we know we have been talking
    about this provision in the DRA.  It is outside of this provision in the
    DRA because under current law, there is a site neutral payment for
    mammography, so it is the same in the physician office as it is in the
    outpatient.
    	MR. NORWOOD.  But we don't know the answer to the question?
    	MR. KUHN.  I don't know the answer, but we can find out.
    	MR. NORWOOD.  How much of the growth is a result of MRI or CT
    scans used to identify the nature and location of strokes?  What percent
    of that increase growth is caused by that?
    	MR. KUHN.  I don't know if we have the coding edits that can show
    that, but in those two particular areas--we group imaging into four
    different areas and that is in a category of advanced imaging, and that is
    probably the single largest growth area we are seeing in terms of
    measuring it right now.
    	MR. NORWOOD.  So what percentage is it?
    	MR. KUHN.  I could look at the chart here real quick--
    	MR. NORWOOD.  I don't--does anybody know the answer?  And if
    you don't, just say I don't know.
    	MR. KUHN.  I don't know right now, but we could find out.  I think it
    is--advanced imaging, it looks like the growth rate was 25 percent in
    2005.
    	MR. NORWOOD.  It seems to me that it is pretty important that you
    understand totally and completely what these increases are all about.
    	Mr. Hackbarth, I have eight questions for you in writing.
    MR. NORWOOD.  Can I get an answer in 2 weeks?
    	MR. HACKBARTH.  Sure.
    	MR. NORWOOD.  That is very kind of you, sir.  Thank you.
    	I made some notes.  Let me see if I can read them.
    	You said increased imaging for--doctors are increasing what they do
    in imaging to supplement their professional fees.  You did say that?
    	MR. HACKBARTH.  Yes.
    	MR. NORWOOD.  Can you--
    	MR. HACKBARTH.  Some physicians.
    	MR. NORWOOD.  Can you prove that to me?
    	MR. HACKBARTH.  I certainly can, among other things, give you
    examples of presentations that are made at physician conferences that are
    pitched at exactly that.
    	MR. NORWOOD.  So you can prove it?  It is pretty important because
    you are saying to us this is one of the major causes, and we have
    legislation that cuts the heck out of what we pay for these fees, and if that
    is true, it needs to have absolute proof to it.
    	MR. HACKBARTH.  Dr. Norwood, I want to be clear that I am not
    saying that that is true of all physicians.
    	MR. NORWOOD.  I understood that part.
    	MR. HACKBARTH.  There are some physicians and--
    	MR. NORWOOD.  I speculate you are right.  I want proof.
    	MR. HACKBARTH.  Well, I can give you examples of it happening.
    	MR. NORWOOD.  Okay, then you need to give me examples of it not
    happening so I understand are we talking about .001, are we talking
    about a normal occurrence?  I mean, we have cut what we pay for
    imaging which is absolutely vital to healthcare today, and the patient is
    the one maybe in the end who is not going to fare well under this, and
    you say you have a study--and you and I both have been in this town
    long enough to know, you make a study say anything you want it to say.
    I want to be sure we are right about this as we move forward.
    	You also used the word "high use of imaging does not produce
    increased good outcomes."  First, what does high use mean, and can you
    prove that statement?
    	MR. HACKBARTH.  Well, what I said was that individual cases of
    increased imaging can, in fact, improve outcomes.  I think we both know
    those examples.
    	MR. NORWOOD.  You said that.
    	MR. HACKBARTH.  The research indicates that higher use of imaging
    services in the aggregate--
    	MR. NORWOOD.  Yes, I understand.
    	MR. HACKBARTH.  --in total does not correlate with better outcomes.
    	MR. NORWOOD.  I am trying to figure out who determines what high
    use is.  I think I have had so many CAT scans I can't believe it, but I am
    sure happy to be alive.  Now, was one of them not needed?  I don't
    know.  Who measures that?
    	MR. HACKBARTH.  Well, on that particular issue, we are not saying
    that high use is a particular number.  You just look at the change in
    volume of the imaging and then correlate that with improved outcomes.
    	MR. NORWOOD.  Lastly, Congress cannot set standards.  You said
    Congress should.  Congress can't anymore than CMS can set standards.
    I would rather have Congress do it.  We have got more practicing
    physicians in Congress than we have got bureaucrat physicians in CMS.
    So in this case, I would rather Congress do it than CMS, but literally,
    neither one can actually do it.
    	I see my time is up, Mr. Chairman.
    	MR. DEAL.  I thank the gentleman.
    	Ms. Capps.
    	MS. CAPPS.  Thank you to our witnesses and I would like to ask
    questions of each of you, so I hope for brief answers.
    	Dr. Kuhn--Mr. Kuhn, I am concerned about how the cuts enacted in
    the Deficit Reduction Act could affect cancer patients' access to needed
    services.  Radiation therapy is less invasive, less expensive, and more
    curative than some other cancer treatments, and it has been brought to
    my attention by the American Society for Therapeutic Radiology and
    Oncology that due to a lack of discussion before inserting these cuts into
    the DRA, it is really unclear whether radiation therapy is included.  Mr.
    Chairman, with your permission and unanimous consent, I would like to
    have the statement of the American Society for Therapeutic Radiology
    and Oncology inserted into the record, which explains their views on
    this.  I wanted to ask you a yes or no question--
    	MR. DEAL.  Without objection.
    	[The information follows:]

    	MS. CAPPS.  --whether radiation therapy is included in these cuts?
    	MR. KUHN.  My understanding is yes.
    	MS. CAPPS.  So the question then is, very brief answer, how do we
    maintain access to these services for cancer patients?
    	MR. KUHN.  I think that is going to be the real key thing when we put
    out the proposed reg, which we should have out in the next few weeks.
    We are going to have a nice discussion about this with the stakeholder
    community at large when they can comment about the provisions that we
    put forward, based on our understanding and our read of the law, and
    have a dialogue on that.
    	The issue here, however, is what Congress was trying to do, as I
    understand with this provision, is really try to create a site neutral
    payment system, that we had a major delta between payments in an
    outpatient setting and a physician office setting, and was that appropriate
    not only for payments for the Medicare program, but was also that
    appropriate for the Medicare beneficiaries as well.
    	And so, we have got a couple of objectives here, to make sure that
    we can have fair and appropriate payment, treat the beneficiaries
    appropriately and fairly, but also make sure, as you indicated, that we
    keep this important access available to everyone.
    	MS. CAPPS.  Well, thank you.  We will be watching very carefully
    because it isn't set and it is very critical how the path goes on in the
    future.
    	Mr. Hackbarth, I think you made some excellent points about the
    need to set and enforce better quality standards for physicians who
    perform and interpret diagnostic imaging services, while also more
    closely evaluating the use of imaging services by physicians to rid out
    possible overuse.  Physicians will need to be empowered to be able to do
    this or even fraud within the system, we give them opportunities and
    ways to do it.  If I understand you correctly, these efforts--these kinds of
    efforts should help reduce spending on these services.  Is this true, in a
    brief answer, so I can give you a chance to follow up?
    	MR. HACKBARTH.  I think what you are referring to is our proposal
    to feedback to physicians--
    	MS. CAPPS.  Right.
    	MR. HACKBARTH.  --information about not just their use of imaging,
    but their overall patterns of care--
    	MS. CAPPS.  Right.
    	MR. HACKBARTH.  --and do so initially in a confidential manner so
    physicians can compare themselves to peers.  We think that is a very
    important approach for helping physicians improve their practice.
    	MS. CAPPS.  And I would like to request of my colleagues that we
    find a way to use that information and be a part of that oversight.  I think
    self-police and self-enforcement can go a long way, although it isn't the
    bottom line.  But I don't think we are taking advantage of that expertise,
    which surely wants to save cost as well.
    	But here is the follow-up.  However, so far the only congressionally
    enacted proposal involves cutting just across the board all outpatient
    imaging, even though we know that the procedures save lives.  It is like
    we know there is waste and abuse out there, but we are going to cut it all,
    even though we don't know, with a sledgehammer.
    	But let me give you the example, and then you can comment.  A
    Mayo Clinic report which concluded that increased use of ultrasound
    guided fine-needle aspiration used to diagnose thyroid cancer has
    reduced the number of unnecessary surgeries and improved costs.
    Shouldn't we wait to see the results of these kinds of studies and efforts
    before we do this blanket cut to reimbursement?  Wouldn't it be risky
    and really appalling to jeopardize patient access to imaging services
    without waiting to see if we can't use other methods to reduce cost
    savings?
    	MR. HACKBARTH.  MedPAC has not specifically looked at the DRA
    provision on limiting payment for imaging services, and I want to
    emphasize that because some people seem to think that it originated with
    MedPAC.  It did not.
    	MS. CAPPS.  Well, who can do it?  How should it be done?
    	MR. HACKBARTH.  Well, what MedPAC has done is we have looked
    at the general idea of trying to set payment rates at the level of efficient
    providers.  Ideally, you would not have different payment rates solely
    based on the site of service and pay more for a less efficient provider of
    the same service.
    	MS. CAPPS.  Right.
    	MR. HACKBARTH.  So we want to set it at the level of efficient
    providers.  Now, operationalizing that for imaging services or any other
    particular service is a fairly complicated task.  You have got to make
    adjustments for the different types of payments--patients, rather, treated
    in different settings.  You have got to be sure you have got the cost of
    efficient providers accurately calculated.
    	So in concept we can understand where the DRA provision is
    coming from, but we have not looked at the specifics of it, and I don't
    have any position on it.
    	MS. CAPPS.  I know I have used my time, but just a yes or no.  Is
    anybody doing this, to your knowledge?
    	MR. HACKBARTH.  Well, I assume CMS is.
    	MR. KUHN.  Obviously, we are looking at this very hard in terms of
    the provisions we have already put forward in terms of the contiguous
    body part changes we made, and obviously we will move forward in
    terms of the implementation of the DRA provision as well.
    	MS. CAPPS.  I think there is a big gap here.
    	Thank you very much.
    	MR. DEAL.  The gentlelady's time has expired.
    	I am recognizing members on the basis of order of appearance and
    seniority, and in that regard, Mr. Shimkus is recognized next for
    questions.
    	MR. SHIMKUS.  Thank you, Mr. Chairman.  Welcome to the
    panelists, and Herb, it is good to see you again.  We have fought a lot of
    fights together.
    	As both you know, I was involved in part of the Deficit Reduction
    Act, was working with Gene Green of Texas on the abdominal aortic
    aneurysm provisions, which we were very excited about having that in
    the process, of course.  That is what happens when you have big
    legislation.  For every good thing that gets in, then there are other issues
    that don't, and then you have to cast the tough vote, and sometimes you
    may not be fully aware of all the other provisions.
    	Having said that, there is a question about the cuts and in essence,
    the non-invasive diagnostic vascular studies.  They really contain no
    imaging, so there is a question out there in the community, will they be
    affected by these cuts, and I want to submit a more precise question,
    because I am not smart enough to say it right without sounding terrible,
    but to make sure I get it right.  But if you understand my question, I
    would welcome an answer on what does it deal with if it is a vascular
    study that contains no imaging?  Is it part of these perceived reductions?
    	MR. KUHN.  No, I think your point is well taken, and we have had a
    number of organizations that have come in to see us since the DRA was
    passed to have discussions about this kind of issue about whether the
    provisions in the DRA just deals with diagnostic imaging, or does it deal
    with therapeutic imaging?  So there is a lot of different breaks here that
    we are spending a lot of time with our general counsel as we evaluate the
    DRA, and quite frankly, Mr. Shimkus, at this time I don't think I have an
    answer for you, but we should when we have our proposed rule come out
    again, hopefully in the next 3 to 4 weeks, where we will have a chance to
    share with everybody our interpretation of what the statute says and then
    let the community at large give us comments on that.
    	MR. SHIMKUS.  Would it be helpful for me to submit this question
    formally, or is it just as well we wait to read your ruling?
    	MR. KUHN.  I think it would be helpful to have it in the record, so if
    you want to go ahead and submit it, we will make sure that we get it
    answered that way, and then we will also have it as part of the rule as
    well.
    	MR. SHIMKUS.  Great, thanks.
    	The other question I have on this whole debate, which I thought
    would have been asked before I had a chance to ask questions, last week
    we had a hearing on medical liability, and other than just the tort issue,
    but what other options are out there.  So as far as this, one of the
    questions would be is a lot of this, how it is termed additional utilization,
    has there been any look to see what part of this is defensive medicine that
    maybe the utilization is just to protect the providers of the healthcare
    services?
    	MR. KUHN.  You know, it certainly is an issue, and maybe Glenn can
    speak to this as well, because they have looked at this and other issues
    pretty hard.
    	Beginning last year when we do an annual letter to MedPAC in the
    spring where we talk about the SGR issue and kind of give an indication
    of what it is going to look like for the following year, last year, and again
    this year, we went through a great deal of detail to provide a lot of
    specificity of what was out there, and that was when we really began
    breaking down into the level of detail that we did on imaging.  One of the
    questions that we have asked the provider community overall is what is
    driving this in imaging and all these other areas we are seeing
    tremendous growth and physician spending, but particularly in imaging
    we really wanted to know what were all the factors that have been talked
    about here, but in particular, defensive medicine.  We are getting a lot of
    mixed reports, but I think the general consensus we hear from the
    provider community is yes, that is one factor that is part of it.
    	I will see if Glenn has any thoughts on that as well.
    	MR. HACKBARTH.  Yeah, I think unquestionably that is a factor in
    the increase.  Off the top of my head, I couldn't try to quantify what
    percentage of the increases are due to fear of malpractice.
    	MR. SHIMKUS.  If I may butt in, I think based upon my friend, Dr.
    Norwood, I think what would help us is to get some quantifiable
    numbers in which we can really point--I know it is difficult to do, but I
    think that would be helpful to us.
    	But let me do the flip side of the coin.  I have 33 seconds left.
    	What about any data that shows improved patient outcomes, based
    upon all this additional screening?  I mean, on the, obviously, on the
    defensive medicine, but what about even though it may be perceived as
    over-utilization, is there an improvement in patient outcome?
    	MR. KUHN.  No question, I am sure there are improved patient
    outcomes, and there have got to be a lot of studies that we could all
    produce to show that, which is good.  I mean, the fact that you don't have
    to do an incision to explore something, the fact that something that is
    hidden from view can be seen with imaging I think is just wonderful.
    And I think what this raises is the cost benefit of technology.  It is a net
    benefit to society as we go forward, but I think the second part that
    anybody does to benefit society in terms of technology also has to look at
    is that there also has to be equal incentives to make sure that we have
    quality and not wasteful spending in this area as well.
    	And so those have to be balanced as we go forward here.
    	MR. SHIMKUS.  Mr. Chairman--unless you want to answer, my time
    is expired.
    	MR. DEAL.  I thank the gentleman.
    	Ms. Eshoo is recognized for questions.
    	MS. ESHOO.  Thank you, Mr. Chairman, and I apologize for not
    being here from the beginning.  I had an Intelligence Committee meeting
    that I tried to divvy up the time.  This is an important hearing, and I think
    it is important to summarize how we arrived here.
    	Deficit Reduction Act was voted on in the House.  These cuts were
    not in that bill.  There was a conference committee.  Certainly, the
    Chairman of the full committee, Mr. Barton, the Chairman of our
    subcommittee, Mr. Deal, were conferees.  It is my understanding that Mr.
    Dingell and Mr. Brown were not included in the ultimate process where
    the outcome was determined for these cuts to imaging.  Our committee
    had many hearings and we have many members on both sides of the aisle
    who have worked to support the enhancement of imaging in our country.
    We all know the benefits of it.  Our colleague who has undergone a long,
    rough road to be back in, I think, full health now just said a little earlier
    that he is most glad to be alive, and that imaging services were a part of
    that.  So, you know, it is important to understand how this darn thing
    happened.
    	Now there are $2.8 billion in imaging cuts over five years, $8.1
    billion over 10.  Imaging represents about one-tenth of Medicare
    spending, and yet the cuts comprise roughly one-third of the total
    Medicare cuts in the bill.  Now, CMS is here and I think that you have
    probably got your marching orders from these conferees.
    	What I would like to know from you, Mr. Kuhn, is have you
    examined any kind of savings that have come about from imaging
    services?  It doesn't seem to me that it is prudent to be going at this with
    a meat axe, if, in fact, we all acknowledge how much a necessary part of
    the system imaging is and what it has produced for the American people.
    You know, on the one hand, Congress is celebrating it.  On the other
    hand, they are saying cut the hell out of it.  We have to be pragmatic
    about this.  I don't know what the conferees were thinking when they
    went to this.  Maybe our Chairman today wants to explain it, because I
    think he voted for it.  It is not what the House voted for.  I didn't vote for
    that bill, and it is not what the House voted for.  This was jammed into
    the bill at the end of the process.
    	So have you done any kind of an analysis of what the savings are,
    relative to imaging in the country--
    	MR. KUHN.  We have not--
    	MS. ESHOO.  --and my other question is did you take into
    consideration the different costs relative to the setting of imaging?
    Hospital settings are always more expensive.  They have greater
    overhead costs and a lot of other costs that are not attendant in a different
    setting.
    	So have you done that, and can you tell me about any kind of
    analysis that you have done relative to savings?
    	MR. KUHN.  In terms of the savings and the offsets, the substitution
    of imaging for other procedures, I don't think we have done a detailed
    analysis that you are talking about here.
    	MS. ESHOO.  Have you done any analyses?
    	MR. KUHN.  There are a number of studies out there and we have
    begun to look in terms of the growth rates in these areas and the site of
    service shifts, but we don't have I think the level of detail that you are
    speaking to right now.
    	MS. ESHOO.  Do you take into consideration, though, yes, there are
    growth rates, and I know in the healthcare system there is over-
    utilization, but sometimes I think that is where the over-emphasis is.  Is
    there any kind of analysis that is done as to why there is the use that there
    is of the imaging?  These are all advancements that we have made.  Are
    we going to cut off the advancements because we don't want to invest in
    them?  It seems to me that part of this debate is being driven by that, and
    that is really, I think, a march to folly on the part of our national policy.
    	MR. KUHN.  There is a lot of technology advancements that nobody
    wants to stop.  In fact, I think the last thing anybody would want to do to
    see any public policy stop some of the wonderful advancements have
    been there.  But I think to put this kind of in a larger context, there are
    some other issues that people need to look at.
    	One is the enormous growth in this area.  It is clearly there and I
    think that is going to catch anybody's eye when you see growth in a
    particular area like this, to be sure.
    	The second thing is the great variation that we are seeing.  Glenn
    talked about some of the variation that they see.  I recently looked at
    some numbers that talked about advance imaging, really the high-end
    computer assisted imaging, and I looked at four States.  They were rural
    States, but they were Wyoming, Montana, and North and South Dakota.
    In Wyoming and Montana, the use of advanced imaging in those States
    was the high 50s, low 60 percent, but over in North and South Dakota, it
    was in the high 30 percent range.  Great deal of variation in terms of use
    of these four neighboring States.  What explains that, we don't know, but
    certainly you saw some higher utilization in a couple of States that are
    out there.
    	But the other thing that is driving us, too, again in terms of the
    overall context that people need to be thinking about, too, this is a key
    driver that is moving the SGR number in ways that are creating situations
    where having to maximize the cuts--
    	MS. ESHOO.  I just want to interrupt for a second, because my time is
    just about up.  Did CMS make this recommendation to conferees?
    	MR. KUHN.  To my knowledge, this was not a recommendation
    coming from CMS.
    	MS. ESHOO.  Thank you.
    	MR. DEAL.  The gentlelady's time has expired.
    	Mr. Pitts is recognized for questions.
    	MR. PITTS.  Thank you, Mr. Chairman.
    	How does MedPAC or CMS quantify the value of imaging?  That is,
    how is imaging's cost-effectiveness valued?  Is better treatment or a
    decreased need for surgery recognized?  Many times, more than one
    imaging modality is necessary.  For example, the immediate test for a
    stroke patient is a CT.  It is fast, it is detailed.  Once the patient is
    stabilized, MRI gives richer detail to make precise judgments about
    treatment.  Do you evaluate volumes on a per patient basis, or do you
    count each encounter separately without describing the episode of
    services?
    	MR. KUHN.  I believe under the particular program right now, we
    look at each individual's services.  I think under current authority we
    cannot look at cost effectiveness in terms of procedures that are out
    there.  We look at reasonable and necessary and whether they meet
    current program coverage rules, but in terms of cost effectiveness, that is
    not an existing authority Medicare has.
    	MR. HACKBARTH.  We accept as a given that improvements in
    imaging can lead to better care, better outcomes for some patients, and
    there are numerous examples of that.
    	The proposition that we have looked at is that given that, is more
    imaging necessarily better for patients?  And with help from researchers
    from Dartmouth, we have looked at care for particular categories of
    Medicare patients and looked at whether more imaging correlates with
    better outcomes.  We found that the answer is no, more imaging does not
    necessarily correlate with better outcomes.  That is not to say that all of
    the imaging is bad.  Much of it is good, but there can be too much of
    even a good thing.
    	It is because of that complexity and how difficult it is to get a handle
    on this that we have treaded, I think, very lightly in terms of our
    recommendations with regard to the rising cost of imaging.  Rather than
    recommending across the board cuts in fees for imaging, what we have
    said is that you need to start looking at some very specific issues.  Are
    we getting the prices right?  Are we paying accurately for imaging
    services?  We have recommended some coding edits to make sure that
    we don't basically pay twice for some types of services.  We have
    recommended feedback to physicians on a confidential basis so they can
    understand their patterns of imaging and compare to their peers.
    	These are a far cry from well, let us slash, rising costs are bad, let us
    just save money.  We have suggested some very targeted steps precisely
    because this is a very delicate complex matter.
    	MR. PITTS.  To follow up, has, for instance, the use of ultrasound-
    guided breast biopsies reduced the number of invasive procedures or
    surgeries?  Have you looked at how specific imaging services improve
    patient outcomes?  Has CMS looked into the role imaging can play in
    efforts to lower the cost to the system by improving outcomes?
    	MR. KUHN.  We have begun looking at this issue overall, I think, in
    aggregate.  I don't think we have looked at this specific one, but yes, we
    are looking at those issues.
    	MR. PITTS.  I am very concerned about potential impacts in
    reductions under the fee schedule.  Have the consequences of imaging
    reimbursement reductions been examined?  Has MedPAC or CMS
    contemplated the effect on beneficiaries?  Is it possible that cuts will
    affect access, thereby contributing to late diagnoses leading to more
    invasive, intensive treatment?  Is it possible that cuts will affect
    outcomes leading to poorer patient health or an increased number of
    unnecessary surgeries, or invasive procedures, leading to increased costs
    to the system?
    	MR. KUHN.  When we put out a proposed rule, we will have impacts
    of a variety of natures in there for people to look at, and also we hope
    during that process we will be asking these kinds of questions so we can
    get the community at large to give us information to help us better
    understand the very questions that you are asking, Congressman.
    	MR. PITTS.  Mr. Chairman, I have several other questions.  I will just
    submit them in writing, if you can also respond to us within a couple of
    weeks.
    	Thank you.
    	MR. DEAL.  Mr. Towns is recognized for questions.
    	MR. TOWNS.  Thank you very much, Mr. Chairman.  Let me also ask
    to place my statement in the record.  I have an opening statement, but I
    was detained and was not able to be here.  So I would like to ask
    permission to place that into the record.
    	MR. DEAL.  I am sorry?
    	MR. TOWNS.  I am seeking permission to put my opening statement
    in the record.
    	MR. DEAL.  Without objection.
    	MR. TOWNS.  Thank you.
    	Mr. Kuhn, what do you consider to be appropriate training for a
    physician to have in office diagnostic imaging services?
    	MR. KUHN.  Right now under the Medicare law and rules, we defer
    to State licensure in terms of the appropriate training of determining
    what physicians can do within their scope of practice.  So we don't tread
    or get in the way of State licensure in that regard.
    	MR. TOWNS.  Let me ask you this.  Do you feel there should be some
    standards, national standards?
    	MR. KUHN.  I think right now the way we work through the system
    in terms of deferring to State licensure is working pretty well for the
    Medicare program.  I think the direction that we would like to see the
    program go is we have been working very hard the last couple of years
    on this issue of trying to develop better quality standards or quality
    measures for payment purposes, and it gives us a chance to work with the
    specialty societies and others to use their evidence-based guidelines to
    translate those into quality metrics, quality indicators that we can use for
    payment in the future.  I think driving the program in that direction will
    help us achieve the better results that we are all talking about here, while
    at the same time not having to go out and set separate individual
    standards that might be in place that have been talked about.
    	MR. TOWNS.  I think this question was raised a little earlier, but I
    would like to go at it a different way.
    	Do you think that a reduction in payments to hospitals to deliver
    diagnostic imaging services under the Deficit Reduction Act will result
    in a significant drop in the delivery of these services?
    	MR. KUHN.  It is a good question, and I don't think we know yet.
    That is why we hope when we put out our proposed rule we will have a
    greater and bigger opportunity to engage the stakeholder community to
    talk to us about those issues and get kind of a richer discussion about that
    issue through the notice and comment period.
    	MR. TOWNS.  Because I feel that cuts might curtail access, and that
    bothers me because I think that is the last thing we need to do.
    	MR. KUHN.  I couldn't agree more, and I think what Congress was
    trying to do in the Deficit Reduction Act was two things.  One, I think
    they really did want to improve the quality of services and care that is out
    there.  They did not want to impede access whatsoever, but they really
    wanted to get their arms around some of this growth that is out there that
    is fueling problems with the SGR, it is fueling issues with the Part B
    premium, and driving to, I think, some unsustainable growth rates that
    everybody needs to look at.
    	So all those things that we need to take into consideration as we put
    out our proposed rule that will be coming out soon.
    	MR. TOWNS.  You know, I think that the provision of imaging
    services should be viewed in the context of fundamental changes in
    healthcare.  Imaging is transforming the way that disease, illness, or
    injury can be detected and treated, and of course, I believe that imaging
    use should not be discouraged without a thorough understanding of its
    impact on the access and delivery of medical care, particularly in
    medically underserved areas.
    	So I am concerned about this.  I know we are trying to cut costs and
    all of that, but at the same time, I think that we really have to be careful
    in what we are doing here.
    	Let me just raise this issue.  In the medically underserved areas, have
    we had an opportunity to check to see where there has been a change in
    delivery of service since we have been using and you know it has
    increased a great deal?
    	MR. KUHN.  I don't know whether CMS has looked in medically
    underserved areas in that issue or not.  I could go back and check and we
    could get a response for the record, but I just don't know the answer to
    that question right now.
    	MR. TOWNS.  Okay, because I am concerned whether or not the
    access situation, which is very important when it comes to the overall
    evaluation in terms of healthcare.
    	MR. KUHN.  Right.  I think you raised the point, and I think it kind of
    swings both ways.  One, you want to make sure there is sufficient
    payments, that it is stable and reliable so that you encourage access in
    these particular areas.  At the same time, you want to make sure that if
    we go the routes that have been talked about of creating standards, you
    don't want to create standards that are so problematic that providers
    won't come to those areas.  So trying to find that balance between those
    two is going to be an absolute key in this area, as well as all parts of
    Medicare.
    	MR. TOWNS.  Right.  I see my time is expired, Mr. Chairman.  Thank
    you.  I yield back.
    	MR. DEAL.  I thank the gentleman.
    	Mr. Pickering is recognized for questions.
    	MR. PICKERING.  Thank you, Mr. Chairman.
    	It seems today the discussion is primarily around reimbursement
    funding and the degree that access is either improved or reduced, based
    on reimbursement.  But the other question is to a degree that standards
    address both issues, that we can have the assurance that imaging
    technologies and services are being used in an appropriate way.  Then it
    gives us greater confidence that the reimbursement and the sustainability
    of reimbursements can be met.
    	And so my question for Mr. Hackbarth is that we have an example of
    a successful standard in the Mammography Quality Standards Act, and
    in fact, in your testimony you used that as an example.  I have introduced
    legislation, the CURE Act, broad bipartisan support and I believe Senator
    Enzi on the Senate side has a similar piece of legislation.  Have you had
    a chance to review or look at either of those bills?  We have set the
    standards in education and credentials, and would that be consistent with
    what you are recommending that Congress do?  And have you any other
    comments or suggestions as it relates to those two pieces of legislation as
    to what we can do to then address all of the issues in a comprehensive
    way?
    	MR. HACKBARTH.  Certainly, the legislation is quite consistent with
    the general thrust of our recommendations.  We agree that it is important
    that there be quality standards.  My recollection of your legislation is that
    it focuses not on the physicians, at least in the first instance, but rather on
    the staff that actually run the equipment.  Is that right?
    	MR. PICKERING.  It doesn't--whoever does the imaging, whether it is
    a technologist or the staff or the physician.  It tries to take a neutral
    position, but to make sure that whoever is doing it is properly educated,
    has proper credentials, and does it in a proper way.
    	MR. HACKBARTH.  Right, and so we agree on that.  We think that
    there ought to be standards for both the physicians and the non-physician
    staff involved in the process.
    	Dr. Norwood raised the question earlier of who sets the standards,
    and what we have recommended is that Congress direct the Secretary of
    HHS to develop the standards and we think that the proper process for
    doing that would be to develop standards in close consultation with the
    relevant medical specialties societies, equipment manufacturers, and the
    like, people who have great expertise to bring to the table.  So what we
    envision is not that people in HHS go off in a room by themselves and do
    this, but do it with people who have the relevant experience.
    	MR. PICKERING.  Is that how the Mammography Quality Standards
    Act was done?
    	MR. HACKBARTH.  That is my understanding of how it was done,
    yes.
    	MR. PICKERING.  And that is an instance or example.  We have had
    dramatic improvements in quality, reduction of errors--
    	MR. HACKBARTH.  Yes.
    	MR. PICKERING.  --and there is a greater confidence that the services
    provided warrant the reimbursements.
    	MR. HACKBARTH.  Yes.  The GAO looked at the issue of the impact
    of the Act on quality for mammography services, and they found a
    significant decline in poor quality images and did not find a reduction in
    access to mammography services.
    	Again, I would emphasize that precisely because these services are
    so important and they are critical in making proper diagnoses and proper
    treatment that we have got to make sure that it is high quality work that
    is done.  If poor quality imaging is done, then it can go off on the wrong
    path to the detriment of the patient, not to mention increase costs.
    	MR. PICKERING.  So it would be fair to say that the Administration,
    as we look at reimbursement either reform or moratoriums, that the
    ability of Congress to pass legislation addressing standards in education
    and credentials, that you all would be supportive of those efforts and
    would want those to be combined, and to do it quickly before the end of
    this session?
    	MR. HACKBARTH.  Well, as I said earlier, MedPAC has not looked at
    the DRA provisions regarding the rates for physician offices versus
    hospital outpatients, so we have no position on that, but certainly we
    would urge Congress to act quickly on legislation for quality standards.
    	MR. PICKERING.  This year?
    	MR. HACKBARTH.  As soon as possible.
    	MR. PICKERING.  Thank you very much.
    	Mr. Chairman, I yield back.
    	MR. DEAL.  Unabashed.
    	Dr. Burgess, you are recognized for questions.
    	MR. BURGESS.  Thank you, Mr. Chairman.
    	I have got so many questions I want to ask, and I know, Mr. Kuhn,
    Dr. Norwood kind of already put you under a time deadline, so for the 2
    weeks after that, could I get some questions answered?
    	MR. KUHN.  We will do our level best to do them concurrently.
    	MR. BURGESS.  And Mr. Hackbarth, I would claim the first 2 weeks,
    then, that Dr. Norwood didn't claim.
    	MR. HACKBARTH.  He gave me some, too.
    	MR. BURGESS.  Oh, he gave you--all right.
    	MR. HACKBARTH.  We will shoot for 2 weeks also.
    	MR. BURGESS.  I will extend the same courtesy, then, to MedPAC as
    I did to CMS.
    	The issues are complex, and I thank you both for acknowledging
    that.  I really thank you for acknowledging what constraints we are under
    with the SGR and underscoring how important it is for us to address that
    fundamental flaw in the overall system.  I hope, Mr. Chairman, we have
    a chance to do that.
    	Mr. Kuhn, in your testimony you note the rate of growth in different
    types of imaging.  Do you have an opinion or do you have a sense of
    what proportion of that has been the growth in ultrasound?
    	MR. KUHN.  I don't know if I have the specific numbers on
    ultrasound there.  We could go back and look at the claims date and see
    if we can dig it out by specific area.  What we do is we lump these
    together into kind of four general areas that we talked about earlier,
    advanced imaging, standard imaging, et cetera, but we could find the
    ultrasound information if you would like us to look for that.
    	MR. BURGESS.  I very much would like that.
    	Now, as CMS develops regulations to comply with the provisions of
    the Deficit Reduction Act, will the standard of care be a significant
    component in the decision-making process?
    	MR. KUHN.  We will have all that kind of information, all that kind
    of discussion will be in the proposed rule, and we will look at all the
    issues related to the DRA and put that out for everybody to comment,
    along with the impacts as well.
    	MR. BURGESS.  Now, several people brought up the issue of
    defensive medicine and how that may be a driver in the growth of
    increased cost in medical imaging.  You said that you didn't have that
    information.  Is that because no one has looked for the information, or is
    the information somehow buried in all of the data that you have?  Is that
    information that could be available to us, or would that require a new or
    separate study to be done?
    	MR. HACKBARTH.  For MedPAC's position, we have not specifically
    looked at and tried to quantify what piece of the total increase is
    attributable to defensive medicine.  I know that there have been some
    academics--
    	MR. BURGESS.  How hard is it going to be for us to get that
    information, because I--
    	MR. HACKBARTH.  It would be very difficult for us, because you are
    trying to understand what is in a physician's head when they are making
    a decision.
    	MR. BURGESS.  Then if we can't get hard data, then I will fight
    anecdote with anecdote.  I would submit to you that you can go into any
    emergency room in this country on Friday night after 11:00 p.m. local
    and say you have got the worst headache in your life, and you have just
    bought a CAT scan.  I don't think you can get out of there without one.  I
    would submit to you that anyone between the ages of 0 and 100 who
    walks into the emergency room that same Friday night after 11:00 p.m.
    and says I have pain in my abdomen is going to have a CAT scan to rule
    out appendicitis.  The old days, we used to say that if a surgeon didn't
    occasionally remove a normal appendix, he was probably sending ill
    people home.  That maxim doesn't fly anymore because everyone has the
    opportunity to have a CT diagnosis of their appendicitis.  Dr. Norwood
    alluded to the problem with stroke diagnosis.  At the risk of
    oversimplifying, and as you both know, strokes can either be
    hemorrhagic or thrombotic, that is caused by a bleed.  Brain damage can
    be caused by a bleed or it can be caused by a blood clot, but you have got
    vastly different treatments for each contingency as unfortunately, the
    former prime minister of Israel has shown us.  He came in with a
    thrombotic stroke one day, appropriately anti-coagulated, but when it
    extended it was a hemorrhagic stroke.  More anticoagulant didn't do him
    a bit of good, and it has left him in tough shape.
    	So these are aspects, I suspect, of this graph that you shared with us
    that we really need to know, because we are talking about where we
    come down with patient care on this.  I lived through the same situation
    with my dad in 1989.  He had a thrombotic stroke.  In those days, we
    didn't have clot-busting medications available.  Had they been available,
    that would have been very useful information to have, but had it been a
    hemorrhagic stroke, the TPA or endosceptilicin or whatever was
    administered would have been extremely damaging.  We have the ability
    for--unlike my dad, who in 1989 had his stroke and was unable to talk
    for the next 18 years of his life, we have the ability today to take that
    same individual, break up the clot, and minimize their damage.  And it is
    incumbent upon us to do that.  Yes, we are going to be overtreating some
    people in the last 2 weeks of their life.  That is just part of the bargain, as
    the lawyer the other day talked to us and said we deal with the world of
    competing sorrows.  Those are some of the sorrows that we are just
    going to have to compete with.  But unfortunately, you guys have to help
    us with this, and if that help is with data, I urge you to make that data
    available to us.
    	Again, I have got about 15 questions that I will submit for the record.
    Some very good thoughts about the issue of needle aspiration on breast
    diagnosis.  If that has led to an increase in imaging, that has led to a
    decrease in cost.  Again, we need to know that at this committee level.
    	Thank you, Mr. Chairman.  I yield back.
    	MR. DEAL.  I thank the gentleman.
    	Mr. Ferguson is recognized for questions.
    	MR. FERGUSON.  Thank you, Mr. Chairman.  I would ask unanimous
    consent that Dr. Burgess have to speak English.
    	MR. DEAL.  Without objection.
    	MR. FERGUSON.  I was feeling a thrombotic stroke coming on there
    for a second as I was listening to the questioning, for those of us non-
    physicians, particularly.  You know, if you have a CAT scan I may need
    to take advantage of that.  It does highlight the complexity of these
    issues, though.
    	First of all, thank you both for being here today.  Mr. Kuhn, can you
    please explain the differences between the HOPPS based on APCs, and
    the Medicare physician fee schedule which relies on relative value units?
    Specifically, is the HOPPS designed to capture the cost of performing an
    individual medical imaging procedure, and is it not true that the HOPPS
    system generally sets payment for an individual APC based on a median
    value of all the procedures included within that single APC, whereas the
    Medicare physician fee schedule seeks to establish a value for each
    individual component of a specific medical procedure?
    	MR. KUHN.  You are absolutely right.  On the outpatient side, it does
    set a median in terms of the data that we get, actual reports of claims data
    from the hospitals versus the physicians side, which is based on a fee
    schedule, which is based on survey information that is collected by the
    physicians goes to the relative value update committee, the RUC, and
    they look at this information and give us kind of relative values for those
    which is, you know, calculated differently.
    	So one is a perspective payment system, the other is a fee schedule.
    They are very, very different methodologies for computing payment
    rates.
    	MR. FERGUSON.  Then it would seem that there is some question as
    to the appropriateness of using an HOPPS to cap payments for individual
    procedures done in an office setting.  Would you agree with that?
    	MR. KUHN.  I think you raise a good point, but a couple of
    observations I would just make, but I think it is worth for everybody to
    understand in that regard.  One is at least on the outpatient setting we are
    getting actual claims data, actual information that is out there in terms of
    what this stuff costs, or at least the charges reduced to cost through cost
    to charge ratios as we move forward in that regard.  And so I think that is
    one point.
    	The second is that you have great variation, great delta between the
    two different payment rates, and so I think what Congress was trying to
    do here in the DRA was to try to get a site neutral payment.  Let us get
    the same kind of payment rate regardless of where the payment might be.
    And so I think that, too, is something that is worthy of Congress looking
    at.
    	But I think the other point, and I shared this earlier, is at least on the
    physician's side, we make an assumption that the equipment is used 50
    percent of the time.  What MedPAC has found in their research is that
    that is no longer the case.  It is there is much higher utilization for the
    equipment.  Likewise, in terms of information we are hearing from
    facilities around the country, it is much higher utilization rate than 50
    percent.  So basically the more you use it, the less it costs.  And so it is
    not a direct linear line from 50 percent to, say, 75 percent or 80 percent,
    but when you have higher utilization rates, the two numbers in terms of
    outpatient and physician match up pretty closely in terms of payment
    rates.
    	MR. FERGUSON.  Well, I would just--and I have a question for Mr.
    Hackbarth as well, but when you initially were touching on--your initial
    part of your answer saying that this is a serious question.  I mean, there is
    clearly a utilization issue that we need to get our arms around.  There is a
    delta in the cost in reimbursement, and for these two things.  And my
    sense is just using these two different, kind of very different ways of
    addressing similar procedures is troubling and probably isn't entirely
    appropriate.  I am concerned with that and I hope we can further address
    that and continue to gather information from you.
    	Mr. Hackbarth, was what Congress included in the DRA package
    last year as it relates to the capping of payments for medical imaging
    procedures performed in the physician office setting, one of MedPAC's
    recommendations on a possible way to address the growth of Medicare
    spending on medical imaging?
    	MR. HACKBARTH.  No, we did not look at that.
    	MR. FERGUSON.  Well, the policy that we included in the DRA, will
    this really reduce--in your estimation, will this really reduce utilization,
    or does it have the potential to shift procedures to a hospital setting to
    encourage those physicians who own their own medical imaging
    equipment to perform a greater number of these procedures to make up
    for the lower payments as a result of the policy that we included in the
    DRA?
    	MR. HACKBARTH.  Mr. Ferguson, we really have not studied it, so I
    wouldn't want to hazard a guess to its ultimate impact.  As I said earlier,
    we have talked of a fairly conceptual level about a long-term goal for
    Medicare, which is to have the same payment rate regardless of site of
    service, and to try to set that payment rate at a level of an efficient
    provider of the service.
    	So at that very high conceptual level, I can understand where
    whoever came up with this DRA provision, what they were thinking
    about, but trying to operationalize that and translate that into real specific
    payment rates for a particular service is a difficult and important piece of
    work that MedPAC simply hasn't gotten into, so we don't have a stance
    on this particular provision.
    	MR. FERGUSON.  My concern is clearly we were trying to address
    what we perceive to be as a problem, and I think many people
    acknowledge that there may well be a problem that needs to be
    addressed.  My concern is that we may have slapped a solution on it or
    slapped a Band-Aid on this problem without really addressing the
    underlying issue, and we may, in fact, just be pushing the problem to a
    different part of the health system rather than really getting at the heart of
    the problem.  That is the basis for my question.
    	Mr. Chairman, I am out of time and I have managed to not have my
    thrombotic stroke, so I appreciate very much and I yield back.
    	MR. DEAL.  Gentlelady, Mrs. Cubin, is recognized for questions.
    	MRS. CUBIN.  Thank you, Mr. Chairman.
    	Mr. Kuhn, according to the American College of Radiologists, the
    cuts in DRA attributed to Section 5102(b) is 44 percent of the overall
    savings in the Medicare portion of the conference report.  Would you
    agree with that or would you disagree with that?
    	MR. KUHN.  I don't know if that is right number or not, but I think
    what everybody has kind of mentioned many times is that the imaging
    reductions were a large, significant part of the savings in order to deal
    with trying to make sure that physicians had a zero percent update for
    this year.  That is correct.
    	MRS. CUBIN.  Doesn't that seem--assuming, you know, plus or
    minus five percent, doesn't that seem like a disproportionate impact on
    one discipline, especially considering the imaging heavy physician
    services or practices?
    	MR. KUHN.  A couple things.  I think on its face when you look at it,
    it does look like a disproportionate number, but I think when you look at
    it in the larger context in terms of the growth rates we have seen in
    imaging over the last several years, how those growth rates have been
    contributing to the issues with the SGR in terms of hitting its maximum
    reduction that we impose with the statute and how that is also been
    contributing as a contributing factor to the increase in the Part B
    premium.  I think when you take it in the larger context, I think it raises
    some good questions, but I think it also lets you see that there are needs
    for greater changes in the Medicare program if we are going to get our
    arms around growth in physician spending and deal with this Part B
    premium.
    	MRS. CUBIN.  Well, I respectfully disagree with you because it
    seems to me that, just like Dr. Burgess referred to, a lot of money is
    saved from the increased practice of imaging.  My son is in residency to
    be an interventional radiologist.  I was lucky enough to sit in one day.  A
    53-year-old woman came in with a stroke.  She couldn't talk, couldn't
    move one side of her body.  Well, I was able to watch while they went in
    her carotid artery, and I don't know what they did with the clot in her
    brain, but an hour and a half later she was talking and moving her hand
    and her foot.  Now, if they can't use the diagnostic tools that they need to
    be able to perform miracles like that, then the cost really is more.  So I
    simply just disagree with you.
    	Prior to the Deficit Reduction Act, why was Medicare historically
    opting to operate under different reimbursement systems in terms of
    hospital and non-hospital imaging?  Once again, I question whether the
    imaging cuts in the DRA fully account for those differences, and
    specifically, because the hospitals have the ability to cost share over a
    large volume of services and obviously the smaller practitioner doesn't.
    I fear very much that rural America and small cities, cities and towns like
    we have all over Wyoming, won't even have opportunities for CAT
    scans and MRIs the way things are going because nobody is going to
    invest in those except the doctors that use them, and then they are
    penalized for that investment and what the bottom line is, the patient
    doesn't get the care.
    	MR. KUHN.  I think you are raising the question that many others on
    this panel have raised, and what we at CMS are going to struggle with as
    we move to implement this provision as we put out our proposed rule.
    How do we really do what Glenn has talked about earlier is make sure
    that we have efficient use of resources and we pay at the rate for the
    efficient provider, while at the same time making sure that we have
    uninterrupted access to care and that we have stability in the system so
    providers can count on it so they know they can make these investments
    and provide high quality care.  It is a balancing act that we are all going
    to have to work through as we work through this provision, as well as
    others in the Medicare program.
    	MRS. CUBIN.  Mr. Hackbarth, has there ever been a thorough
    assessment of how this reimbursement cut will impact Medicare
    beneficiaries and their access to care?
    	MR. HACKBARTH.  Again, we have not looked at the impact of the
    DRA provision that would limit payment for imaging services in
    physician offices.
    	MRS. CUBIN.  Well, it seems to me that access to care ought to be
    one of the most important considerations.
    	MR. KUHN.  Access to care, for the Medicare program to work
    successfully, we have to have active, committed providers out there
    delivering care, and what they need is stability in terms of a payment
    system.  They need predictability, and they need adequacy in terms of the
    payment, and we hope that as we work through this particular provision,
    work to implement it, we can do all those things.
    	MRS. CUBIN.  I hope you can, too.  Thank you.
    	MR. HACKBARTH.  Just to mention one point about DRA.  Almost all
    of the discussion about DRA is focused on the provision relating to
    limiting the payment for imaging services in physician offices.  There is
    another provision in DRA related to imaging, and that is the one that
    reduces the payment for a second image using the same modality on a
    contiguous body part, a fairly technical issue.  But I want to be clear for
    the record that that is a provision that MedPAC has recommended,
    although we haven't looked at the other DRA provision.
    	MRS. CUBIN.  Thank you.
    	MR. DEAL.  If the gentlelady will allow me to share with her
    information that I have, the overall savings in the DRA under Medicare
    was $15.6 billion.  Of that amount, $2.8 billion was in the imaging area.
    It encompasses both components that Mr. Hackbarth spoke about, and
    that is less than one-fifth of the overall savings in Medicare, and
    remembering this is an area that in the last 5 years had almost doubled in
    expenditures.
    	MRS. CUBIN.  It sounds like there must be different things being
    considered for the American Radiologists Association to consider it a 44
    percent cut, so there must be different things being considered.  We will
    have to look into that.
    	MR. DEAL.  Perhaps we will have a chance to do that during the
    second panel that is coming up.
    	But before we do that, we have a member of the full committee who
    has appeared here, and I would make a unanimous consent request on his
    behalf that Mr. Inslee be allowed to ask questions.  Any objections?  If
    not, Mr. Inslee, you are recognized for questions.
    	MR. INSLEE.  Thank you, Mr. Chairman.  I appreciate your courtesy.
    	Gentlemen, I want to ask you about a concern I have about lumping
    all diagnostic imaging into sort of one box.  Particularly, I want to ask
    about ultrasound imaging.  Let us just take an example of ultrasound-
    guided biopsies, breast biopsies.  We know that ultrasound-guided breast
    biopsies, while they take two ultrasounds to do, they can have a
    decreased risk of infection, they can have a better cosmetic result, they
    can avoid some of the trauma associated with an open biopsy.  But they
    do result in two extra diagnostic imaging that are going to show up in a
    databank that you have been reviewing.
    	From both of your perspectives, would you believe that that
    technique is a worthwhile valuable thing that we should not in some way
    punish or discourage in any of our rulemaking?
    	MR. KUHN.  No question about that.  I think rather than an open
    biopsy, if you can have an ultrasound to evaluate a lesion, it is far
    superior to be able to do it that way, and it is one of the real advances
    that technology has given us for better outcomes and better detection.
    	MR. INSLEE.  Mr. Hackbarth?
    	MR. HACKBARTH.  I agree with that.  I have had a family member
    benefit from the procedure.
    	MR. INSLEE.  So I guess the question I have is, is at least in some of
    the proposals I have seen, this sort of lumps ultrasound in with all of the
    other diagnostic imaging techniques, and I just picked one, this
    ultrasound-guided biopsy, as one.  There is a whole host--slew of
    ultrasound techniques.  We will have a doctor talking about that later.
    Ultrasound guidance, central venous catheterization, that can have
    tremendously improved results.  Ultrasound-guided aspiration of thyroid
    nodules, we have this whole host of techniques that will decrease trauma
    and decrease risk, and Mr. Hackbarth, you want to say something?
    	MR. HACKBARTH.  I want to emphasize that within the category of
    ultrasound or almost any other--in fact, any other category of imaging
    that you can talk about, there are very important, very valuable
    procedures that help patients.  I don't think anybody disputes that.
    	Having said that, there is research that we and others have done that
    shows that even with good things, more is not necessarily better.  That is
    what makes this area so difficult.  We are trying to, in a general category
    of good stuff, identify some problems, and there are problems.
    	MR. INSLEE.  Right.  And in doing so, wouldn't it make sense, given
    the distinct nature and attributes of these various diagnostic imaging
    techniques, to treat each one separately?  If we treat them all the same, at
    least as I understand some of the proposals that are floating around here,
    they would all be treated the same.  I am focusing on ultrasound imaging
    particularly.  The center of some of the geniuses in the country happen to
    be in my district, so it is one of the reasons I am particularly interested in
    it, but I am sure there are others that have similar benefits.
    	Doesn't it make sense to treat--and I will just start with ultrasound--
    doesn't it make sense to treat ultrasound diagnostic imaging differently,
    designing rules that would be fitting to its benefits, to its advantages,
    both fiscally and physically?  Wouldn't that make sense?
    	MR. KUHN.  Absolutely.  Within the Medicare program, to the extent
    that we can price and pay procedures as close to their actual costs, as
    Glenn indicated earlier, for efficiently delivered services, that is the
    ultimate goal for all of us.  It is what we want to achieve here with this
    program.  I couldn't agree with you more.
    	MR. INSLEE.  So if you do agree with me, where does that lead?  Are
    we going to go back and start to revise some of these proposals to--
    	MR. KUHN.  I mean, obviously part of it is a staging process.  I mean,
    how do you get to that kind of stage?  Obviously, within the DRA
    provision what Congress was trying to do is put together here kind of a
    site neutral payment system.  Why do we have this delta, this
    differentiation between the hospital outpatient and the physician service
    in their office?  And so sometimes you have to take graduated steps to
    get where you want to get to your ultimate objective, but I think the key
    is what you are saying is let us pay as accurately as we can for each
    service.  In the Medicare program, sometimes they are staged.  As we
    step forward, I think this particular provision in the DRA helps us kind of
    move forward in that staged process.
    	MR. INSLEE.  As you do so, I hope you will pay particular attention
    to number one, the evidence suggests that ultrasound is growing at a
    slower rate, if at all, relative to other diagnostic imaging techniques, and
    that ultrasound just has these incredible advantages to the patient in
    reducing trauma, as well as being acutely sensitive.  I hope you will think
    about that as you go forward.
    	MR. KUHN.  Those are all good points, and hopefully those will be
    the kind of things that we capture when we put out our proposed rule and
    we really engage in the stakeholder community fully on these provisions.
    	MR. INSLEE.  Thank you.
    	MR. DEAL.  Mr. Green, do you have questions?
    	MR. GREEN.  Yes, sir, Mr. Chairman.  Thank you.
    	Mr. Kuhn, your testimony mentions that CMS currently assumes that
    imaging equipment is used 50 percent of the time, and your testimony
    also addresses MedPAC's assertions that CMS assumptions for payment
    of imaging services is too high and that MedPAC believes that
    equipment should be utilized more often, which would bring the cost for
    utilization per utilization down.  Can you explain how CMS arrived at
    the 50 percent assumption?
    	MR. KUHN.  Yes.  My understanding on the 50 percent assumption
    goes back nearly a decade now.  It was in a proposed rule, in a proposed
    regulation where we kind of engaged the physician community overall to
    talk about this issue, and at the end of the comment period, that is the
    number we came out.  I don't think there was a lot of scientific
    information behind it, but I guess the best estimate at the time, best
    survey information people had at the time kind of pegged it at 50 percent.
    What we have seen, I think, over the past decade is a couple of things.
    One is a number of the groups that are doing this imaging activity in their
    offices and these independent facilities are coming in and sharing with us
    that their rates of utilization are exceeding 50 percent and much more
    aggressive.  MedPAC, in terms of their comment letter to us last year on
    last year's proposed rule, also indicated that their research indicated that
    it was higher than 50 percent.
    	So I think it is something we have to look at pretty seriously.
    	MR. GREEN.  Mr. Chairman, I agree, and I hope any further hearings
    we have, see if we can get some better numbers, because again, analogies
    don't make really good law.  I know a lot of times in our major hospital
    facilities imaging equipment is used--I don't know if 24 hours a day, but
    probably 20 or 18 hours a day, because of the times.  I know I have been
    there in the evenings in some of our facilities in the Houston area, so that
    is when they set appointments.
    	MR. KUHN.  Yeah, and what we are seeing is more extended hours,
    weekend hours, and a lot of it is for patient convenience.  People can't
    come in during the regular workday so they are going to come in the
    evening, so they are using this--I don't think inappropriately, to term
    services, but to get maximum use and provide convenience for the
    patient.
    	MR. GREEN.  Okay.
    	Mr. Hackbarth, to follow up on Congressman Norwood's question
    about standards, we have also reported the intent on the Mammogram
    Quality Standards Act, and I am pleased that you referred to it as a
    potential model for imaging quality standards.  What, if any, lessons
    have we learned from the Mammogram Quality Standards Act that we
    can use to implement effective imaging quality standards?
    	MR. HACKBARTH.  Well, I think far and away the most important
    lesson is that it does work.  It can work to improve the quality of service
    without having a severe detrimental effect on access.  The standards can
    be developed in conjunction with professional societies.  Again, I want to
    emphasize that that is the sort of process that we envision, engaging with
    the profession in what appropriate standards are, and that there ought to
    be different standards set for each of the various imaging modalities.  So
    I think it is basically a success story.  I am sure that as we were going
    through it, it wasn't all smooth sailing, but we think it is a good model.
    	MR. GREEN.  Okay.  Mr. Hackbarth, between 2000 and 2003, non-
    radiologist physician imaging grew 12 percent.  During the same time,
    radiologist imaging grew 10 percent annually.  MedPAC has
    recommended strengthening rules that restrict physician investment in
    imaging centers to which they refer patients; however, these statistics on
    their face suggest that perhaps the entire field has been growing and not
    just the non-radiologist imaging.  Do these statistics relay a problem with
    physician investing in imaging centers, because one would think that
    over-utilization would lead to much greater growth in non-radiologist
    imaging?
    	MR. HACKBARTH.  Well, the work that we looked at as a foundation
    in the prior recommendation is work done by the GAO and Inspector
    General and some academic research that shows that when physicians
    have an ownership interest, they, in fact order more images.  How big
    that increase is depends on the modality.  For some, like MRI, the
    number of images was doubled when the physician had an ownership
    interest.
    	MR. GREEN.  Okay.  Thank you, Mr. Chairman.
    	MR. DEAL.  I thank the gentleman.
    	Thank you both, gentlemen.  You have been here with good
    testimony.  We appreciate your presence.  I guess Dr. Norwood and Dr.
    Burgess are going to hold you to those timetables.
    	MR. KUHN.  I am sure they will.
    	MR. DEAL.  I ask the second panel to take their seats.  Lady and
    gentlemen, we appreciate your being patient and waiting for the
    completion of the first panel.  We are pleased to have you here and I will
    introduce you at this time.  I would remind you, as I did the first panel,
    your written testimony has already been made part of the record.  We
    would ask that the 5 minutes that you are allotted be a summarization of
    that, or other testimony that you may want to add in light of the
    testimony of the first panel.
    	We are pleased to have Dr. Pamela S. Douglas, who is the Chief of
    the Division of Cardiovascular Medicine at Duke University Medical
    Center; Dr. Arl Van Moore, who is Chairman of the Board of
    Chancellors of the American College of Radiology; Dr. Doug Laube,
    who is the President of the American College of Obstetricians and
    Gynecologists; Mr. John Donahue, President and Chief Executive
    Officer of the National Imaging Associates, Incorporated; Mr. Lynn
    May, who is the Chief Executive Officer of the American Society of
    Radiologic Technologists.  Dr. Griffeth, I skipped you.  I am sorry.  My
    list and the sequence there is not the same.  Dr. Landis Griffeth, who is
    the Director of Nuclear Medicine at Baylor University Medical Center;
    Mr. Robert Baumgartner, who is the Chief Executive Officer of the
    Center for Diagnostic Imaging in Minneapolis, Minnesota; and Dr.
    Donald W. Rucker, who is Vice President and Chief Medical Officer of
    Siemens Medical Solutions, USA, Inc.  Once again, we are pleased to
    have you here and Dr. Douglas, we will begin with you.

    STATEMENTS OF DR. PAMELA S. DOUGLAS, CHIEF, DIVISION OF CARDIOVASCULAR
    MEDICINE, DUKE UNIVERSITY MEDICAL CENTER; DR. ARL VAN MOORE,
    CHAIR, BOARD OF CHANCELLORS, AMERICAN COLLEGE OF RADIOLOGY; JOHN J. DONAHUE,
    PRESIDENT AND CHIEF EXECUTIVE OFFICER, NATIONAL IMAGING ASSOCIATES, INC.; DR.
    DOUG LAUBE, PRESIDENT, AMERICAN COLLEGE OF OBSTETRICIANS AND GYNECOLOGISTS;
    DR. LANDIS GRIFFETH, DIRECTOR, NUCLEAR MEDICINE, BAYLOR UNIVERSITY MEDICAL
    CENTER; LYNN F. MAY, CHIEF EXECUTIVE OFFICER, AMERICAN SOCIETY OF
    RADIOLOGIC TECHNOLOGISTS; ROBERT BAUMGARTNER, CHIEF EXECUTIVE OFFICER, CENTER
    FOR DIAGNOSTIC IMAGING; AND DR. DONALD W. RUCKER, VICE PRESIDENT AND CHIEF
    MEDICAL OFFICER, SIEMENS MEDICAL SOLUTIONS USA, INC.

            DR. DOUGLAS.  I am delighted.  Thank you, Chairman Deal.
    	MR. DEAL.  Turn your microphone on and pull it where we can hear
    you.
    	DR. DOUGLAS.  There, it is on.
    	Thank you, Chairman Deal.  Members of the subcommittee, I am
    honored to testify before you today on behalf of the American College of
    Cardiology and the more than 20 healthcare organizations that comprise
    the Coalition for Patient-Centered Imaging.  Together, we are united in
    the belief that office-based imaging is an integral component in the
    delivery of quality patient care, and should be protected as such.  An
    extension of my remarks have been provided for the record, of course.
    	I am a Board-certified cardiologist and Chief of Cardiovascular
    Medicine at Duke University, but I am also the immediate past President
    of the American College of Cardiology, and the past President of the
    American Society of Echocardiography.
    	Today, patients, physicians, policymakers such as you, and payers
    are at a crossroads in debate over the provision of imaging services.  The
    title of today's hearing aptly reflects what I believe is at the core of this
    debate.  Ensuring that medical imaging received by Medicare patients is
    clinically appropriate.  This subcommittee will hear from others and has
    heard this morning about why reductions in payments for office-based
    imaging services contained in the Deficit Reduction Act are bad policy
    and could negatively affect patient care.  We agree, and therefore
    appreciate the commitment of many on the subcommittee have already
    made to reexamine DRA imaging policy and imaging quality in general
    in a more thoughtful, deliberate manner.
    	We recognize that Congress is concerned about the growth of
    imaging volume, but caution must be exercised to ensure that policies are
    driven by what is best for patients and not solely by budgetary
    constraints.
    	In keeping with the theme of today's hearing, I will focus my
    remarks on imaging appropriateness, which is an important component
    of imaging quality.  Many physician specialties are using or developing
    tools, such as accreditation, training programs, guidelines, performance
    measures that foster quality in medical imaging.  In my own specialty of
    cardiology, among groundbreaking quality efforts in imaging is the
    creation of novel appropriateness criteria, or diagnostic cardiovascular
    testing.  The purpose of these is to address overuse, underuse, and misuse
    of imaging tests.  These criteria are patient centric and ask the question
    whether the right test is used for the right patient at the right time.
    	Last fall, the ACC and the American Society of Nuclear Cardiology
    published the inaugural set of appropriateness criteria for cardiovascular
    and nuclear imaging.  The rigorous process for building the criteria
    included convening a panel of clinical experts, half of whom were not
    cardiologists, who assessed the benefits and risks of the procedure for
    different indications or patient scenarios.  Using a RAND UCLA scoring
    method, the criteria for each indication were considered and given a
    designation of appropriate, inappropriate, or uncertain, in other words,
    not enough data.  Subsequently, several private payers have adopted
    these appropriateness criteria and the College has achieved some success
    in getting radiology benefit organizations to update their guidelines to
    include these criteria.  We hope that others, including CMS, will also
    consider their use through pilot projects.  Meanwhile, the ACC will
    closely monitor how its appropriateness criteria are utilized to ensure that
    they are not misused to deny or delay care to patients.
    	The College will release appropriateness criteria for cardiac MRI and
    CT this summer and for echocardiography early next year.  Ultimately,
    appropriateness criteria will improve cardiovascular imaging quality,
    weed out inappropriate utilization, and facilitate reimbursement for
    appropriate utilization in a performance-based measurement system.
    	But appropriateness criteria is just part of the bigger imaging quality
    picture.  The College and other cardiovascular health organizations have
    been leaders in the development of laboratory standards and
    accreditation, training program standards, clinical competency
    statements, and clinical practice guidelines that contain recommendations
    regarding the necessary knowledge and skills and policies and
    procedures.  With these threads of quality all pulled together, they
    culminate in improved patient outcomes.
    	To this end, this year ACC, in partnership with my own university,
    Duke, convened a 2-day think tank on quality in cardiovascular imaging
    with over 80 stakeholder participants, from payers, industry, professional
    societies, and government.  The think tank mapped out a multi-year
    quality agenda to develop and implement standards as part of an action
    plan for cardiovascular imaging in general and each imaging modality in
    particular.
    	Ensuring the quality and safety of medical imaging is being
    accomplished through costly and painstaking work by professional
    medical organizations.  Some have called for the implementation of
    Federal standards for imaging services.  I want to emphasize that many
    such standards, including accreditation, certification, and quality
    improvement tools, already exist and should not be put into place as cost
    containment mechanisms alone.  It is important that the Federal
    government recognize specialty society efforts to ensure quality and
    safety, and not duplicate or override them by imposing non-specialty
    specific or overly burdensome requirements.
    	The Coalition for Patient-Centered Imaging and the American
    College of Cardiology are committed to working with Congress to
    responsibly address the growth in medical imaging.  It is important that
    we all work together to ensure that Medicare beneficiaries are not denied
    access to appropriate imaging services that meet their healthcare needs,
    and that these are provided by quality physician specialists.
    	Thank you, and I look forward to answering any questions you have.
    	[The prepared statement of Dr. Pamela S. Douglas follows:]

    PREPARED STATEMENT OF DR. PAMELA S. DOUGLAS, CHIEF, DIVISION OF
    CARDIOVASCULAR MEDICINE, DUKE UNIVERSITY MEDICAL CENTER

            Chairman Deal and Members of the Subcommittee, I am pleased to testify before
    you today on behalf of the American College of Cardiology (ACC) and the Coalition for
    Patient-Centered Imaging (CPCI), an alliance of more than 20 physician specialty groups
    and health care organizations united in the strong belief that office-based medical
    imaging is an integral component in the delivery of quality patient care.  I am a board-
    certified cardiologist and the Division Chief and Ursula Geller Professor of Research in
    Cardiovascular Diseases at Duke University Medical Center.  I also serve as Director of
    Cardiovascular Research Strategy at Duke Clinical Research Institute.  I am the
    immediate past president of the ACC and a past president of the American Society of
    Echocardiography (ASE).
     	I welcome the opportunity to offer the Coalition's perspective on the importance of
    office-based imaging and commend the Subcommittee for holding this hearing.  Medical
    technology has evolved to provide crucial support to skilled patient care.  Advanced
    technologies unheard of a decade ago are now key tools in the prompt and efficient
    diagnosis and treatment of patients.
     	We believe that patients, physicians, policymakers and payers are at a crossroads in
    the political debate over the provision of imaging services.  The title of today's hearing
    aptly reflects what I believe is the core of this debate: Ensuring that medical imaging
    received by Medicare patients is in fact clinically appropriate.  I expect that this
    Subcommittee will hear from others today about why reductions in payments for office-
    based imaging services contained in the Deficit Reduction Act (DRA) are bad policy and
    could negatively affect patient care.  We agree with this assessment and appreciate the
    commitment many of you on this Subcommittee have already made to reexamine the
    DRA imaging policy in a more thoughtful manner, especially given the closed-door,
    eleventh-hour nature of this significant policy decision.
     	However, in keeping with the theme of today's hearing, I want to focus on the
    quality assurance tools that my specialty of cardiology and other physician specialties
    currently use -- or are developing -- to guide physicians in the appropriate ordering and
    performance of imaging tests.  We firmly believe that until there are benchmarks for
    measuring appropriateness that will allow for a better understanding of imaging
    utilization growth, draconian approaches such as the one taken under the DRA will not
    only persist, but eventually negatively affect patient care and have no affect on
    utilization.
    My testimony today will also highlight that imaging services, when provided by
    experienced and qualified physician specialists with training and experience, are
    important tools that vastly improve patient care.   I also hope to provide a better context
    in which to view imaging growth.

    Office-Based Medical Imaging Constitutes Good Patient Care
            Advancements in medical imaging have changed the way cardiologists, urologists,
    orthopaedic surgeons, breast surgeons, obstetricians, neurologists, endocrinologists and
    other specialty physicians deliver patient care on a daily basis.  Specialty physicians are
    uniquely qualified to provide imaging services specific to their specialty because they are
    trained in both diagnostic imaging techniques, and in the structure and function of the
    organs and systems they are imaging.  By integrating medical technology into care plans,
    it offers the opportunity for earlier, better and more accurate diagnosis of disease or
    injury and the prospect of better quality care.
            Today in cardiology, we are fortunate to have a wide range of non-invasive imaging
    techniques to combat and treat disease.  With the selective use of echocardiography,
    nuclear imaging, CT and MR we can evaluate the heart to answer specific clinical
    questions presented by patients.  This allows physicians like me to define the functional
    adequacy of the heart to pump blood in heart failure patients, or for my colleagues to
    assess the significance of plaque within a vessel wall by viewing it in three dimensions.
    We can now visualize what in the past required subjecting a patient to an invasive
    procedure.  The ability to view various aspects of the heart is important to providing cost
    effective and minimally invasive diagnosis and risk assessment.
            In addition to employing medical imaging for diagnostic purposes, physicians now
    use imaging to guide minimally invasive treatments and to track ongoing treatment
    protocols.
            Two examples are ultrasound-guided needle breast biopsies and image-guided
    biopsies of prostate lesions.  In breast surgery, ultrasound-guided breast biopsies in the
    physician office can be performed at a third of the cost and in about half of the time of an
    open surgical biopsy.  Ultrasound-guided breast biopsy allows for less-invasive
    evaluation of mammographic lesions, with more reliable tissue differentiation, more
    streamlined patient care and characterization, and improved staging of disease.  Patient
    satisfaction is also increased with shorter recovery times and minimized scarring.  In
    addition to the clinical and patient satisfaction benefits, The Lewin Group estimates that
    use of image-guided core breast biopsies instead of open biopsies saved the Medicare
    program $88 million between 2001 and 2003.
            Urology offers another example where advancements in medical imaging have led
    to less-invasive and less-painful procedures.  Older men often experience difficulty
    urinating because of prostate enlargement.  To evaluate this problem, physicians must
    learn how much urine is retained in the bladder after voiding, known as "residual urine."
    For many years this was determined by passing a catheter through the urethra and into the
    bladder, the amount of urine drained from the bladder was then measured.  Introducing a
    catheter into the bladder, in addition to being uncomfortable, also may introduce
    infection.  Today, many urologists employ a small ultrasound machine designed
    specifically for this task.  This test can be done in the urologist's office and eliminates the
    use of a catheter and the danger of infection.
            The expectation of society, and of our patients, is that we will employ these marvels
    of medicine to achieve best practice outcomes for every care interlude.  That means the
    integration of medical imaging as part of the treatment plan is here to stay.

    Growth in Medical Imaging Utilization
            There is no dispute that growth in medical imaging utilization is occurring.  What is
    in dispute is how much of the growth is out of line with other Medicare Part B spending
    and whether increased utilization in imaging is creating cost savings elsewhere in the
    Medicare program.  Last year the ACC commissioned a study by The Lewin Group to
    examine the growth in diagnostic imaging services.   Based on those study findings, we
    were and remain concerned that the Medicare Payment Advisory Commission (MedPAC)
    and the Centers for Medicare and Medicaid Services (CMS) continue to cite growth rates
    for imaging services without taking into account the shift in site of services out of
    hospitals and into physician offices.  MedPAC, in its March 2005 report to Congress,
    acknowledged about 20 percent of the growth in imaging services paid under the
    physician fee schedule between 1999 and 2002 was due to this shift in site of services,
    but did not account for this shift in its growth comparisons.  Furthermore, MedPAC did
    not include all Medicare Part B services in its comparison of growth rates for imaging
    and other services.  In particular, MedPAC omited durable medical equipment,
    chemotherapy drugs and other drugs covered under Part B, and ambulance services.
    Therefore, comparison in growth of imaging and the growth of other Medicare Part B
    services is distorted significantly.  According to the The Lewin Group analysis, when all
    Part B services are included and the changes in the site of service are accounted for,
    imaging grew at an average annual rate of 11.2 percent from 1999-2004 compared with
    an average annual rate of 6.9 percent for all Part B services.  The increase in imaging
    utilization has resulted in particular scrutiny of advanced imaging such as CT and MRI.
    The Lewin Study found that these technologies had a higher rate of growth from 2003-
    2004, approximately 18 percent and 20 percent respectively, than other imaging
    technologies.  The study also showed that radiology performed 84 percent of CT scans
    and 65 percent of MRIs.
            There are a number of reasons for the growth in imaging that are not adequately
    examined by MedPAC or CMS.  The Coalition hopes that before further policy changes
    are considered, a more thorough analysis will occur as to the reasons behind the growth,
    including shift in site of service, clinical substitution, clinical appropriateness through the
    adherence to evidence-based scientific guidelines, advancements in technology, and
    demographic changes.
            When growth is distorted, or factors for growth are not fully factored into an
    analysis, it leads to inadequate and/or inappropriate policy responses.

    Responding to Medical Imaging Utilization Growth
            As I mentioned in my introduction, patients, physicians, private payers and the
    federal government are all caught in the middle of political debate over the growth and
    future of medical imaging.  The DRA cuts enacted this year are just one example of
    several onerous responses to imaging utilization growth.  Proposals set forth by MedPAC
    include setting federal standards for accreditation of facilities and certification of
    individuals.  I will tell you today that these measures are not, and should not, be viewed
    as cost-containment mechanisms.  They are tools to improve quality - a point I will
    elaborate on later in my testimony.

    Cuts in Medicare Reimbursement for Medical Imaging Services
            Earlier this year, as part of the DRA, Congress enacted a provision that cuts
    payments for many office-based imaging services.  The law requires that Medicare
    payment for the equipment, supplies, non-physician personnel, and overhead associated
    with non-hospital imaging services (the technical component) be paid, effective Jan.  1,
    2007, at either the Hospital Outpatient Prospective Payment System (HOPPS) rate or the
    Medicare physician fee schedule amount, whichever is lower.  This provision was
    included in neither the House nor the Senate deficit reduction bills, but emerged from
    conference committee and was enacted without ever having been subject to public
    comment or scrutiny.
            Not surprisingly, the DRA will result in draconian payment reductions for some
    imaging services in non-hospital settings.  For many of those services, anticipated
    reductions as a result of the DRA are in the range of 35-55 percent.  For example,
    Medicare payment for ultrasound guidance procedures performed as part of minimally
    invasive biopsies for the diagnosis of breast cancer would be reduced by 35 percent;
    Medicare payment for positron emission tomography (PET)/CT exams used to diagnose
    cancerous tumors and to determine the effectiveness of cancer treatment would be
    reduced upward of 50 percent; and payment for bone densitometry studies to diagnose
    osteoporosis (a recently added Medicare screening benefit) would be reduced by more
    than 40 percent.
            The Coalition is troubled by the precedent-setting nature of this provision.  Nowhere
    else in Medicare are physician payments tied to hospital outpatient reimbursement.  The
    methodologies used to determine payment rates for hospital and non-hospital imaging
    services are based on different data and different methodologies.  Therefore, if the
    methodologies and data differ, why would Congress require that a methodology used to
    determine reimbursement in one setting be used to set reimbursement in a different
    setting for the same service? If Congress' intent was to "level the playing field" for
    imaging reimbursement, payments for office-based imaging services that are lower than
    the hospital outpatient rates should be increased.  What is clear is that the policy was built
    less on strong or sensible policy rationale and more on the need to create savings to offset
    other spending.  While the physician community appreciates Congress' intervention to
    stop a negative update in Medicare physician payments this year, the zero-sum politics of
    physician payment is unsustainable.
            The DRA medical imaging cuts cannot be considered in isolation.  There are other
    policy changes that will or could negatively affect medical imaging reimbursement in
    2007.  As part of the DRA, Congress imposed a multiple procedure discount to selected
    diagnostic imaging procedures.  Eligible procedures were identified and grouped into 11
    "families" of related CPT imaging codes.  For these procedures, Medicare will make full
    payment for the procedure with the highest payment rate and then apply a 50 percent
    reduction in the payments for second and subsequent imaging procedures in the same
    family that are performed during the same session.
            Most recently, CMS published a proposal to completely revamp the methodology
    used to determine the physician fee schedule technical component and other physician
    practice expenses.  This proposal will affect imaging technical component services, but
    impact varies by services.
            While such payment reductions may result in short-term savings, there is no
    evidence that decreasing payment rates will reduce any inappropriate utilization.
    However, Medicare cuts such as those highlighted above, not to mention the pending 4.6
    percent across-the-board cut, are likely to result in reduced Medicare patient access,
    higher beneficiary co-payments, and lower quality due to the reduced availability of
    funds for imaging equipment maintenance, replacement, and upgrades.
            According to an online survey conducted May 24-June 21, 2006 by CPCI of more
    than 3,900 individual physicians, practice administrators, and health care professionals
    across the country, 40 percent of those who had planned to purchase or lease new
    imaging equipment in 2006 or 2007 delayed or canceled those plans largely due to the
    DRA cuts.  While this may sound like good news to payers, it provides no relief to
    Medicare patients who already endure long waits for imaging services.  According to a
    study recently conducted by the Society for Vascular Ultrasound, on average, patients
    already wait 10 days to two weeks for non-urgent imaging services in the hospital
    outpatient department.  If Medicare reimbursement for medical imaging services
    decreases in 2007, 47 percent of respondents said they will cut practice overhead by
    reducing personnel levels, compensation or fringe benefits; 46 percent say they will
    discontinue value-added but non-reimbursed patient services; 44 percent will freeze or
    delay hiring of clinical staff; 40 percent will delay the purchase or updating of electronic
    medical record software; and 39 percent will no long provide imaging services to
    Medicare beneficiaries.
            When asked where patients would go to receive imaging services if they were no
    longer provided in their office, the respondents replied that 83 percent would be sent to
    hospitals for those services.  According to the American Hospital Association, the
    demand for hospital care, both outpatient and inpatient, is rising and half of emergency
    departments are "at" or "over" capacity.  If medical imaging becomes a fiscally
    unsustainable service for physician practices or if restrictive standards or regulations are
    imposed, patients will be forced into already over-crowded hospitals to receive imaging
    services.  Medicare patients who must go to the hospital outpatient department to receive
    imaging services may not only endure significantly longer wait times, delayed diagnosis
    and treatment, but their co-payments will also jump from 20 percent in the physician
    office setting to up to 40 percent of charges in the hospital outpatient department setting.

    Federal Standards for Office-Based Imaging
            Some policymakers have called for the imposition of federal "standards" as a
    mechanism to increase quality and safety in the provision of imaging services.  It is likely
    that under such a regulatory scheme, nationally-based imaging norms would be
    developed, implemented and administered by CMS and would apply to both the technical
    (e.g., equipment/overhead) and professional components (e.g., interpretation of the
    imaging) of imaging services.
            We do not oppose the use of criteria that foster and support better quality and safety
    of diagnostic imaging, but we caution against the federal government's having a role in
    this realm.  The federal government has not played a part in the credentialing and
    determination of privileges of physicians to provide medical services.  Typically, the
    practice of medicine has been left to the states to govern.  States most commonly rely on
    the expertise of medical professional organizations or boards to create standards,
    guidelines, or other criteria for their members.  The development and imposition of
    federal standards on the practice of medicine would represent an enormous new role for
    Congress and CMS that could lead to the politicizing of medical privileging - physician
    organizations would incessantly "lobby" the federal government on medical scope of
    practice and other, similar matters, most appropriately left for the states to decide.
            To be candid, inherent in this discussion are "turf" issues as well as concerns about
    increased utilization and appropriateness of testing.  Some, notably in the radiology
    community, have mounted criticisms based on quality of diagnostic services performed
    by non-radiologists.  They seek to set standards that would effectively allow only
    radiologists to perform and interpret images and bill Medicare for their services,
    particularly in certain "advanced" modalities, such as CT, MR and PET.  Yet, there is no
    credible evidence to demonstrate systematic quality problems in performance and
    interpretation of diagnostic medical imaging by specialists who are not also board-
    certified radiologists.
     	Federal quality/certification regulations or thinly veiled attempts to protect "turf"
    will not lower utilization, but will merely redirect it.  Nor do such regulations address the
    challenge of ensuring that the right test is provided by qualified personnel in the right
    setting, at the right time.  Ensuring the quality and safety of medical imaging can only be
    accomplished through costly and painstaking work by the professional medical
    organizations who are meeting the challenge by developing training programs and
    requirements, appropriateness criteria, guidelines, and other quality-improvement tools
    such as performance measurements.  Medical organizations are at different stages in their
    development of these types of tools.  Nevertheless, it is appropriate that these efforts be
    specialty and modality specific and have significant input from the respective specialty
    organization(s).

    Ensuring Appropriate Use of Medical Imaging Tests
            The ACC, the American College of Surgeons (ACS), the American Academy of
    Orthopaedic Surgeons, the American Association of Clinical Endocrinologists,  and other
    specialties are making strides in developing and using tools including accreditation and
    training programs, guidelines, and performance measures, that will facilitate the delivery
    of quality and appropriate imaging services.  For instance, large multi-specialty medical
    groups utilize practice guidelines - whether related to chronic diseases like diabetes or
    imaging services.  Requiring these large providers to adopt a national, one-size-fits-all
    standard that overrides carefully considered care management processes within the group
    setting makes little policy sense.

    American College of Cardiology
            Cardiology is a leader within the imaging community in the development of quality-
    improvement tools, largely because of the dependence upon imaging in the provision of
    cardiac care.  Among the ACC's quality efforts is creation of groundbreaking
    appropriateness criteria for diagnostic tests.  The purpose of appropriateness criteria is to
    address overuse, under use, and misuse of imaging tests.  These directives are patient-
    centric and define "when to do" and "how often to do" a given procedure in the context
    of scientific evidence, the health care environment, the patient's profile and the
    physician's judgment.
            In October 2005, the ACC and the American Society of Nuclear Cardiology
    (ASNC) published its inaugural set of appropriateness criteria for Single Photon
    Emission Computed Tomography Myocardial Perfusion Imaging (SPECT MPI),
    commonly known as cardiovascular nuclear imaging.  To build the criteria, a
    representative panel of clinical experts met to assess the benefits and risks of the
    procedure for different indications, or patient scenarios.  The panel used the
    RAND/UCLA appropriateness method to score each indication, assigning scores within a
    range of one to nine.  Using these scores, the panel identified for each indication whether
    SPECT-MPI was appropriate, inappropriate or possibly appropriate requiring more
    patient-specific information.  This process and methodology is being used by the ACC to
    develop appropriateness criteria for cardiac MR and CT and echocardiography, scheduled
    for release this summer and early 2007, respectively.
            Not only do appropriateness criteria promote safe and cost-effective cardiovascular
    care, these criteria also can help ensure the delivery of more equitable health care among
    all demographic profiles, minimizing documented disparities.  Several third-party
    payers have adopted the SPECT-MPI appropriateness criteria for diagnostic imaging and
    the ACC has achieved some success in getting radiology benefit management
    organizations to update their guidelines to include the SPECT-MPI appropriateness
    criteria.  The ACC is closely monitoring how the appropriateness criteria are utilized to
    ensure that they are not misused.
            To facilitate the adoption of its appropriateness criteria, the ACC is working with the
    Oklahoma Foundation for Medical Quality, the OK Quality Improvement Organization
    (QIO), to develop a project proposal based on a recently issued CMS QIO RFP titled
    "Developing a Framework for Improving Outcomes via Curtailing Harmful Over-
    Utilization for Chronically Ill Beneficiaries." The proposed project would focus on
    appropriate utilization of SPECT MPI for cardiovascular patients using the ACC/ASNC
    SPECT MPI appropriateness criteria.  Among the objectives are establishing regional
    variations in annual volume and growth rates for SPECT MPI, as well as the potential
    impact of a prospective ordering sheet to foster quality improvement and benchmarking
    based on the appropriateness criteria.
            Already physicians are using the SPECT MPI criteria, allowing them to compare
    their practice patterns with those of their peers.  Ultimately, appropriateness criteria will
    weed out inappropriate utilization, improve imaging quality and facilitate reimbursement
    in a performance measurement-based system.
            Quality in cardiovascular imaging will require us to adopt new processes for quality
    improvement.  A thorough and thoughtful process must be put in place for measuring
    quality that begins before the patient even walks through the door.  Early this year, the
    ACC, in partnership with the Duke University Medical Center, convened a two-day
    Think Tank on Quality in Cardiovascular Imaging with 80 stakeholders representing
    imaging professional societies, academics, quality experts, CMS, FDA, private payers,
    equipment manufacturers and pharmaceutical companies.  The think tank mapped out a
    multi-year quality agenda to develop and implement standards as part of an action plan
    for each imaging modality.  These plans include development of patient selection criteria,
    as well as protocols for measuring the quality of laboratories, image acquisition, image
    interpretation, communication of results, and improved patient outcomes.  The summit
    proceedings represent a consensus of the leadership of the ACC, American College of
    Radiology and a host of cardiovascular specialty organizations and will be published in
    the Journal of the American College of Cardiology later this year.

    American College of Surgeons
            To ensure that surgeons who use ultrasound are qualified and that the ultrasound
    facilities and equipment they use are appropriate for the medical application and meet
    and maintain quality standards, a thorough verification program was developed by the
    ACS for surgeons and surgical residents.  The program provides a formal means of
    education verification to assist in credentialing.  Through didactic instruction, practical
    demonstration, and hands-on sessions, the ACS "Voluntary Verification Program for
    Surgeons in the Use of Ultrasound" provides advanced knowledge of clinical applications
    tailored to specific types of surgical clinical practice, including acute/trauma, vascular,
    breast, abdominal, intraoperative/laproscopic, and head/neck.
            The ACS has also developed the "Stereotactic Breast Biopsy Accreditation
    Program" to ensure that only qualified personnel perform stereotactic breast biopsies for
    the diagnosis and treatment of breast cancer and appropriate equipment is used to ensure
    that women receive optimum tissue sampling with the lowest possible risk.  The program
    offers physicians the opportunity for peer review and comprehensive evaluation of their
    facility's staff qualifications, equipment, quality control and quality assurance programs,
    image quality, and breast dose.  Those facilities successfully meeting all of the criteria are
    given a three-year accreditation and the American Cancer Society, the National Alliance
    of Breast Cancer Organizations, National Cancer Institute, Y-ME and other patient
    referral organizations are provided with an updated list of accredited facilities.

    The American Academy of Orthopaedic Surgeons
            The American Academy of Orthopaedic Surgeons (AAOS) has established quality
    guidelines to enhance orthopaedic surgeons' diagnosis and treatment of various
    musculoskeletal conditions.  Workgroups consisting of members of AAOS and
    Orthopaedic Specialty Societies, with scientific and clinical expertise, were organized to
    create the guidelines.  Workgroup members attended workshops to learn how to develop,
    evaluate, and revise evidence-based guidelines.  They created "decision trees" or
    algorithms for treating knee and shoulder pain, common orthopaedic conditions.  In each
    algorithm, suggestions for the most effective and efficient imaging options, based on the
    patient problem, standards of care, and the advantages and disadvantages for using each
    imaging modality help orthopaedic surgeons make an accurate diagnosis and treatment
    plan.  Additional guidelines are under development to ensure appropriate patient care,
    including the appropriate use of imaging technology, for all orthopaedic conditions.
    In addition, more than half of all orthopeadic surgeons have a formal rotation in
    radiology during training.  Orthopaedic surgeons cannot become board certified
    physicians without passing an exam of which half of all questions on part one and all of
    the questions on part two require the interpretation of an image.

    American Association of Clinical Endocrinologists
            The American Association of Clinical Endocrinologists (AACE) and the American
    College of Endocrinology (ACE) have long recognized the need for specialized education
    and training to verify knowledge, skills, and capabilities in endocrine imaging services.
            Since 1998, the AACE and ACE have sponsored the Thyroid Ultrasound and FNA
    Biopsy Accreditation Courser.  Physicians who successfully complete this course have
    the indications and limitations of thyroid ultrasound and how it integrates with other
    thyroid tests to improve the diagnosis and management of thyroid disease.  Physicians
    successfully completing this course and examination receive a certificate of accreditation
    for Thyroid Ultrasound & Ultrasound Guided FNA Biopsy.  Ultrasound is an example
    where a highly skilled endocrinologist or other qualified physician can utilize real time
    ultrasonography to optimize and facilitate excellence in patient care, procedures and
    outcomes.
            AACE and ACE also sponsor Endocrine Universityr.   Endocrine Universityr
    provides specially designed curriculum and programming to help prepare endocrine
    fellows for entering clinical practice.  Endocrine Universityr is held once a year and is
    open only to final year fellows-in-training in endocrinology.  The course is held at the
    Mayo Clinic in Rochester, Minn., and provides fellows with an intensive six-day
    curriculum which covers thyroid ultrasound accreditation, bone densitometry
    accreditation, Metabolic Laboratory CLIA certification, practice management topics, and
    insulin management.
            It is important that the federal government recognize and not duplicate or override
    specialty society efforts to ensure quality and safety by imposing non-specialty specific
    requirements.  There are already a number of specialty-specific programs designed to
    improve imaging quality, as well as state laws and regulations in place that stipulate
    equipment quality controls and technologist training requirements.  Specialty society
    efforts should be encouraged and quality related initiatives for diagnostic imaging should
    be considered by Congress in the context of broader pay-for-performance concepts.

    June 2006 Medicare Payment Advisory Commission Recommendations
            As Congress considers policy proposals that relate to medical imaging, we hope that
    you will consider what further cuts in medical imaging services will do to quality-
    improvement efforts.  The passage of the DRA imaging cuts sent a message to the
    physician community that Congress cares more about ratcheting down costs than
    improving quality.  Continued cuts of this nature will have an absolute stifling effect on
    quality improvement efforts by the physician specialty community.
            The Coalition is concerned with a recommendation in MedPAC's June 2006 Report
    to Congress that CMS adjust the equipment utilization assumption used in physician
    practice expense payment calculations upward from 50 percent.  Such an adjustment
    could severely affect payments for office-based imaging services at a time when imaging
    is already poised for reimbursement cuts.  MedPAC's recommendation, that would be
    applicable to all imaging services, was based predominately on a study of MRI and CT
    utilization.  We hope that the Committee understands that the ultrasound equipment use
    rate is likely to be different from the utilization rate of an MRI machine because of the
    practice patterns of the specialties that use each type of imaging modality.  For example,
    ultrasound services are one element of the clinical care provided by many specialties and,
    as such, are used as an adjunct to the practice of many physicians whose primary
    occupation is direct patient care - i.e.  surgical procedures and office visits.  MRI and CT,
    on the other hand, are more often used in a radiology practice setting as the only type of
    care provided, and thus are less likely to be idle during business hours.
            We request caution on the part of Congress and CMS and ask that MedPAC be
    directed to expand its survey to collect data using a large, broad-based sample which
    includes different equipment types across all sites of service, distinguishing by specialty
    before changes in equipment utilization rates can be considered for equipment in non-
    hospital sites of service.  Because of the limitations of the MedPAC study, it would only
    be prudent at the present time for MedPAC or CMS to propose adjustments in utilization
    assumptions for free-standing imaging facilities that have billed Medicare for CT and
    MRI services.
            Also in MedPAC's June 2006 report, it concluded that the assumption of 11 percent
    in calculating the cost of capital for medical equipment purchases is too high.  MedPAC
    arrived at this conclusion based upon a review of Federal Reserve Board information on
    commercial loans, but with the admission that a more specific source of data on the
    subject had not been located.  The Coalition disagrees with this conclusion and believes
    that if MedPAC staff were to survey financing companies that lend money for medical
    equipment purchases, their conclusion may be different.
            The Coalition was able to obtain information from Key Equipment Financing
    regarding the current and expected future cost of capital.  KeyCorp, the parent company
    for Key Equipment Financing, is one of the nation's largest bank-based financial services
    company.  For more than 20 years, Key Equipment Finance has been providing financing
    to health care providers including medical doctors, clinics, group practices and hospitals.
    The information from Key Equipment Financing indicates that rates for long-term
    leases/purchases for imaging equipment have ranged from 8-10 percent over the last few
    years, but that these rates are abnormal and have been the result of historically low prime
    rates.  However, with the recent actions by the Federal Reserve to raise the base interest
    rates that banks pay to borrow money, the interest being charged today on new long-term
    leases is expected to be between 9-11 percent, depending on the amount of money
    borrowed.
            We believe that this information validates that CMS' estimate for the cost of capital
    continues to be a correct assumption and is not in need of adjustment.  Therefore, we
    recommend the Subcommittee direct MedPAC to investigate the issue more fully,
    directly surveying medical equipment financing companies before they or CMS move
    forward with recommending any changes to this aspect of the formula for calculating
    practice expense payments for equipment under the Medicare physician's fee schedule.

    Conclusion
            The organizations that comprise the Coalition for Patient-Centered Imaging are
    committed to working with Congress to responsibly address the growth in medical
    imaging.  It is important that we all work together to ensure that Medicare beneficiaries
    are not denied access to appropriate imaging services provided by qualified physician
    specialists.  Thank you for the opportunity to present our views.  I look forward to
    answering any questions you may have.

    	MR. DEAL.  Thank you.  Dr. Moore.
            DR. VAN MOORE.  Thank you, Chairman Deal, for the kind
    introduction.  I thank Congresswoman Myrick for the introduction as
    well.
    	I thank you, Chairman Deal and the subcommittee members, for
    recognizing the important role that medical imaging serves and quality
    care provide to Medicare beneficiaries.  I particularly thank those 56
    Members of Congress, 15 of whom are on this subcommittee, for
    cosponsoring H.R. 5704 introduced by Congressman Pitts.  The
    legislation calls for a 2-year delay in implementation of Deficit
    Reduction Act imaging cuts and a GAO study regarding their effect on
    patient care.
    	While ACR understands Congress' need to make difficult budget
    decisions, Section 5102(b) of the DRA is troubling to the College.  This
    policy requires CMS to reimburse the technical component of in-office
    imaging at the lower of the Medicare fee schedule rate, or the HOPPS
    rate, the hospital outpatient perspective payment system rate.  The
    HOPPS was never intended to accurately reflect costs at the procedure
    level.  For example, hospital reporting systems may not uniformly
    delineate capital equipment costs.  ACR believes picking and choosing
    between payment systems based on whichever is cheaper both
    invalidates and corrupts both systems, not only for imaging services, but
    for all of medicine.  Until a substantive review is completed,
    implementation of the DRA should be delayed, as proposed under
    Congressman Pitts' bill.
    	Furthermore, the DRA policy does not address imaging utilization.
    Physicians who refer patients to their own equipment can take advantage
    of this policy and recover losses by ramping up volume, the exact
    opposite that the Congress intended.  These cuts, when applied in tandem
    with ongoing CMS rulemaking reductions, may force physicians to limit
    the number of patients in the Medicare system that they accept.  As a
    result, Medicare beneficiaries may be forced to endure increased wait
    times and increased travel times, particularly in rural areas.
    	The College has echoed many previous MedPAC recommendations
    for mandatory quality and safety standards for all imaging providers that
    will be determined by the Secretary of HHS.  MedPAC called for all
    imaging providers, regardless of specialty, to meet Federal standards
    regarding physician training, equipment maintenance, and certification of
    non-physician staff.
    	Clearly, quality standards have government precedent.  In 1992,
    Congress enacted the Mammography Quality Standards Act, or MQSA.
    This program sets standards for the facility, the technical staff, and
    physicians involved in mammography.  It has unquestionably improved
    breast cancer diagnosis and has reduced the breast cancer death rate.
    Physicians have adapted to these MQSA standards.  Technology clearly
    continues to advance, and more importantly, the level of care has greatly
    improved.  Our patients, your constituents, have benefited.
    	Another example of Federal imaging standards is CMS regulation of
    independent diagnostic testing facilities, or IDTFs.  CMS currently gives
    States the authority to regulate IDTFs.  Some States are diligent in this
    overview; unfortunately, others are lax.  ACR maintains that CMS
    currently has the authority to assert national quality and safety standards
    for all imaging providers, and expand their IDTF requirements to all
    settings.  If this were done, uniform quality and safety standards usually
    associated with hospital and radiology practices will be required for all
    physicians performing imaging in the office setting.
    	To improve imaging quality and to reduce costs, many private
    insurers have implemented accreditation programs similar to those
    proposed by MedPAC and the ACR.  Insurers recognize that
    accreditation is a key element in evaluating and maintaining quality and
    safety for their patients.  Any one of these programs will one, improve
    the quality of imaging services for Medicare beneficiaries, and two,
    achieve the savings that the DRA was intended to capture.  Given the
    likelihood that Medicare spending over the next 10 years on the highest
    cost modalities will approach $100 billion, deterring just 5 percent of
    projected spending would save Medicare $4 to $6 billion over the next
    decade.
    	Embracing the ideas that we have articulated will benefit patients
    and the healthcare system, which is our goal.  And it will significantly
    reduce expenses, which is one of your goals.  I urge this subcommittee,
    as well as the entire Congress, to enact H.R. 5704 and to implement
    sensible imaging reimbursement policies, such as those that I have
    discussed today.
    	On behalf of the more than 32,000 members of the ACR, thank you
    for your time and attention.  I look forward to any questions you might
    have.
    	[The prepared statement of Dr. Arl Van Moore follows:]

    PREPARED STATEMENT OF DR. ARL VAN MOORE, CHAIR, BOARD OF CHANCELLORS,
    AMERICAN COLLEGE OF RADIOLOGY

            Chairman Deal and Distinguished Members of the Subcommittee,
            My name is Arl Van Moore, Jr., M.D. and I am the Chair of the Board of
    Chancellors for the American College of Radiology.  I am a practicing radiologist from
    Charlotte, North Carolina.  It is a pleasure and an honor to represent the more than 32,000
    members of the American College of Radiology before this distinguished body.
            The College is the nation's largest radiology specialty organization representing
    diagnostic radiologists, radiation oncologists, interventional radiologists, nuclear
    medicine physicians and medical physicists.  Our goal remains to advance evidence-
    based criteria to support the delivery of higher quality, safe, appropriate and cost-
    effective diagnostic imaging services. Today, I will be discussing the imaging provisions
    contained in the Deficit Reduction Act of 2005 (DRA), their impact on providing
    imaging services to Medicare beneficiaries and the College's recommendations for
    addressing the rapid growth in utilization of imaging services in Medicare through the
    establishment of quality and safety standards.
            I would like to thank Chairman Deal and the Members of the Subcommittee for
    holding this hearing and recognizing the important role medical imaging plays in the
    quality of care provided to Medicare beneficiaries. I especially want to thank those
    Members of the subcommittee who are already cosponsors of HR 5704, the Access to
    Medicare Imaging Act of 2006, introduced by Congressman Pitts.  This legislation calls
    for a 2-year delay in the implementation of the DRA imaging provisions in order to allow
    for a GAO study to examine the potential effects on Medicare beneficiary access to the
    latest medical imaging technology and procedures.  I believe these cosponsors'
    participation underscores the importance of this issue and would encourage other
    Members of the subcommittee and full committee to become cosponsors.
            Furthermore, I would like to state that the ACR is proud to be a founding member of
    the Access to Medical Imaging Coalition (AMIC), a broad alliance of patient advocacy
    groups, medical manufacturers, and providers.  As one of several AMIC members
    testifying today, ACR fully supports the enactment of 5704.

    DRA Concerns
            The ACR continues to encourage and support the technological innovations and
    advances in diagnostic medical imaging, which have unequivocally improved the quality
    of patient care while producing cost savings through less invasive diagnostic techniques.
    As medical physicians who have devoted over 75 years to the study,  and practice of the
    science and clinical application behind imaging technologies, the ACR and its members'
    training, expertise and passion is focused on medical imaging.  As a result, we have
    serious concerns regarding the affects that the severe reimbursement cuts contained in
    section 5102(b) of the DRA will have on the provision of imaging services to our
    Medicare patients.
            ACR fully understands Congress' need to make difficult budgetary decisions to
    maintain the solvency of the Medicare trust funds and we have always been willing to
    work with Congress to develop reasonable policies to accomplish this mutual goal.
    However, the College has some serious concerns with the policy contained in section
    5102(b) which arbitrarily applies the hospital outpatient payment system and does little to
    neither address the issue of utilization nor improve the quality of the care provided to
    Medicare beneficiaries.  Some examples of imaging procedures and the severity of their
    cuts include:
             CT angiography to examine heart arteries - reduced by 50 percent;
             PET/CT exams to pinpoint tumor location - reduced by 50 percent;
             MRI of the brain which is used primarily to diagnose brain tumors - reduced by
    50 percent;
             MRI of the abdomen which is used to diagnose abdominal and/or liver cancer -
    reduced by 48 percent; and
             MR angiography of the head which is used to detect the location of aneurysms -
    reduced by 42 percent.

            The College finds it hard to believe that the Congress and Members of this
    subcommittee were aware that this policy would result in such dramatic cuts in the
    payment of such vitally important medical imaging procedures.  In addition,
    reimbursement policies that pick and choose between payment systems based primarily
    on the budget savings available to be achieved without validating the accuracy of either
    system or examining the applicability of either system corrupts and invalidates both
    payment systems.
            ACR's concerns with the DRA imaging provisions fall into two basic categories; the
    policy setting process of the Conference Committee of the DRA and the actual imaging
    reduction policy that was enacted. When a provision is offered to the Conferees which
    results in a $2.8 billion direct reduction in physician fees, one would hope that such a
    provision would be debated in committee, on the House or Senate floor or be the subject
    of a study by an outside federal agency as to the effects of such a policy. Regrettably,
    none of this oversight occurred with regard to section 5102(b). We think the results of
    this inaction during conference resulted in a policy that subjects and singles out a
    particular range of physician services to severe reimbursement reductions that are
    unfounded, and fails to address, in any way whatsoever, concerns Members of Congress
    may have about the appropriate and safe use of complex imaging tests on our Medicare
    beneficiaries.
            We understand the philosophy behind the intent of the Congress to pay equally for
    the same imaging service, regardless of the site of its delivery.  However, the policy
    included in the DRA arbitrarily replaces the long established and validated Medicare
    Physician Fee Schedule payment system, with the non-validated Hospital Outpatient
    Prospective Payment System (HOPPS) for the Technical Component reimbursement.
            The Balanced Budget Act of 1997 (P.L. No. 105-33) called for the Secretary of HHS
    to develop the HOPPS methodology for hospital outpatient services.  Outpatient services
    typically are performed at a hospital and include routine visits, emergency room visits,
    diagnostic medical imaging services, and surgical procedures not performed as part of an
    inpatient stay.  The hospital outpatient payment system  was never designed to accurately
    reimburse physician practice expense outside of the hospital setting and its applicability
    to the cost structure of non-hospital sites of service, such as a physician office or an
    imaging center, has never been examined.  Moreover, HOPPS fails to adequately account
    for the capital-intensive nature of diagnostic medical imaging services provided for in an
    office setting, where there is often less volume of services.
            Unlike the Resource Based Relative Value System (RBRVS), which a prior
    Congress required to be based on specific procedure level resource costs in determination
    of reimbursement, the HOPPS was never intended to accurately reflect resource costs at
    the procedure level. The HOPPS classification methodology is a hospital case mixed
    index not intended to be a procedure level payment. This new Congressional proposed
    reimbursement scheme effectively removes physician input and the resource basis from
    the reimbursement system and negates the careful and rigorous work performed by the
    AMA Practice Expense Advisory Committee (PEAC) over the past six years.
            The convoluted methodology of the HOPPS, which has relatively minor physician
    input into the process, is ultimately based on what hospitals report as their 'costs' for the
    various outpatient procedures. This reporting system is notoriously inaccurate and is not
    systematically validated. Before Congress discards the MPFS methodology in favor of
    the HOPPS methodology it should be sure that the hospitals are showing all of their costs
    for outpatient imaging services, especially CT and MRI as some of these costs may be
    allocated to the Part A Medicare payments (DRGs).
            Rather than blindly believing that the MPFS over reimburses CT and MRI
    procedures performed in an office setting, you should have considered the more likely
    probability that hospitals are not showing all of their costs and, as such, that hospitals are
    under reimbursed.
            For example, much of the cost of providing these state of the art imaging services is
    in the cost of the equipment. The HOPPS methodology has no specific mechanism for
    capturing those costs and it is quite possible that hospitals are not reflecting equipment
    purchase costs in their reporting system. Implementation of the legislation transitioning
    the HOPPS payments to the Medicare Physician Fee Schedule must be delayed until this
    answer is known. Otherwise, Congress may unwittingly put many imaging centers out of
    business because it never bothered to understand that the new reimbursement level may
    not even cover the costs of providing many imaging services.  Simply stated, the HOPPS
    system was never designed to account for the costs of in-office imaging and therefore
    cannot be expected to be an accurate measure of the costs associated with in-office
    imaging.
      	Furthermore, the imaging cuts in the bill represent nearly a third of overall
    reductions in the Medicare program that were contained in the DRA and do not address
    the utilization concerns of many in Congress.  When taken in tandem with ongoing CMS
    rulemaking reductions such as CMS's November 2005 final rule on contiguous body
    parts and CMS's June 2006 proposed rule that discusses the 5 year review and revisions
    to the practice expense methodology, the combination of these policies cross the
    threshold of defensible public policy and become arbitrary and punitive reimbursement
    reductions.  If these cuts are implemented in January 2007, many physicians may be
    forced to stop offering much needed imaging services or limit the number of Medicare
    patients they receive.  It is possible that many rural areas of the country will be affected.
    As a result, Medicare beneficiaries may be forced to endure increased wait and travel
    times to receive imaging services and higher co-payments for certain studies performed
    in the outpatient setting.
     	Many ACR members, in response to this policy, have expressed their concerns that
    in the event these payment reductions go into effect that they will likely be forced to
    reduce their hours significantly, cut staff or close altogether since they cannot increase
    their volume by performing more examinations in order to offset these losses.  In addition
    to the access problems that will inevitably occur, ACR is also concerned that these cuts
    may discourage research and development of new imaging technologies that are
    increasingly replacing more invasive (and more costly) techniques.  I'm sure the NEMA
    representative testifying today can verify that many of our members are stopping orders
    for new equipment and/or updates for older equipment.

    Alternative Policies
            Mr. Chairman, we recognize that  of section 5102(b) of the DRA is intended to
    reduce the growth and the costs of medical imaging in Medicare. However, the DRA
    policy does nothing to address the growth in imaging services.  Therefore, ACR and our
    colleagues in our Coalition, believe this  issue requires a more thorough analysis, and not
    the sledge hammer reimbursement cuts enacted early this year.  The two year moratorium
    contained in HR 5704 should give Congress ample time to accomplish a more thoughtful
    analysis of the potential unintended consequences that such severe payment cuts could
    portend.
     	To address the growing concern of policy makers in the public sector as well as with
    private payers who have worried about the tremendous growth in usage of PET scans, CT
    and MRI tests,  the College has advocated for the last two years that utilization can be
    controlled through the development of  quality and safety standards. We believe that
    Medicare should only pay for those complex imaging tests, CT, MRI and PET, if they are
    performed  in a safe and controlled environment. We believe that any physician,
    regardless of their specialty, should meet minimum quality and training standards. We
    think the equipment must continue to be of the highest caliber, with continuous
    maintenance to monitor the numerous safety issues associated with these complex tests.
    Some may view this position as anti-competitive on the part of radiologists, but we view
    the requirement of quality and safety standards as providing the necessary assurance to
    patients and taxpayers alike, that these services are being carried out in the most
    appropriate manner.  The complexity, cost, and possible radiation exposure often
    associated with many of these procedures require and demand special consideration of
    federal quality standards.

    The Mammography Quality Standards Act (MQSA)
            The requirement of federal quality standards already has governmental precedent. In
    1992, Congress enacted the Mammography Quality Standards Act or MQSA. This
    congressionally established program sought to increase the quality of mammographic
    images by setting standards for the facility, technicians and physicians involved in the
    mammography process, thus improving breast cancer diagnosis and ultimately breast
    cancer survival.  Since the establishment of MQSA, earlier detection of breast cancer
    through quality imaging has saved thousands of women's lives.
     	ACR believes that if Congress thought it was important to ensure quality for the x-
    ray procedures involved in mammography, then it is logical that Congress would want to
    enact similar standards for other imaging procedures that are more complex, such as CT,
    in which the radiation dose is 200 times that of a conventional chest film.  Clearly the
    Centers for Medicare and Medicaid Services (CMS) has begun to move in this direction
    as evidenced by its October 1, 2004 transmittal number 24 which incorporated into
    Medicare regulation a national coverage determination for PET scans that includes
    facility accreditation and demonstrated physician interpreter expertise as a requirement of
    coverage.  Specifically, the CMS languages states "The FDG-PET scan is performed in a
    facility that has all the accreditation necessary to operate nuclear medicine equipment.
    The reading of the scan should be done by an expert in nuclear medicine, radiology,
    neurology, or psychiatry, with experience interpreting such scans in the presence of
    dementia."
            While MQSA is not perfect, physicians have accepted these standards.  Advances in
    technology continue, including recent findings that the latest digital mammography may
    be a particularly effective test for some high risk groups of women.  Most importantly,
    the level of care has greatly improved and our patients, your constituents, have benefited
    from early detection, increased survival rates and reduced death rates.

    Medicare Payment Advisory Commission (MedPAC) Recommendations
            In its June 2004 and March 2005 reports to Congress, MedPAC's recommendations,
    which are not specialty specific, call for all diagnostic imaging providers to meet quality
    standards for imaging equipment, non-physician staff, images produced, patient safety
    protocols, and increased training for physicians who bill Medicare for interpreting
    diagnostic imaging procedures.  As suggested by MedPAC in its March 2005 report,
    these standards would be determined by the Secretary of Health and Human Services
    (HHS) in consultation with physician specialty associations and nationally recognized
    accreditation organizations.  Therefore, those physicians that are committed to obtaining
    the training, education, personnel and equipment necessary to meet these standards will
    continue to be able to provide services to their patients.  The ACR urges the
    subcommittee to seriously consider and follow the advice of its advisory commission.
            According to data compiled for the ACR, Congressional implementation of the
    MedPAC recommendations, designed in part to stem the financial incentive associated
    with some of the growth in imaging utilization, could save the Medicare program a
    minimum of $4-6 billion over ten years (the analysis behind this cost savings has been
    previously provided to Committee staff).  Given the likelihood that Medicare spending on
    the highest-cost modalities may approach $100 billion over the next ten years, deterring
    just 5 percent of projected spending would represent a substantial savings to Medicare.
    We believe that if quality of care standards were adopted,  Medicare beneficiaries would
    receive fewer duplicative studies, with more accurate and  better image quality of the
    range of tests available.

    Independent Diagnostic Testing Facilities
            While much of the increase in imaging procedures is due to the growing value of
    imaging as an alternative to more invasive diagnostic techniques, there is continued
    concern about the proliferation of expensive imaging equipment outside the traditional
    setting of the hospital or radiology group practice.  It is in these non traditional settings
    where uniform quality and safety standards, usually associated with hospital and
    radiology group practices, do not exist.
            The ACR feels that CMS currently has the authority to assert quality and safety
    standards to all settings where complex imaging testing is done if CMS were to expand
    their current Independent Diagnostic Testing Facility (IDTF) program to all settings
    where these tests are performed. Currently each state has authority to regulate how
    diagnostic imaging services are performed if such services are performed in an IDTF.
    Some states are diligent in this overview while others are more lax.
            In order to make these standards uniform for all states, the ACR feels that CMS
    should nationalize the IDTF standards, and insist that the provision of CT, PET or MRI
    exams, when performed in an office setting should meet the qualifications of, and register
    as an IDTF.  CMS has this authority to expand the existing IDTF program and the ACR
    urges the Congress to seriously consider this avenue of policy making as a fairly direct
    way to address many of the concerns raised in this hearing.

    Private Insurers
            Today, third party payers across the country are looking for ways to reign in
    imaging costs while ensuring that there is no negative impact on the quality of patient
    care. To improve image quality and reduce costs, some insurers are following
    accreditation models similar to those proposed by MedPAC and ACR.
            More and more payers recognize that accreditation programs are a key element in
    evaluating and maintaining the quality and safety of imaging for their patients.  In recent
    years carriers in various markets across the country have mandated accreditation in
    complex imaging modalities such as MRI and CT for their providers.  Until now the only
    national mandate was for MRI accreditation that was implemented in 2001 by Aetna.
    Recently, another national payer has indicated that they will require accreditation for all
    providers of MRI, CT, PET, Nuclear medicine, Nuclear Cardiology and
    Echocardiography beginning in late 2007.
            A list of some insurers and states utilizing ACR Accreditation is attached to this
    testimony and include Aetna, Blue Cross of California, Highmark Blue Cross of
    Pennsylvania, Blue Cross Blue Shield of Alabama, United Health Group of Wisconsin,
    Cigna of Connecticut and Oxford to name a few.

    Conclusion
            The ACR represents those physicians who focus solely on medical imaging and
    have unrivaled expertise in radiological sciences, medical imaging techniques, radiation
    safety, radiation protection, dose delivery and image interpretation programs. We are
    committed to evidence based decision making in healthcare and dedicated to high quality,
    safe and effective patient care through all of its available resources.
            I would like to reiterate my appreciation for your interest and concern that Medicare
    beneficiaries continue to receive the life-saving technology found in diagnostic imaging
    services.   We hope the subcommittee, as well as the entire Congress, will work to enact
    the provisions contained in HR 5704 so that we can implement an effective and sensible
    imaging reimbursement policy that will benefit our patients and the health care system
    overall.
     	I look forward to any questions you may have.
     	Thank you.

    	MR. DEAL.  Thank you.
    	Mr. Donahue.
            MR. DONAHUE.  Chairman Deal, Congressman Pallone, and
    members of the subcommittee, my name is John Donahue, and I am the
    President, the Founder, and the CEO of National Imaging Associates,
    and I am very honored and pleased to be before this committee today.
    	NIA is America's largest radiology benefit management firm.  Our
    clients include the Nation's leading managed care organizations, such as
    WellPoint, Aetna, and Harvard Pilgrim.  We cover 17 million Americans
    in 36 States across this country, including 300,000 Medicare Advantage
    enrollees and 1.2 million commercial Medicaid lives.
    	I would like to address three areas for you this afternoon.  First, to
    describe radiology benefit management; secondly, to discuss the
    explosive growth in imaging costs; and thirdly, to propose some
    solutions.
    	Radiology benefit management involves applying evidence-based
    guidelines, nationally endorsed quality and safety standards, patient
    education and patient advocacy to ensure that a diagnostic imaging study
    is clinically appropriate, is safe, and is affordable.  I strongly believe that
    radiology benefit management is sound policy.
    	The qualitative consensus shows that outpatient diagnostic imaging
    exceeds $100 billion and is growing at a rate in excess of 20 percent.  We
    find almost axiomatically across many regions in this Nation that high
    tech imaging, MRI, CT, PET, and nuclear cardiology exams, often
    constitute 15 percent of imaging volume, over 50 percent of imaging
    costs, and a full three-quarters, 75 percent of diagnostic imaging
    technology inflation.
    	What is causing this explosion in imaging inflation and utilization?
    Well, members of the committee, I wish there were a straight, direct
    simple answer to this, but as we have heard today, it is very complex and
    multi-variate.  It is, in fact, the perfect storm of healthcare quality, safety,
    and economic concern where you have innovative and therapeutically
    helpful new technology bombarding the marketplace, and that is a very
    good thing.  However, there is often a lack of clinical consensus and a
    full understanding on the part of ordering physicians on how to apply this
    marvelous technology.  There are malpractice concerns which encourage
    the defensive ordering of multiple diagnostic imaging exams, there are
    patients who are bombarded with direct-to-consumer imaging
    advertisements who often present in physician's offices with strong
    biases as to what specific imaging exams they would like rendered.
    There is a proliferation of imaging capacity across this country,
    sometimes not driven by clinical appropriateness, but by entrepreneurial
    zeal, and finally, we have the vexing issue of self-referral.  Our data
    indicates that some referring providers across this country who have
    access to equipment and will refer to themselves are often up to four
    times more likely to order an imaging procedure than those that order but
    don't render the same exam.
    	[Slide]
    	As the first slide depicts--I am sorry, it is both the same slide.  But as
    the first slide depicts, the quality, the safety, and the affordability of
    diagnostic imaging hinges, in my belief, on three distinct areas: the
    evaluation, the ordering, and the delivery of imaging care, as well as the
    payment of imaging care.  My belief is that ordering, delivery, and
    payment must be addressed holistically.  MedPAC and the DRA have
    admirably addressed some of the delivery and the payment issues
    through what we believe are highly justified pricing and billing solutions.
    My proposed solution today focuses on evaluating the ordering of
    imaging studies, which most predominantly drive volume and cost.
    	The appropriate ordering of imaging requires evidence-based
    support, which assures the clinical value of a given study.  The most
    effective means to do this is through patient and physician education on
    the technology, coupled with convenient physician decision support to
    help use the technology.  Our processes are based on clinical guidelines
    and radiology peer-to-peer delivered at the point of ordering.
    	Across this Nation, we are providing physicians with clinical
    decision support 300,000 times per month through 4-minute Web and
    telephonic encounters.  NIA connects ordering physicians with Board-
    certified radiologists while the patient is still in the office.  This program
    adds value and we believe that it works.
    	[Slide]
    	As this slide indicates, in this particular Medicare Advantage plan, a
    25 percent annual growth rate was turned around to a 20 percent
    reduction in the first year of the program.  Exploiting this to Medicare
    Advantage, traditional Medicare, and Medicaid indicates that this
    strategy could save our Nation billions of dollars in unwarranted
    diagnostic imaging.
    	In conclusion, we feel that radiology benefit management is a viable
    option available to Congress to address the explosive cost of high tech
    imaging.  We feel we can facilitate the national goal of high quality care,
    patient safety, and affordable imaging.
    	We very much appreciate the opportunity to be before you, and
    would welcome any questions.  Thank you.
    	[The prepared statement of John J. Donahue follows:]

    PREPARED STATEMENT OF JOHN J. DONAHUE, PRESIDENT AND CHIEF EXECUTIVE OFFICER,
    NATIONAL IMAGING ASSOCIATES, INC.

            Chairman Deal, Ranking Member Brown, and Members of the Subcommittee, my
    name is John Donahue, and I am pleased to appear before you today to discuss the state
    of medical imaging in today's healthcare marketplace.  As a fellow American, I am also
    deeply grateful to the commitment and contributions each of you Members have made to
    our Nation.  I am the Founder, the President, and the Chief Executive Officer of National
    Imaging Associates, Inc. (NIA).  NIA is the nation's largest radiology benefits
    management firm, covering nearly 17 million people through contracts with national and
    regional health plans.   NIA is dedicated to improving the quality of patient care through
    clinically appropriate and cost-effective management of diagnostic imaging such as
    MRIs, CT and PET scans, and nuclear cardiology services.  Robert LaGalia (who is with
    me today),  Dr. Thomas Dehn and I , originally developed this company through a
    partnership with Quest Diagnostics.  NIA became a separate entity in 1996, and is now a
    wholly owned subsidiary of Magellan Health Services. Headquartered in Avon,
    Connecticut, Magellan Health Services is the nation's leading specialty health care
    management organization.
            NIA is the only radiology management organization to receive accreditation for our
    HIPAA privacy compliance program for all the Protected Health Information we receive
    in the course of our operations. NIA was also selected as an early adopter for the new
    URAC and JCAHO/NCQA Privacy Certification Program for Business Associates.
    URAC awarded NIA HIPAA Privacy Accreditation for Business Associates in August
    2003.  Our Web based applications were also recognized by Computer World's
    Smithsonian Award for Healthcare Innovation.
            Radiology benefits management involves evaluating diagnostic imaging to insure
    that services rendered are both clinically appropriate and cost effective.  NIA currently
    partners with the nation's leading managed care organizations in 36 states to improve the
    quality and cost-efficiency of diagnostic imaging testing for health plan members and
    physicians.  NIA's clients include the nation's leading managed care organizations,
    including Aetna and WellPoint, many other leading Blue Cross and Blue Shield Plans
    and regional leaders such as Harvard Pilgrim Health Care.  In the government sector, we
    cover over 300,000 Medicare Advantage lives and over 1,200,000 Medicaid lives in
    multiple states.  Given the scope of our role in our nation's health care, I believe our
    perspective on advanced medical imaging and the management of imaging costs can be
    useful to the Subcommittee.
            The record on diagnostic imaging as one of the fastest growing cost areas in
    American health care, and the growth in advanced medical imaging as a major
    contributor to today's exploding Medicare spending, are both well documented.  By most
    accounts, outpatient diagnostic imaging exceeds $100 billion and is growing at a rate in
    excess of 20 percent.  It is interesting to note that we find almost axiomatically across the
    country, high tech imaging (MRI, CT, PET and nuclear cardiology exams), typically
    account for only roughly 15 percent of imaging volume, but over 50 percent of imaging
    cost (driven by their high relative fees) and over almost 80 percent of the inflationary
    impact. Most health plans, State authorities or Center for Medicare and Medicaid Service
    (CMS) will report to you that diagnostic imaging represents upwards of over 15 percent
    of the overall health care spend in our country.  While we understand the consternation
    with the MedPAC recommendations, the CMS Physician Fee Schedule changes for
    multiple procedures and nuclear medicine services, and the imaging provisions in the
    Deficit Reduction Act of 2005 (DRA), we fully endorse the concept of clinically based,
    safe and affordable imaging as sound public policy, and we are encouraged that the
    Subcommittee has held this hearing today.
            I am often asked: What is causing this explosion in diagnostic imaging utilization,
    safety concern and financial stress on our health care system?  There is no single simple
    answer.  We are here today because a compendium of causal factors are forming The
    Perfect Storm, these dynamics include:
             The constant flow of remarkably innovative and therapeutically helpful new
    imaging technology that is flooding the market place.  To the extent this helps
    patients, it is very positive.
             A lack of clinical consensus on the part of those who predominantly order
    diagnostic imaging.  Well-intentioned primary care, family practice and
    internal medicine physicians, who endeavor to perform the best care for their
    patients but lack the time and acumen to master the nuances of every emerging
    technology, most often cast a wide, extraordinary costly and most often not
    clinically justified net of imaging prescriptions.
             There is a reflexive professional instinct  to cast a broad net of multiple
    diagnostic imaging exams to protect a doctor from financially devastating and
    often unjustified instances of physician malpractice.
             And then there is the patient, who is bombarded with direct-to-consumer
    imaging advertisement, an enlightened sense of technological awareness, mixed
    with a smidgen of entitlement.  He often requests specific imaging exams when
    thinking, "I twisted my knee this weekend playing hoops in the driveway, I
    want an MRI on a GE magnet just like my local sports star had last week."

    Now, we turn to two of the most concerning issues this Committee will face:
             There is a proliferation of  imaging capacity driven by entrepreneurial zeal and
    resulting in imaging orders, which is encouraged by aggressive marketing.
    They are not clinically warranted and are driven by return in investment
    decisions by the owner.
             World of self referral:  We must find a solution to this gaping hole in the Stark
    legislation.  A solution is necessary which  affords patients access to highly
    skilled and convenient non-radiologist imaging care, while protecting our
    health care system from unsavory financially driven imaging utilization.

            I have a solution for you to consider for both of these points.  I will describe how
    diagnostic imaging is delivered in America.  At NIA we organize this into three distinct
    areas: (1) ordering of imaging care; (2) delivery of imaging care; and (3) payment of
    imaging care.
            Ordering, Delivery and Payment are the most quintessential elements of any
    capitalistic system whether it is widgets, or automobiles or diagnostic imaging.  Scarcely
    anywhere is there more need in America for more governmental guidance on safety,
    clinical assurance and financial appropriateness than in the area of diagnostic imaging. It
    is also my firm belief that ordering, delivery and payment of imaging must be addressed
    holistically to achieve the goals of improved clinical care, patient safety and financial
    affordability.  MedPAC and the DRA legislation have admirably addressed some of the
    delivery and payment issues - through highly justified pricing and billing solutions.
    	However, ordering of imaging tests, which predominantly drives volume and cost
    more than any factor has been, respectfully,  somewhat under addressed.  Let me zero in
    for a moment on the ordering of imaging care.  Remember, while self-referral is a
    justifiable concern, the vast majority of imaging exams in this country are ordered by
    physicians who will not render or economically benefit from their generation.  As
    mentioned previously, these are the physicians who are, in every state in this nation,
    bombarded with a flow of innovative but confusing and costly new technology or
    applications of existing technology, patient demand and an uneasy concern over applying
    justifiable conservative ordering in the face of rampant malpractice litigation.
            The appropriate ordering of imaging care requires evidence based support which
    tests clinical value.  We find the most effective means to do this is through patient and
    physician education coupled with convenient physician decision support (founded in
    evidenced based medicine) at the point of ordering.  Across this nation, we are providing
    physicians with clinically invaluable decision support (300,000 times per month) through
    4 minute web and telephonic interaction and connection with board certified radiologists,
    while the patient is in the office.  This service enlightens physicians, protects patients
    from clinically unwarranted and unsafe procedures and saves our managed care partners
    hundreds of millions of dollars per year by eliminating wasteful imaging exams.  I
    strongly encourage this subcommittee to examine this methodology because we think it
    provides a solution transferable to  the public health insurance programs.  As you will
    hear, we feel this enlightened approach can unlock tens of billions in clinically warranted
    economic savings for our country.
            NIA is confident that the empirical data  demonstrates that clinically appropriate
    radiology benefits  management is the responsible approach that offers the necessary cost
    reductions while ensuring the safety of the patients who require treatment.  Our
    experience in radiology management has led us to three conclusions that I want to share
    with you.  Congress should not shy away from a robust dialogue on the issue because:
            1. Roughly One-Third of Advanced Imaging Tests Are Inappropriate or Do
    Not Contribute to Health Outcomes.   We have first-hand experiences and successes
    managing imaging benefits for Medicare Advantage plans.  We have found about one-
    third of advanced imaging tests are either inappropriate or do not contribute to the
    physician's diagnosis or ultimate health outcomes. For example, such tests could possibly
    be performed more efficiently and economically, and achieve the same clinical/diagnostic
    goal, with traditional technology. Applied to the nation as a whole, this data strongly
    suggests that efficient radiology benefit management could cut America's radiology
    expenditures by $20 billion to $30 billion annually.
            2. There Are Inherent Risks In Radiation Exposure.  There is no question that
    patient care is vastly improved when diagnostic imaging services are performed, but the
    inherent risks associated with radiation exposure should not be trivialized.  The medical
    consequences that result when patients incur too much exposure to radiation may not be
    apparent to a physician when identifying what is in the best interest of the patient.  This
    has the potential of trying to solve a problem by creating a brand new health risk to the
    patient.
            3. There is a Substantial Incidence of Self-Referral for Nuclear Medicine
    Services.  In our experience, self-referral is a driver of escalating imaging costs, despite
    nuclear medicine's approval as designated health service under the Stark Act.  Since
    imaging services can be performed in referring physicians' offices under an exception,
    growth in self-referrals will undoubtedly continue to proliferate with little or no
    exceptions, despite the change in CMS rules.  Our data shows that 68 percent of the
    encounters of nuclear cardiologists who made referrals for nuclear cardiology services
    within a major health plan in 2003 were self-referrals.   When the data is stratified
    another way, virtually all providers whose self-referral rates were classified as "high"
    were nuclear cardiology referrals (1,045 out of 1,050). This practice must stop.
            Taken together, the findings outlined above, and discussed in more detail below,
    suggest that the fiscal integrity of Medicare and Medicaid as well as the health and safety
    of beneficiaries are at risk with the explosive growth in imaging spending.  We endorse
    the concept of cost controls and radiology benefits management and can demonstrate
    clinically appropriate and safe imaging management.

            1. 	Roughly One-Third of Advanced Imaging Tests Are Inappropriate or Do
    	Not Contribute to Health Outcomes.
            In our experience, about one third of advanced imaging tests are either inappropriate
    or do not contribute to the physician's diagnosis or ultimate health outcomes.  We
    maintain the nation's largest clinical and financial database that includes over 150 million
    imaging encounters.  Among a variety of uses, the data enables us to provide the
    industry's most advanced algorithms to enhance the quality and efficiency of radiology
    modality choices, while providing doctors and plan partners with important information
    on radiology ordering practices.
            NIA has drawn on its clinical and financial database from a sampling of pre-
    authorizations submitted through major managed care organizations for the period of
    September 1, 2004 through August 31, 2005.   The data from our sample show that
    almost one-third of all requests for imaging services involved multiple procedures using
    the same modality for related body parts during a single clinical session.  Specifically,
    there were more than 330,000 requests in our sample, and, of these, nearly 110,000
    involved multiple procedures.  In all, the data in our sample show a substantial incidence
    of requests for multiple procedures in a single session.
            In another instance, NIA turned nearly 25 percent annual growth in Medicare
    Advantage imaging claims into a reduction of nearly 20 percent in the first year.  This
    swing of nearly 45 percent exceeded NIA's management of the plan's commercial
    imaging benefit.  Furthermore, this reduction helped the plan realize a savings of nearly
    $6.50 in its per-member per-month Medicare Advantage imaging rate, four times the per-
    member per-month savings realized on the non-Medicare side.

            2. 	There Are Inherent Risks In Radiation Exposure.
            As important as responsible cost management is, patient safety always comes first.
    We strive to help good doctors become better doctors.  While patient care is vastly
    improved when diagnostic imaging services are performed, there are inherent risks
    associated with radiation exposure that should not be trivialized.  We live in a society
    where an abundance of caution often supersedes what is an appropriate course of action.
    A doctor's assessment of the appropriateness of radiation exposure to a patient requires a
    subjective evaluation of the potential benefit to the patient in relation to the additional
    radiation risk resulting from the imaging test.
            The medical consequences that result when patients incur too much exposure to
    radiation may not be top-of-mind for a physician when identifying what is in the best
    interest of the patient, which has the potential to cause a brand new health risk.    For
    example, a July 2005 National Academy of Sciences report underscored the fact that any
    level of ionizing radiation may have carcinogenic effects .    NIA strives to mitigate
    overexposure to radiation by tracking patient dosages, through a combination of recent
    claim and pre-authorization data, and, through management techniques, preventing
    unnecessary and harmful exposure to clinically unnecessary and potentially dangerous
    radiation.
            Radiology benefits management can reduce the dangers caused by too much
    radiation from too many procedures.  We work with our clients to focus on patient
    exposure to radiation and the need to balance the risks and benefits of those procedures
    through utilization management.

            3. 	There is a Substantial Incidence of Self-Referral for Nuclear Medicine
    	Services.
            Another driver of the cost boom is the ever-growing entrepreneurial physician
    network, comprised of doctors who have purchased imaging equipment and have a desire
    to see a return on their investment.  Self-referral practices are emerging everywhere.
    Specialty and primary care practices are buying their own CT and MRI scanners, entering
    special lease agreements, and self-referring their patients while outsourcing the
    radiologists' interpretations. A May 3, 2005 article in the Wall Street Journal examined
    "increasingly common" arrangements in which physicians contract with medical imaging
    centers to "structure referral deals as leases, under which physicians, each time they send
    over a patient, are renting the scan center's facilities and employees." Under the
    arrangements, the medical imaging centers charge physicians a flat rate per scan and
    physicians can bill health insurers for the scans at the reimbursement rate in their area.
            Information drawn from NIA's clinical and financial database supports the view that
    there is substantial incidence of self-referral for nuclear medicine services and that self-
    referring providers are much more likely to order these types of services than those who
    do not self-refer and they do so with no concomitant clinical justification.   Specifically,
    we reviewed data on nearly 1,000 providers who made referrals for nuclear cardiology
    services within a major health plan in the period June 2002 through May 2003.  In all,
    1,605 referrals for these services were recorded, of which 1,096 - 68 percent - were self-
    referrals.
            We also stratified our data to identify groups of providers whose self-referral rates
    were classified as "high," "medium," and "low."  In the "high" group of providers,
    virtually all nuclear cardiology referrals - 1,045 out of 1,500 - were self-referrals, while
    in the "low" group virtually none of the referrals were self-referrals.  Using these
    classifications, we were able to determine that self-referring providers in the "high"
    group were four times more likely to make a nuclear cardiology referral of any kind than
    were providers in the "low" group.
            It is clear that self-referring is a culprit for climbing imaging costs, despite nuclear
    medicine's approval as a designated health service under the Stark Act.  Since imaging
    services can be performed in referring physicians' offices under an exception, growth in
    self-referrals will undoubtedly continue to proliferate with little or no exceptions, despite
    the change in CMS rules.  This practice must stop.  Self-referral is manipulating a
    loophole that must be closed in order to establish parity and allow the true intent of the
    Stark Act to properly police the imaging community.

              CONCLUSION: A PROPOSED SOLUTION FOR MOVING FORWARD:
               PRIOR AUTHORIZATION AS A CHECK FOR IMAGING COSTS
            NIA's safeguards ensure that patients receive clinically appropriate and safe imaging
    in an efficient and timely manner, but we recognize that pre-authorization programs are
    not always embraced by physicians.  Therefore, we endeavor to expedite the pre-
    authorization process.     Within minutes, referring physicians or their clinical staffs
    receive approval or are notified that the decision has been forwarded for clinical
    consultation by a Board-Certified Radiologist or physician. The best radiology
    professionals in medicine, including our over 60 board-certified radiologists and other
    specialists handle those cases that require further judgment on a peer-to-peer consultative
    basis. If a request is denied on a clinical basis, our reviewers always recommend an
    appropriate alternative procedure.  No request is ever denied without a concerted effort
    by our physicians to discuss the matter with the referring physician in peer-to-peer
    dialogue.
            Out safeguards ensure that patients receive clinically appropriate and safe imaging
    in an efficient and timely manner, but we recognize that pre-authorization programs are
    not always embraced by physicians.  We endeavor to expedite the process.  Within
    minutes, referring physicians or their clinical staff receive approval or are notified that
    the decision has been forwarded for clinical consultation by a board-certified radiologist
    or physician.  Expert physicians, including over 60 board-certified radiologists and other
    specialists, handle those cases that require further judgment on a peer-2-peer consultative
    basis.  If a request is denied on a clinical basis, our reviewers almost always recommend
    an appropriate alternative procedure.  No request is ever denied without a concerted effort
    by our physicians to discuss the matter with the referring physician in peer-2-peer
    dialogue.
            NIA also publishes up-to-date clinical guidelines covering the common reasons for
    requesting imaging tests. These guidelines have been developed from practice
    experience, literature reviews, specialty criteria sets, and empirical data from credible
    medical organizations such as the American College of Radiology, the American College
    of Cardiology, and other specialty doctor groups.  Our proprietary algorithms are
    developed and updated using NIA's imaging database with reference to the latest medical
    literature. The algorithms are regularly reviewed and approved by state Imaging Advisory
    Committees, health plan Chief Medical Officers,  state medical societies, and updated by
    our database of encounters which grows by  300,000 calls per month.
            We believe that there are a number of options available to both Congress and the
    Administration as a means of identifying and deploying cost-cutting initiatives in
    imaging.
            Congress could enact two of the 2005 MedPAC recommendations which require
    federal standards for physicians who perform diagnostic imaging procedures, as well as
    for those physicians who read and interpret the images.  While the establishment of
    federal standards for medicine is admittedly a difficult and complex procedure, there is a
    precedent for setting these standards.  For example, the Mammography Quality Standards
    Act (MQSA) that was first enacted in 1992 and reauthorized three times since could
    justify a legislative effort to set federal standards for other forms of diagnostic imaging.
    Furthermore, another law that demonstrates that the federal government does have a role,
    and responsibility, to set medical standards is the Clinical Laboratory Improvement
    Amendments (CLIA), which was enacted by Congress nearly 20 years ago in 1988.  Just
    as MQSA established standards for mammography facility, CLIA did the same for
    laboratory testing.
            We believe that these two laws illustrate a federal precedent for establishing medical
    standards and regulating the practice of medicine. Patient safety was the genesis behind
    both MQSA and CLIA, and we believe that the same argument can be applied more
    broadly across the spectrum of diagnostic imaging procedures.  Clearly, patient safety is
    an issue in diagnostic imaging, e.g. exposure to excessive radiation, the improper
    handling of a patient, and the  accuracy and reliability of tests.
            Second, we believe that there are opportunities with Congress and CMS for the
    development of creative new techniques in the management of radiology services.  For
    example, radiology benefits management could be a key enabler of "pay for
    performance" and other value-based purchasing systems planned for Medicaid, Medicare
    Advantage, and fee-for-service Medicare.  We have had some discussions with CMS
    officials on this topic, and we welcome any opportunity to broaden our dialogue on this
    issue. There is the potential of advancing this issue under a pay-for-performance proposal
    where payments to imaging providers are linked to quality and efficiency, which would
    address the issue of exploding costs.  We look forward to the opportunity to collaborate
    with Congress, the Administration, and other stakeholders to develop an appropriate pilot
    program that strikes a balance between cost savings and patient safety.  NIA recognizes
    that these are lofty goals being suggested at a time when the Congressional calendar is
    winding down.  But, sound public policy initiatives require visionaries and forward
    thinkers, and the time is now to consider the framework for a pragmatic healthcare
    agenda for the 110th Congress and beyond.
            Thank you for the opportunity to appear before you today.  I would be delighted to
    answer any questions you may have.

    	MR. DEAL.  Thank you.
    	Dr. Laube.
            DR. LAUBE.  Thank you, Chairman Deal, for the opportunity to
    discuss the use of ultrasound in our specialty, and its importance to the
    women we serve.
    	I represent the American College of Obstetricians and Gynecologists,
    a membership organization of over 50,000 obstetricians and
    gynecologists.
    	The safety and longstanding integration of ultrasound in medical
    offices sets it apart from other parts of imaging, including CT, MRI, and
    PET.  Congress should recognize these differences and exempt OB/GYN
    ultrasound from many of the proposals under consideration.
    	To make my point, I will summarize the major points in the written
    testimony, which are five.
    	First, ultrasound is safe.  Ultrasound uses low-intensity sound waves
    to generate images, not ionizing radiation or potential carcinogen in X-
    ray, CT, and nuclear medicine.  No harmful effects have ever been
    associated with the medical use of ultrasound.  The clinical benefits far
    outweigh any potential risk.
    	Second, OB/GYN residents are extensively trained in ultrasound
    throughout their f4 years of training.  Since 1982, ultrasound has been
    recognized as an essential element of OB/GYN training.  As someone
    who has been in academic medicine for 25 years and has trained over
    350 OB/GYN residents, I can certainly attest to the integration of
    ultrasound in our medical training.  ACOG offers postgraduate medical
    education in ultrasound and educates its fellows on appropriate use.
    ACOG has worked with the American Institute of Ultrasound Medicine
    and with the American College of Radiology to develop clinical practice
    guidelines and a voluntary accreditation program.
    	Third, ultrasound use in physician offices saves healthcare costs and
    improves quality of care.  Use of ultrasound in clinical care speeds
    decision-making and enables greater reliance on minimally invasive, less
    costly procedures.  Many exams need to be performed urgently, such as
    when women experience unexplained bleeding, pelvic pain, or discovery
    of a mass.  Ectopic pregnancies or complications during active labor can
    be life-threatening, and require immediate ultrasoundography.
    Ultrasound has greatly reduced the need for exploratory surgery.
    	Fourth, ultrasound is growing at a much slower rate than other
    imaging services.  For ultrasound codes billed by OB/GYNs for the
    diagnosis of gynecologic conditions, the growth between 2001 and 2003
    was less than 4 percent a year.  This growth rate is entirely appropriate
    and reflects in part a shift in services from costly hospital settings to less
    costly office settings.  Any assessment of Part B growth in ultrasound
    use needs to take into account the companion reduction in hospital
    ultrasound.  Office based imaging allows patients to have the same exam
    or procedure in the office that they would have had previously in the
    hospital.  It is more convenient for the patient and allows for faster
    diagnosis and treatment.
    	In addition, our patients are aging.  More people are living longer
    with chronic disease, and pregnancy rates are soaring among women
    older than 35.  These women are more likely to have pregnancy
    complications and are at increased risk for birth defects.  Ultrasound is
    indicated for these reasons, and many older mothers should expect
    ultrasounds and ultrasound-guided tests, such as amniocentesis or
    corionic filler sampling.
    	In a high-risk specialty like mine, some imaging growth is
    undoubtedly due to defensive medicine, and until Congress acts to solve
    America's medical liability crisis, the cost of defensive medicine,
    including imaging, will grow.
    	Fifth and last, current imaging proposals are not necessary for
    ultrasound.  Accreditation measures are unnecessary for OB/GYNs who
    are trained in ultrasound from the beginning of their residency and are
    certified by the American Board of OB/GYN in its use.  Many
    OB/GYNs are in small practices.  Unlike multi-million dollar practices
    using CT and MRI equipment, or for freestanding imaging centers, a solo
    practitioner doesn't have the office support to manage the process of
    accreditation.  In the end, no Federal certification or accreditation
    standards can guarantee that the right diagnostic test is provided in the
    right setting at the right time.  This can only be accomplished through the
    training programs and education as those that we offer through ACOG.
    	In summary, ultrasound has undeniable benefits for both patients and
    physicians needing speedy diagnosis and timely treatment.  It has a long
    record of safe use it used appropriately in clinical settings.  Growth is
    low and appropriate.  We urge Congress to recognize the value and
    distinctions of ultrasound as it considers various imaging proposals.
    Thank you.
    	[The prepared statement of Dr. Doug Laube follows:]

    PREPARED STATEMENT OF DR. DOUG LAUBE, PRESIDENT, AMERICAN COLLEGE OF
    OBSTETRICIANS AND GYNECOLOGISTS

            On behalf of the American College of Obstetricians and Gynecologists (ACOG) and
    our 51,000 physicians and partners in women's health, I would like to thank Chairman
    Deal and members of the Energy and Commerce Health Subcommittee for the
    opportunity to discuss the use of ultrasound in our specialty and the importance of this
    technology to the women we serve.  I am the Chair of the Department of Obstetrics and
    Gynecology at the University of Wisconsin and the current President of the American
    College of Obstetricians and Gynecologists.
            I would like to focus on the imaging most used in my specialty-ultrasound.  We
    believe the safety and longstanding integration of ultrasound in medical offices sets it
    apart from other forms of imaging and warrants special consideration in this debate.
            Medicare patients make up only 13% of the average ob-gyn practice.  This small but
    significant percentage includes both older women and women with disabilities of all
    ages.  While today's hearing is focused on imaging in Medicare, the decisions about
    Medicare policy this Committee may make will be adopted widely by private payers,
    Medicaid and TRICARE, the health care system for 9 million military families.  Clearly,
    women of all ages throughout the country stand to be affected by these decisions.
            Medical imaging is a complex subject.  Discussions of growth and safety of imaging
    must clearly distinguish between different types of imaging.  Setting it apart from other
    imaging, ob-gyn ultrasound has a high record of safety, is fully integrated in day-to-day
    patient care, and is a critical part of medical resident education.  A distinction between
    ultrasound and the rest of the imaging field, including CT, MRI, and PET, is warranted.
    We urge the Congress, in any legislation, to recognize the safety, quality and
    appropriateness of ultrasound studies and to exempt ultrasound from any new
    restrictions on imaging use, federal quality standards, or additional administrative
    burdens.

    Unique Characteristics of Ultrasound
            Ultrasound uses low intensity sound waves to generate images.  Most people are
    familiar with obstetric ultrasound as a way to evaluate the health of a fetus in utero.  But
    ultrasound has broader application and value in obstetrics and gynecology and across
    several medical specialties.  In obstetrics, ultrasound is useful in helping to accurately
    date a pregnancy, estimating the amount of amniotic fluid and detecting birth defects.
            Ultrasound may be necessary if there is a complication during labor or to identify an
    ectopic pregnancy, a life-threatening condition.  In gynecology, ultrasound is used to
    identify the cause of unexplained pain or bleeding, to visualize a mass felt during a
    manual exam and in the assessment of infertile patients.
            Ultrasound has been established as an accurate imaging modality for many
    conditions.  Other specialties use sonography to identify cysts or tumors in the breast,
    look for causes of abdominal pain, investigate causes of joint pain, or identify an enlarged
    prostate.   In some conditions requiring a biopsy, ultrasound can be used to guide needle
    placement and eliminate the need for surgery.   Ultrasound is also used to guide the
    needle placement during amniocentesis to reduce the risk of maternal or fetal injury.
            Ultrasound has many advantages over other types of imaging.  Since it does not use
    ionizing radiation or contrast media, to which some patients are allergic, it is much safer.
    Transabdominal ultrasound does not require sedation and is performed non-invasively,
    reducing risk of infection and other potential adverse events.  Portable or hand-carried
    equipment allows scans to be performed in an ob-gyn's exam room to capture real-time
    images, including fetal movement and umbilical blood flow.  Critical clinical data are
    immediately available to the physician making patient care decisions.  Its convenience for
    physicians and patients, and real-time precision have made ultrasonography an essential
    tool for early diagnosis of disease and quality health care.
            Ultrasound is an essential part of ob-gyns' clinical care.  With several decades of
    clinical use, ultrasound is fully integrated into patient care.  Removing this tool from the
    exam room or creating burdensome new requirements for physicians who use it will only
    bring harm to patients who want and need timely diagnosis and accurate information.
    Congress should reject proposals to restrict the use of this tool.
            Ultrasound is different from other imaging services for several reasons:
             Ultrasound is safe;
             Training is incorporated into residency and board exams for many physician
    specialties and all ob-gyns;
             Use of ultrasound saves money and improves quality; and
             Growth of ultrasound is appropriate and is no faster than growth in other
    Medicare Part B services.
            These many important differences lead us to the conclusion that proposals in the
    imaging debate are unnecessary for ultrasound.

    Ultrasound is Safe
            The first consideration in the use of any technology should be its safety.  Diagnostic
    ultrasound uses low intensity sound waves to generate images, unlike x-ray, CT and
    nuclear medicine, which require ionizing radiation, a potential carcinogen.  Additionally,
    ultrasound does not require the use of contrast media, which are required for angiography
    and some CT studies, and cause adverse events in a significant number of patients.
    After many years of widespread clinical use, the FDA (among others) has found no
    known harmful effects associated with the medical use of ultrasound .  Studies in humans
    have revealed no direct link between the use of diagnostic ultrasound and any adverse
    outcome.  It is the general consensus that the clinical benefits of ultrasound far outweigh
    any potential risk.
            In particular, ACOG has carefully investigated the safety of scanning during
    pregnancy. In this regard, we concur with the FDA statement that "ultrasonic fetal
    scanning is generally considered safe and is properly used when medical information on a
    pregnancy is needed. But ultrasound energy delivered to the fetus cannot be regarded as
    completely innocuous. Laboratory studies have shown that diagnostic levels of
    ultrasound can produce physical effects in tissue, such as mechanical vibrations and rise
    in temperature. Although there is no evidence that these physical effects can harm the
    fetus, public health experts, clinicians, and industry agree that casual exposure to
    ultrasound, especially during pregnancy, should be avoided. Viewed in this light,
    exposing the fetus to ultrasound with no anticipation of medical benefit is not justified."
            ACOG has taken a firm position against the non-medical use of ultrasound and is
    alarmed by the emergence of imaging centers whose sole use of ultrasound is for
    entertainment, or 'keepsake' ultrasound, a practice that ACOG does not endorse.   ACOG
    has advised several imaging centers of our position and at ACOG's urging some imaging
    manufacturers have adopted similar positions.

    Ob-Gyns are Well-Trained and Well-Qualified to Perform Ultrasound Exams
            Taking ultrasound out of the ob-gyn office is akin to taking away the stethoscope, it
    is so integrated with the care ob-gyns provide, particularly in the treatment of pregnant
    women.  Procedures performed by ob-gyns include sonography to assist in the diagnosis
    of certain pregnancy complications, diagnosis and management of certain gynecological
    cancers, sources of pelvic pain or postmenopausal bleeding.  Maternal-fetal medicine
    specialists, who work with high-risk pregnant women, are trained in the use of fetal
    echocardiography to investigate fetal heart problems.  Patients requiring advanced
    imaging procedures--such as MRI, CT and PET--are generally referred to a radiologist.

    Residency Education
            Since 1982, ultrasound has been recognized as an essential element of ob-gyn
    training. Training in ultrasound begins early in residency and continues throughout.  The
    manual for the American Residency Coordinators in Obstetrics and Gynecology
    (ARCOG) specifies that by the end of the first year of training, ob-gyn residents must
    learn ultrasound physics and be able to perform time scanning and interpretation under
    supervision.  By the end of the second year, ob-gyn residents observe and perform
    advanced ultrasound procedures under supervision and can interpret sonograms.  In the
    third year, residents are expected to be able to identify normal anatomy on transvaginal
    ultrasound, as well.
            In addition, the Accreditation Council for Graduate Medical Education ob-gyn
    residency requirements explicitly state that educational curriculum must include obstetric
    and gynecologic ultrasonography and other imaging techniques.  Under guidelines from
    the Council on Resident Education in Obstetrics and Gynecology (CREOG), graduating
    ob-gyn residents must be able to understand and independently perform diagnostic
    ultrasonography.  The American Board of Obstetrics and Gynecology tests extensively on
    this subject in certification and recertification exams.
            Obstetric ultrasound has been in ob-gyn offices for so long that radiology residents
    see very little of it in their training.  One study found that radiology residency programs
    provided fewer than 4 weeks per year of obstetric sonography and that radiology
    residency and fellowship lecture topics were similarly deficient.  The authors concluded
    that for radiology residents "current levels of experience in obstetric sonography may not
    be providing sufficient experience to allow residents to appropriately manage call cases
    or for practicing radiologists to provide such services after their training is completed."

    The Role of Specialty Societies in Ensuring Quality
            ACOG, and other specialty societies, offer many opportunities for postgraduate
    medical education in ultrasound through seminars and meetings.  In addition, several
    specialties have developed guidelines for appropriate use of imaging technology.  ACOG
    has several publications to educate Fellows on appropriate usage of this technology.
    Practice Bulletins offer guidance on choosing a transducer; differentiation between
    standard, limited and specialized examinations; the indications and parameters for first,
    second and third trimester ultrasound; and proper documentation of the scan.  These
    criteria were published in the journal Obstetrics and Gynecology and are widely available
    to our members.  In addition, ACOG has worked with the American Institute of
    Ultrasound in Medicine (AIUM) and with the American College of Radiology (ACR) to
    develop clinical practice guidelines for antepartum obstetrical, female pelvic and saline
    infusion sonohysterography and voluntary accreditation programs.
            When specialty societies see the need for further education, training can be
    developed to fill the gap.  To facilitate the incorporation of ultrasound into surgical
    practice, the American College of Surgeons developed an ultrasound education program
    consisting of didactic and hands-on learning.   It consists of a basic, core module that
    covers ultrasound physics, instrumentation and scanning technique, and clinical
    applications.  The basic core module is a prerequisite for education in the advanced
    training modules. There are advanced training modules in acute or trauma, vascular,
    abdominal, anorectal, head and neck, and breast ultrasound.  Questions are included on
    the American Board of Surgery qualifying and in-service examinations that require the
    interpretation of ultrasound images.

    Use of Ultrasound Saves Money and Enhances the Quality and Safety of Care
            Use of ultrasound in clinical care speeds decision-making and enables greater
    reliance on minimally invasive, less costly, procedures.  Many exams need to be
    performed urgently, such as when a woman experiences unexplained bleeding, pelvic
    pain or discovery of a mass.  Ectopic pregnancies or complications during active labor
    can be life threatening and require immediate ultrasonography so the patient can be cared
    for quickly.  Ob-gyns are the most appropriate physicians to provide these services.
    Radiologists often are not on call throughout the night and on weekends when many
    emergencies occur.  It is critical that women have access to diagnosis and treatment when
    they need it.
    	In ob-gyn, as in many other specialties, ultrasound has greatly reduced the need for
    "exploratory" surgery or invasive diagnostics to make the same determination.  In many
    cases, integration of ultrasound can have considerable cost savings, in addition to quality
    of care and patient benefits.
             Continuous ultrasound guidance improves the safety of third trimester
    amniocentesis and reduces costly complications.  In one study, ultrasound
    guidance helped achieve a 99% success rate, considerably higher than the 87%
    success of the procedure in previous studies without using ultrasound
    guidance.   Prior to ultrasound guidance, complications were common and
    often serious, including premature rupture of membranes, infection, maternal
    hemorrhage, fetal or placental hemorrhage, fetal distress and fetal injuries.
             Ultrasound imaging in clinical practice enables a breast surgeon to perform a
    minimally invasive breast biopsy and determine whether the lump is cancerous
    in a matter of days.  Previously a surgeon had to do an open biopsy and the
    patient waited as long as 10 days to learn the result.  The Medicare program is
    estimated to have saved as much as $88 million because of the use of image-
    guided breast biopsies instead of open biopsies between 2001 and 2003.
             One study found that use of transvaginal ultrasound as the initial diagnostic test
    to evaluate peri- and post-menopausal women with abnormal vaginal bleeding
    has been found to yield substantial cost-savings over biopsy-based treatments.
    Endometrial biopsy is a relatively inexpensive test for identifying endometrial
    cancer but is a poor test for diagnosing benign endometrial abnormalities.
    Transvaginal ultrasound is more sensitive to these benign conditions and may
    be a cost-saving, less invasive alternative to biopsy.
    In other examples:
             Ultrasound guidance of central venous catheterization (CVC) placement
    reduces the risk of devastating complications by 75%.
             Point of care evaluation of torso trauma resulted in decreased mortality and
    reduced inpatient length of stay.  A conservative estimate of the resulting
    savings is $569 million per 100,000 patients.
             A study examining endoscopic ultrasound with fine needle aspiration for
    preoperative staging of esophageal cancer resulted in potential cost reductions
    of $12,340 per patient by reducing the total number of thoracotomies
    performed.
             Point of care, limited ultrasound during evaluation of patients for cardiac
    conditions revealed sufficient information for clinical decision making in 80%
    of cases.  The remaining 20% received a detailed cardiac ultrasound.  Using
    this staged approach, total costs were reduced by 33% and time to diagnosis
    was reduced from four days to instantaneous.
             Thyroid nodules are a common occurrence.  The usual approach to diagnosing
    these nodules is fine needle aspiration biopsy.  When ultrasound guidance is
    used for these biopsies, the success rate of the procedure jumps from 75% to
    94% avoiding a costly hospital-based open biopsy.   The cost of using
    ultrasound each time - roughly $150 - compared with the cost of an open
    biopsy - approximately $2900 - shows that using ultrasound routinely in these
    cases could save $40,000 per 100 patients.
             A 2003 study by the UK's National Institute for Clinical Excellence and
    published in The British Medical Journal found that patients experience fewer
    complications when providers use ultrasound imaging to guide insertion of the
    catheters.  Economic modeling showed that using ultrasound to place central
    venous catheters would save �2000 for every 1,000 procedures. This included
    the costs of purchasing ultrasound machines and training medical staff.

    Growth in Ultrasound Utilization
            In its March 2005 Report to Congress, MedPAC estimated overall imaging growth
    to be at a rate of 10.1%, compared to a 5.2% overall growth rate in Medicare physician
    services between 1999 and 2002.  This analysis fails to differentiate between the growth
    rate of ultrasound versus the growth rate of advanced imaging and does not adequately
    reflect savings from in-office ultrasound.  Further analysis of the data show that MedPAC
    also may have understated overall growth in Medicare services, making imaging growth
    seem larger by comparison.
            Ultrasound imaging in the physician office grew slower than imaging services in
    general (8.9% versus 10.8%).  Ultrasound imaging services also grew slower than all
    Medicare Part B services (7.2% versus 7.8%) when looking across physician and
    outpatient settings.  For some categories of ultrasound services, such as the ultrasound
    codes billed by ob-gyns for diagnosis of gynecologic conditions, the growth in this period
    has been less than 4% a year.
            The overall Part B growth rates used in the analysis by the Lewin Group differ
    significantly from those reported by MedPAC in its March 2005 report to Congress
    (which cited a 4.3% average annual growth rate from 2001 to 2002).  This difference is
    primarily explained by our inclusion of all Medicare services, where MedPAC compared
    imaging growth to only selected types of physician services.  In particular, MedPAC did
    not include durable medical equipment, or the "Other" category in its analysis.  (The
    "Other" category consists primarily of high-growth chemotherapeutic drugs for cancers,
    other drugs and biologicals covered under Medicare Part B, and ambulance services.)
    Additionally, our analysis is based on all Medicare Part B claims, while MedPAC used
    physician claims from a 5-percent random sample of Medicare beneficiaries.

    Explaining Growth: Shift in Site of Service
            Lewin found that the application of ultrasound by different specialties is appropriate
    to their patient populations, as well as a shift in ultrasound services from the hospital into
    the physician's office, which benefits patients in terms of convenience and accelerates
    diagnosis and treatment.
            Table 1 reflects the average annual growth in physician- and hospital-billed services
    for the period from 1999 to 2003.  The differences between the growth rate in physician-
    billed services and the combination of physician- and hospital-billed services indicates, in
    part, a shift in site of service.  For ultrasound in particular, the numbers suggest services
    were shifting out of hospital outpatient departments towards physicians' offices.  The
    same trend, and potential shift in site of service, is not evident in all Medicare services.
    Significant growth continued in all sites of service over the 1999 to 2003 time period.
    As much as 19-21% of the growth in the technical component of ultrasound imaging is
    attributable to the shift in site of service, contributing significantly to the appearance of
    growth in these services.  But a significant share of the perceived growth may not be
    growth at all, but a simple one-for-one substitution of scans that were previously
    performed in the hospital outpatient department and are now performed in the physician's
    office.

    Understanding Utilization: Incidence of Diseases
            The increase in the incidence rate (per 1,000 population) of the diseases for which
    ultrasound imaging is useful has increased in recent years.  Some of these increases have
    been quite substantial, such as a cumulative increase of more than 20% in the incidence
    of gallbladder, pancreatic, and liver disease over a four-year period.  These diseases may
    be diagnosed using ultrasound on the abdomen or pelvis region.
            Some of this increase may also be an increase in the rate of detection. Medicare
    began covering annual prostate exams and prostate-specific antigen (PSA) tests in 2000,
    which is in the period of our data, and per-population use of prostate ultrasound increased
    5% between 1999-2001 and not at all from 2001-2003.  It is reasonable to believe that the
    new coverage resulted in an increase to a higher level of utilization of follow-ups to PSA
    tests, including prostate ultrasound and ultrasonic guidance of prostate biopsy (as
    discussed below), but that once that adoption had happened, further increases above the
    current level may not result.
            Outside of Medicare, pregnancy rates are soaring in women older than age 35, and
    these women are more likely to have pregnancy complications, including hypertension
    and diabetes.  Babies born to older mothers are more likely to be born preterm or with a
    low birthweight.  The risk of miscarriage doubles and the older a woman gets, the greater
    her risk of carrying a child with chromosomal abnormalities.  Ultrasound would be
    indicated for any one of these factors, and many older mothers should expect several
    ultrasounds and possibly ultrasound-guided tests such as amniocentesis or chorionic
    villus sampling (CVS).

    Appropriateness
            In looking at most utilization data, the question remains: how do you distinguish
    appropriate utilization from inappropriate utilization?  What part of growth is better
    access to screening or more people living longer with chronic disease, and what part is a
    redundant use of health care resources?  Public and private payers struggle with these
    questions.   But until we better know how to answer these questions, Congress, CMS and
    MedPAC should recognize that it is premature to label all growth as bad growth.
            For instance, ultrasound-guided needle biopsy allows a physician to diagnose breast
    cancer without an open incision. The patient is spared time in the operating room,
    increased risk of infection, days off work and scarring.  But on the Part B side of the
    ledger, two additional ultrasounds are scored-one for diagnosis and one to guide the
    needle.  Marrying the hospital outpatient fee schedule and the physician fee schedule
    costs shows that needle-guided breast biopsy saves Medicare millions of dollars, but
    looking at the physician fee schedule alone shows only the cost of two additional
    ultrasounds.
            In a study assessing appropriateness, conducted for Highmark Blue Cross Blue
    Shield, ob-gyns ranked highest among physician specialties in appropriateness, followed
    closely by urology, another specialty that has integrated the use of ultrasound in their
    practice.   Study authors attribute ob-gyns' high degree of appropriateness to the
    specialty's "relatively high degree of consensus" on imaging usage.  Radiology and other
    specialties trailed in comparison.  When broken down by diagnostic code, obstetric
    ultrasound was second only to mammography in overall appropriate usage at 86%.
    Ultrasound, generally, had an appropriateness score of 84%, far ahead of MRI and CT,
    both at 56%.

    Defensive Medicine
            Some imaging utilization growth, particularly within high-risk specialties like ob-
    gyn and in states that have not enacted tort reform, is undoubtedly attributable to the
    practice of defensive medicine.  The fear of being sued leads physicians to sometimes
    perform additional procedures or tests, or refer to specialists.   Some estimates of
    defensive medicine costs, as a whole, run as high as $60-100 billion a year.  It costs the
    federal government billions of dollars in Medicare and Medicaid spending and raises the
    cost of health care for every American.
            The fear of being sued is justified.  ACOG surveys members regularly on the issue
    of medical liability. According to preliminary data from the 2006 ACOG Survey on
    Professional Liability, the typical ob-gyn can expect to be sued 2.3 times over his or her
    career.   In fact, 89.2% of ob-gyns reported they had been sued at least once so far.  Over
    one-third (37.3%) have been sued for care provided during their residency.
            This high rate of legal activity does not equate to widespread malpractice. Rather, it
    demonstrates a lawsuit culture where doctors are held responsible for a less than perfect
    outcome. And in obstetrics, there is no guarantee of a perfect outcome, no matter how
    perfect the prenatal care and delivery.
            A study published in the Journal of the American Medical Association surveyed
    physicians in 6 high-risk specialties in Pennsylvania and found that nearly all of them
    practiced defensive medicine (93%).   Within this group, 43% who detailed their most
    recent defensive act cited using imaging.  This was true of a smaller but significant
    percentage of ob-gyns (18%).
            Ultrasound adds a layer of reassurance to many ob-gyns and to their patients.  Until
    Congress acts to solve America's medical liability crisis, the costs of defensive medicine,
    including imaging, will continue to grow.

    Ultrasound is Different: Current Proposals Are Not Necessary for Ultrasound
    Accreditation and Privileging
            Some have offered proposals to require accreditation of physician practices in
    Medicare and in the private sector, or privileging beyond board certification.
    Accreditation measures are unnecessary for ob-gyns, or other specialists, who are trained
    in ultrasound from the beginning of their residency and use it continuously and accurately
    throughout their medical career.  Accreditation of medical practices is typically done to
    reduce exposure to radiation and to certify that technologists are using radiating
    equipment properly.  This is not relevant to ultrasound, which doesn't use ionizing
    radiation.
            Accreditation would also set a dangerous precedent of government intervention in
    patient care.  If a physician needs special certification for ultrasound, then where would
    government accreditation regulations end?  It would be unthinkable to parse medical
    practice into multiple government accreditation programs for each facet of clinical care,
    but that is just what is being proposed here.
            Accreditation of ultrasound, an essential tool of private practice physicians, would
    be much more burdensome than accreditation for advanced imaging, largely found in
    imaging centers.  Ultrasound is widely dispersed in physician offices.  Harvey Klein,
    Ph.D. of Klein Biomedical Consultants, a long-time ultrasound industry analyst,
    estimates that as many as 85 - 90% of ob-gyn offices in the United States have ultrasound
    on site for use in managing the care of their patients.  One-quarter of ob-gyns are in solo
    practice and the mean practice size is three.    These physicians do not have the office
    support staff on hand to manage the process of accreditation, unlike multi-million dollar
    imaging centers.
            Furthermore, physician specialty societies, including ACOG, are already taking
    quality assurance measures, including participation in voluntary accreditation through the
    American Institute of Ultrasound in Medicine.  Imposing a new layer of federal
    regulation on physicians will only increase practice expenses and require additional
    federal resources at CMS-already stretched beyond its means-for verification.
            No federal certification or accreditation standards can guarantee that the right
    diagnostic test is provided in the right setting at the right time.  This can only be
    accomplished through training programs and recommendations on indicated usage, like
    those promoted by ACOG.
            Ultrasound has undeniable benefits for both patients and physicians needing prompt
    diagnosis and timely treatment.  Its safety is high.  Ultrasound is used appropriately in
    clinical settings.  And it is growing at a slower rate than other Medicare imaging services
    and all Part B services generally.  There is no compelling reason for the government to
    subject physicians, many in small practices and having many years of experience, to
    burdensome new accreditation requirements.

    In-Office Ancillary Exception
            Removal of the in-office ancillary services exception of the Stark Law (42 USC
    1935nn) is an overly broad remedy, particularly in ultrasound.  This change would
    restrict in-office diagnostic testing and result in substantial inconvenience and costs for
    patients, who would have to schedule a new appointment, with a different facility and a
    different physician, when the needed testing could be performed on the spot by the
    patient's own physician.  Continuity of care would be interrupted, and the treating
    physician would lose valuable time in detecting and diagnosing a condition.  An ob-gyn
    unable to perform ultrasonography would also lose the benefit of seeing real-time images,
    important in assessing fetal movement and blood flow.
            Maryland's self-referral law--one of the toughest in the country-allows only
    radiology to self-refer for MR, CT and radiation therapy procedures, effectively limiting
    ownership of these technologies by nonradiologists.  The law specifically excludes
    ultrasound.  To the best of our knowledge, no state legislature has considered restricting
    in-office ultrasound.

    Adopting the IDTF Certification Program in the Physician Office
            Another proposal would expand certification requirements of independent diagnostic
    testing facilities (IDTFs) to the physician office.  The IDTF certification program allows
    individual Medicare carriers to determine which specialties are able to supervise imaging
    exams, listed by CPT code.  This approach would create a de facto privileging program
    under Medicare that is based on the physician's specialty rather than the training and
    experience of any specific physician or the guidelines that are derived by each specialty
    organization for its members.  If applied to physician offices, ob-gyns in 12 Western
    states that use the carrier Noridian would be barred from supervising obstetric ultrasound,
    simply because they are not radiologists.  The Medicare carrier in Wisconsin is
    considering similar restrictions for mobile imaging units.
    Barring ob-gyns from performing ultrasound would clearly harm patient care.  It
    also offers no protection from cost increases.  The MRI, CT, and PET utilization growth
    in IDTFs far outpaces the utilization growth of these services in physicians' offices.
    MedPAC found that Medicare spending for IDTF services (mainly CT and MRI) nearly
    doubled between 2000 and 2002, from $385 million to $741 million.   Medicare
    spending for all imaging services paid under the physician fee schedule grew at half that
    rate during the same period.  MedPAC further found that Medicare spending for IDTF
    services grew by almost 40 percent per year, on average, during this period-a growth
    rate that cannot be explained due to the conservative growth in the number of new IDTFs.

    Adjusting the Medicare Allowances for Use of Equipment and Interest Rates
            In part of its calculation of the capital costs of equipment, Medicare assumes that
    imaging equipment is in use 50% of the time.  CMS and MedPAC are investigating
    whether this assumption should be changed to a higher rate, a change ACOG would
    oppose.   Ultrasound services are one element of the clinical care provided by physicians
    whose primary occupation is direct patient care - i.e. surgical procedures and office
    visits.   Ultrasound equipment remains idle when physicians are engaged in other patient
    care activities, lowering its overall use rate.  Breast surgeons, for example, will often
    have an ultrasound unit in their office for use on the one day a week that they perform
    ultrasound-guided needle biopsies and ultrasound-guided cyst aspirations in their offices.
    MRI and CT, on the other hand, are more often used in a radiology practice setting where
    imaging is the only type of care provided, and unlikely to sit idle during business hours.
    Given this use model for ultrasound equipment, we recommend that Congress direct
    CMS to maintain the 50% utilization rate for ultrasound equipment in order to maintain
    access to these important services for Medicare beneficiaries, even if CMS decides to
    change the utilization rate for other types of imaging equipment.
            CMS indicated in its 2007 Medicare Physician Fee Schedule Notice of Proposed
    Rulemaking regarding practice expense that it currently utilizes an interest rate of 11% in
    calculating the cost of capital for medical equipment purchases.  MedPAC, using
    commercial loan rates rather than medical equipment loan rates, argued during its April
    2006 meeting that this rate is overly generous.  Data obtained from Key Equipment
    Financing supports the accuracy of Medicare's current interest rate allowance.   The last
    several years have seen historically low interest rates.  During this time period the interest
    rate on the ultrasound equipment has ranged from 8%-10% (depending on the term and
    structure).  In the last six months the low interest environment has changed, with the
    Federal Reserve Board boosting rates several times.  As a result, rates have increased to
    9%-11%.  Before making any change on this interest rate, MedPAC or CMS should
    investigate the issue more fully by surveying a range of medical equipment financing
    companies.

    Conclusion
            Physicians in many specialties are trained in ultrasound from day one of their
    residency.  ACOG and other specialty societies have shown leadership in developing
    appropriateness criteria and getting it into practice, and evidence of appropriateness
    shows that these efforts are working.   Growth in ultrasound is low and driven by factors
    largely out of a physician's control, such as the increase in incidence of chronic disease
    and the tort climate.  Setting it apart from other imaging services, ultrasound has a high
    record of safety, is fully integrated in day-to-day patient care, and is saving our health
    care system money every day through early detection and fewer invasive procedures.
            A distinction between ultrasound and the rest of the imaging field is warranted.  We
    urge the Congress, in any legislation, to recognize the safety, quality and appropriateness
    of ultrasound studies and to exempt ultrasound from any new restrictions on imaging use,
    federal quality standards, or additional administrative burdens.

            MR. DEAL.  Thank you.
    	Dr. Griffeth.
            DR. GRIFFETH.  Thank you, Chairman Deal and the distinguished
    members of this subcommittee for this opportunity to address the
    subcommittee and discuss the critical role of imaging in cancer care.  As
    the Director of Nuclear Medicine at Baylor University Medical Center in
    Dallas, the Medical Director of the North Texas Clinical PET Institute,
    and the National Medical Director for PET for U.S. Oncology, I spend
    about 95 percent of my time focused on oncology patients and oncologic
    imaging.  I have been asked specifically to address the utilization of
    advanced medical imaging, in particular, positron emission tomography,
    or PET scanning in the management of cancer patients.
    	But first, let me summarize that the growth of imaging utilization
    over the past several years is, in fact, saving the Government and other
    payers significant sums of money, improving the quality of healthcare,
    and allowing millions of Americans to lead longer, more productive
    lives.  This is not just an evolution of technology; it is an evolution of
    patient care.
    	Advanced medical imaging is expensive, but medical imaging is
    absolutely crucial for the early detection, therapy selection, and follow-
    up of cancer patients.  Let me stress this:  if you or a family member is
    diagnosed with a life-threatening cancer tomorrow, it is virtually certain
    that the selection of your treatment and the follow-up of that treatment
    will be governed by advanced medical imaging.  An imaging test such as
    a PET or PET CT scan can easily cost $2,000, but the therapy for a
    cancer patient can very quickly exceed $100,000.  Medical imaging is
    absolutely critical to the selection and the targeting of those expensive
    therapies.  Cost-effectiveness studies in various cancers have shown that
    utilization of PET or PET CT in appropriate circumstances can mean
    billions of healthcare dollars saved in this country per year.
    	But I am not here to focus on cost savings.  Imaging quite simply
    provides better patient care.  For example, PET CT imaging can prevent
    up to half of the futile surgeries that are performed for what turns out to
    be unresectable lung cancer.  Substituting a $2,000 non-invasive imaging
    test for a $20,000 major surgery in a terminally ill patient makes good
    fiscal and clinical sense.  The rise in utilization is overwhelmingly a
    positive occurrence for patients, as well as for healthcare budgets, and is
    due mostly to oncologists becoming more familiar with this vital new
    tool.  Utilization will and should continue to increase as this physician
    education is ongoing.
    	It is clear that even with the very stringent criteria set out by CMS
    for utilization of appropriate PET in appropriate patients, less than half of
    those who qualify for a PET scan are actually getting that PET scan.
    CMS is losing hundreds, if not thousands, of dollars on each of those
    patients that is not getting an appropriate PET scan, because that patient
    is therefore at risk for other needless and expensive procedures.  In fact,
    CMS has always limited utilization of PET and dramatically limited
    over-utilization by imposing strict limitations on when a patient is even
    eligible to have a PET scan.  Recently in recognition of the fact that these
    limitations are impeding both the appropriate care of many patients and
    our ability to learn more about when PET should be used in these
    patients, CMS has worked with the Academy of Molecular Imaging to
    establish the National Oncologic PET Registry, which allows for some
    expansion of the guidelines for use of PET in these patients and
    collection of data regarding PET's impact on patient management.  This
    is a shining example of how CMS can work together with the imaging
    and oncology communities using what is commonly called evidence-
    based medicine to ensure appropriate future utilization.  Several peers
    have also established guidelines regarding how often a cancer patient can
    have a follow-up PET scan.  Some of these are unrealistic.  Recently, I
    have been working with a group assembled by Dr. Mitchell Burkin of
    Trailblazer Healthcare aimed at establishing appropriate frequency
    guidelines for these patients, and I believe his approach could be
    duplicated on a larger scale by CMS.
    	In my opinion, collaborative efforts, such as those that I just
    mentioned, form the best way to balance optimal patient care with fiscal
    responsibility.  Drastic reimbursement cuts will not decrease healthcare
    expenditures.  They will limit access to advanced imaging tests like PET,
    and they will tend to push cancer care services back into the major
    medical center.  This will lead to more expensive, less convenient, less
    integrated, and less effective patient care.  Access to medical imaging
    must keep pace with advances in cancer therapy.  To better see disease is
    to better treat disease.  CMS should continue to work with imaging and
    oncology experts to develop appropriate management guidelines that
    includes and depends heavily upon advanced imaging.
    	I appreciate your attention and I look forward to any questions.
    	[The prepared statement of Dr. Landis Griffeth follows:]

    PREPARED STATEMENT OF DR. LANDIS GRIFFETH, DIRECTOR, NUCLEAR MEDICINE,
    BAYLOR UNIVERSITY MEDICAL CENTER

            Thank you, Mr. Chairman and distinguished members of the panel for giving me
    this opportunity to discuss the critical role of imaging in cancer care. My name is Dr.
    Landis Griffeth. I am the Director of Nuclear Medicine at Baylor University Medical
    Center in Dallas. I also serve as the Medical Director for the North Texas Clinical PET
    Institute and, for the past 6 years, the National Medical Director for PET for US
    Oncology.
            My discussion today focuses on the use of advanced medical imaging, Positron
    Emission Tomography (PET) in particular, in the management of cancer patients.
    However, I want to make it clear that most of what I am saying extends to the treatment
    of the other major diseases that take millions of American lives each year, such as cardiac
    or neurological diseases.
            Turning to the role of imaging in cancer, it is important to consider several facts:
             42 % of Americans will develop a significant cancer.
             52% of those (almost 600,000 a year) will die from their cancer.
             Death rates from the four most common cancers-lung, breast, prostate and
    colorectal-continue to decline.  Over the past decade, Americans have
    experienced a 7% decline in mortality from cancer and hundreds of thousands
    of lives have been saved-and imaging has played an important role in this
    progress.
             Imaging is used to diagnose, treat, manage, and predict disease.
             Many cancer patients will have their cancers detected or diagnosed by medical
    imaging.
            More importantly, virtually 100% of cancer patients will have their treatment
    options determined by the results of one or more advanced imaging tests, and a large
    percentage of those patients will need multiple types of imaging tests and/or sequential
    imaging tests over time, to determine how well treatment has worked or whether tumor
    has recurred. Let me restate this - if you or a family member is diagnosed with a life-
    threatening cancer tomorrow, it is a virtual certainty that the extent of your disease, the
    treatment of your disease, and the assessment of whether or not that treatment worked
    will depend heavily on one or more advanced imaging tests.
            The role of imaging in cancer care, in simple terms, is to diagnose and localize
    tumors, so that optimal decisions can be made about whether and how to pursue surgery,
    radiation therapy, chemotherapy, or any of the other extremely sophisticated therapeutic
    modalities that are now being developed at an encouraging pace.
            The good news is that, over the past 40 years, along with dramatic advances in
    cancer treatment strategies, there has been an explosion of technological advances in
    imaging that have dramatically improved cancer patient care. These advances have led to
    earlier detection of cancer, when it is most easily and successfully treated, better selection
    of the appropriate therapies for each individual patient, better targeting of specific types
    of therapy, such as radiation therapy and minimally invasive surgeries, and better follow-
    up of cancer patients after therapy. Advanced imaging techniques such as mammography,
    sonography, CT, MRI, Nuclear Medicine and PET have played a huge role in helping us
    achieve better patient care, higher cure rates for limited cancers, and longer - and more
    productive - survival for patients with more extensive cancers.
            While many of these new imaging techniques are expensive, we must consider the
    costs of imaging relative to the costs of treating cancer without the information that
    imaging provides and also with an eye to the efficacy of treatment without that vital
    information.
            An imaging test, such as a PET or PET/CT scan may cost $2000 or so with the
    current payment schedule - clearly a lot of money. Surgery, radiotherapy, and
    chemotherapy for a cancer patient can very quickly exceed $100,000 - clearly
    significantly more money - and that is without some of the newer and more expensive
    treatment modalities, such as bone marrow transplantation. One paper published last year
    in the journal Cancer Biotherapy and Radiopharmaceuticals, studying patients evaluated
    for colon cancer that had spread to the liver, showed that incorporating PET into the
    work-up of these patients saved $5,269 per patient. In the US, there are 7000 colon
    cancer patients in this particular clinical situation. If all 7000 of these patients underwent
    PET imaging, this would save $37M. In patients undergoing initial staging evaluation of
    non-small-cell lung cancer, the global savings would be $267M (in 2003 dollars). Now I
    realize that $37M, or even $267M, is a very small amount compared to the types of
    budgets that you folks look at every day, but this is for two small subsets of the patients
    in this country with cancer and, once again, shows that limiting access to advanced
    imaging is penny-wise and pound-foolish.
            How do PET and other advanced imaging techniques save money? - Typically by
    showing that another costly procedure, like surgery or radiotherapy, is not indicated, or
    can be better targeted to improve patient results. The most extreme case would be a
    patient who is thought to have operable cancer, based on other tests, but in whom PET
    shows that the tumor has spread to other organs. The fact is that advanced imaging like
    PET helps make sure patients are treated appropriately.
            This isn't just important from a cost-savings perspective; it is simply better patient
    care. The last thing any patient needs is surgery, radiotherapy, or chemotherapy that is
    either unnecessary or ineffective. For example, PET imaging can prevent up to half of the
    needless surgeries performed for lung cancer that is thought to be resectable, but, in fact,
    is not resectable. Imagine if you had inoperable metastatic cancer and only had six
    months to live. Would you rather have a $2000, non-invasive PET/CT scan that told you
    that it was inoperable, so that you could make the most of the time you had left, or would
    you rather spend a good part of your last six months recovering from a major surgery that
    cost $20,000 and that, in the end, didn't do you any good at all?
            In addition, as cancer treatments become more expensive or more toxic to the
    patient, we need to be able to determine DURING therapy, preferably EARLY during
    therapy, whether that treatment is working or whether we should switch to a different
    type of therapy. To pursue a cancer treatment that is not working not only wastes
    thousands and thousands of dollars, but exposes the patient to needless side effects of
    treatment and, most importantly, delays the switch to another, hopefully more effective,
    type of therapy. In most tumors, imaging techniques like PET are the best means we have
    to determine whether a given treatment is working or not.
            Moreover, as our treatments become more sophisticated, whether we are talking
    about better and better targeting of radiotherapy beams to avoid damage to non-tumor
    tissue or highly advanced types of gene therapies that very precisely target specific types
    of tumor cells, we simply cannot aim those big guns of cancer therapy correctly without
    the appropriate imaging techniques, whether they be CT, MRI, Nuclear Medicine, PET,
    or some combination of the above.
            We also cannot forget that many cancer patients actually DIE from their treatments
    and from complications relating to their treatments, rather than from their disease. That is
    an unfortunate sequela of the need to use potentially very toxic agents to kill tumor cells.
    It is imperative that we use the best tools we have to allow us to target and refine those
    treatments.
            I have been asked specifically to address the rise in utilization, and possible over-
    utilization, of PET and PET/CT, and to suggest ways to manage that utilization. My own
    impression is that the rise in utilization is a positive occurrence for patients, as long as it
    is appropriate utilization.  I want to stress that increases in imaging utilization arise
    primarily from advances in patient care and not inappropriate use and are, in large part
    due to oncologists becoming more familiar with the use of PET in patient management.
    The large majority of medical oncologists and radiation oncologists currently practicing
    were not exposed to this relatively new modality during their training, and it sometimes
    takes a while for even very smart old dogs to learn new tricks. However, over time, when
    offered a tool that can be demonstrated to be more effective, and more cost-effective, at
    helping them make these life and death patient decisions, these physicians will, of course,
    adopt and utilize that tool.
            Another factor in PET's growth has been the increased availability of this equipment
    - which not long ago was confined to major medical centers - in medium and small
    communities. I believe that this trend is bound to occur with any new and improved
    treatment or diagnostic tool, it's just that the growth curve is slower for complicated,
    sophisticated modalities than it is for something that is easy to explain and distribute,
    such as a new antibiotic.
            It should not be a surprise that the utilization of PET imaging has continued to grow
    rapidly over the past several years. It takes time to disseminate the knowledge and
    equipment necessary for appropriate utilization. In fact, even when we use the very
    stringent criteria developed by CMS for determining eligibility for a PET study, as well
    as VERY conservative estimates for the number of patients who will need a follow-up
    study to assess for effectiveness of treatment or for suspicion of a recurrence, far less than
    half of those patients who would probably benefit from a PET study are currently getting
    that PET study. Based on the cost-effectiveness projected for these PET studies, CMS is
    losing hundreds if not thousands, of dollars on each patient who does not get an
    appropriate PET scan, because that patient is, therefore, potentially at risk of undergoing
    other needless, expensive procedures.  It is important to understand that imaging
    technologies detect cancer early, enable less-invasive cancer diagnosis and treatment,
    foster more effective cancer management, produce efficiencies and savings in cancer
    care, and, in many instances, keep workers more productive.
            There also has been concern expressed over the "escalation of technology and
    expense," such as from CT to PET to PET/CT. This process is not just an evolution of
    technology, but an evolution of patient care. Sometimes, the benefits of this evolution,
    while clinically evident, are hard to quantify. For example, most studies, depending on
    the tumor type, show that combined-modality PET/CT scanning will provide answers that
    may range from 5-30% more accurate than separate PET and CT scans. But, the
    CONFIDENCE in the answer provided by this new technology can be up to 50% higher.
    When medical oncologists and radiation oncologists have greater confidence in the
    accuracy of these types of results, they can be more aggressive in their clinical decisions
    and treatments, they can spend less time and money with "second-guessing" procedures,
    and they can deliver better therapies that have a greater chance of killing the tumor cells
    and a lesser chance of needless side effects. Thus with the increased confidence of
    evolving imaging technology, oncologists provide better and safer treatment. Moreover,
    now that we have the appropriate tools to monitor tumor activity, we are seeing more
    rapid development of improved therapies, such as highly targeting radiation therapies and
    novel molecular approaches to cancer therapy, such as gene therapies or immunologic
    therapies.
            As I just mentioned, CMS, as the hallmark of payer reimbursement has, in fact,
    limited utilization and dramatically limited over-utilization by imposing strict clinical
    guidelines for when a patient is and is not eligible for a PET study. CMS has recently
    acknowledged that those guidelines, in fact, are impeding both the appropriate care of
    many patients and the ability of the PET community, the oncologic community, and CMS
    to learn more about which patients should and should not undergo PET imaging. CMS
    has worked with the Academy of Molecular Imaging, the American College of
    Radiology, and others to address this problem by establishing the National Oncologic
    PET Registry, which allows for some expansion of the guidelines under which PET
    studies can be performed for Medicare's cancer patients, provided that data regarding the
    impact of PET on patient management are collected. This allows us and CMS to take an
    organized approach to expanding the use of a new modality into new patient conditions
    while gathering data to determine whether the new modality actually changes patient
    management and is, therefore, worthy of continued reimbursement for those conditions.
    This is a shining example of how the imaging community, the oncology community, and
    CMS can work together, using what is commonly called "evidence-based medicine" to
    ensure that a relatively expensive test is made available to patients who will benefit from
    it, while still limiting its use to appropriate situations.
            In addition, several payers have also established frequency guidelines, based on the
    concern that repetitive testing is adding more cost than benefit to the patient care
    equation. Some of those have been reasonable, while some, in my opinion, have not been
    adequately vetted in the real world of patient management. Recently, I have been
    involved in a PET stakeholder work group assembled by Dr. Mitchell Burken of
    Trailblazer, one of CMS's carriers, aimed at establishing appropriate frequency
    guidelines for various cancer conditions and patient situations, and I believe his approach
    should be duplicated on a larger scale within CMS. What I need to stress is that such
    clinical guidelines MUST be developed with input from the folks on the front lines:
    medical oncologists and radiation oncologists who are treating the patients and imaging
    physicians experienced in the use of PET in patient management. I would extrapolate
    those last comments to other imaging modalities.
            While thoughtful, collaborative efforts such as those I just described are, in my
    professional opinion, the appropriate way to balance proper patient care with sound
    fiduciary responsibility, I don't see how the drastic spending cuts called for in the Deficit
    Reduction Act of 2005 will stop the inappropriate use of medical imaging.  I am
    concerned that this legislation will deny access to the medical procedures that Medicare
    patients need.  I admit to you today that I am not a businessman. I pursued a career in
    science and medicine, in part, to AVOID having to deal with business and finance. What
    I DO know is that the impetus, by both CMS and caregivers, over the past 15 years has
    been to push cancer care out into the community, while maintaining state-of-the art
    quality. This is good for the patients, who no longer have to drive long distances during
    their very serious illnesses for their diagnostic and therapeutic procedures. This is good
    for CMS and other payers, because community-based care is typically less expensive
    than care delivered in large medical centers. We believe that the drastic cuts in imaging
    reimbursement, particularly for PET and PET/CT, contained in the DRA constitute a
    serious threat to cancer care in the community. The estimates of the PET community are
    that the reimbursement cuts contained in the DRA could result in half of the non-hospital-
    based PET and PET/CT providers closing their doors, because they would be operating at
    a substantial loss. The net effect will surely be to push cancer care services back into the
    large hospital setting, translating into greater inconvenience and difficulty for patients
    and their loved ones and more expense for the healthcare system. Even worse, there are
    many patients who simply will not undergo advanced imaging tests like PET, because
    they are unwilling or unable to travel to a distant imaging center or because the lack of
    proximity means that their community physicians will remain unfamiliar with this life-
    saving technology.
            We believe these cuts in reimbursement are arbitrary, and attempt to balance far too
    much of the overall healthcare budget on the small percentage that represents imaging.
    We also believe that there ARE no reliable cost data available by which to justify these
    cuts. The Academy of Molecular Imaging is currently trying to collate such data for PET
    and PET/CT and, at the very least, these drastic cuts should be delayed until reasonable
    and reliable cost data for both hospital and community outpatient care delivery systems
    can be gathered and analyzed.
            In January 2000, the editorial board of the New England Journal of Medicine listed
    medical imaging as one of the eleven most significant medical advances of the past 1000
    years, ranking on a par with the development of antibiotics and the elucidation of human
    anatomy and physiology.
            The advancement of imaging science, and the ability of cancer patients in all
    communities across America to access these imaging techniques, must keep pace with the
    advances in cancer therapy. Optimal cancer care is absolutely dependent on optimal
    imaging care. To better SEE disease is to better TREAT disease, and the best treatments
    in the world may be useless if they are not targeted appropriately. To take our American
    cancer patients, who otherwise have access to the finest cancer care in the world, and
    restrict their access to high-quality imaging services such as PET, is the medical
    equivalent of putting them in a very expensive, very fast, sports car - and then bashing
    the windshield with a ball-peen hammer.
            Simply put, Draconian, across-the-board cuts in imaging reimbursement are NOT an
    effective way to cut overall healthcare costs. CMS should, instead, continue to work with
    experts in the related imaging and patient-care subspecialties to develop appropriate
    guidelines for patient management - management that includes, and depends upon,
    advanced medical imaging.
            Mr. Chairman, thank you again for allowing me the opportunity to address you and
    your distinguished colleagues on this important issue.

    	MR. DEAL.  Thank you.
    	Mr. May.
            MR. MAY.  Thank you.  Mr. Chairman and members of the
    committee, my name is Lynn May.  I am Chief Executive Officer of the
    American Society of Radiologic Technologists.  Thank you for this
    opportunity to contribute to this important dialogue on the quality, safety,
    and cost of imaging services.
    	The ASRT represents more than 121,000 radiologic technologists,
    the healthcare professionals who perform medical imaging.  Radiologic
    technologists work closely with physicians in a variety of medical
    settings, ranging from cardiac cath labs in hospitals to outpatient X-ray
    clinics.  The images they produce help physicians diagnose disease,
    detect injury, and direct treatment.
    	Radiologic technologists operate some of the most complex
    equipment in the medical field, including MRI units, CT scanners, and
    gamma cameras.  However, this amazing technology is ineffective in the
    wrong hands.  That is because the quality of a medical image is directly
    linked to the skill of the person performing the exam.  Individuals must
    have extensive education to perform exams correctly.  Accurate medical
    imaging leads to accurate diagnoses, which leads to better outcomes for
    patients.
    	Unfortunately, tens of thousands of people who perform medical
    imaging in this country are not really qualified to do so.  They have no
    formal education in the field, and they have no certification or license in
    the profession.  That is because Washington, D.C. and nine other States
    do not regulate people who use diagnostic medical imaging equipment.
    In some States, a person can go from operating a forklift on one day to
    operating CT scanners in the next, with no training in between.  And
    even in States where there are regulations, they vary so widely that there
    is no guarantee personnel are qualified.  In many places, a hairdresser is
    more highly regulated than a nuclear medicine technologist.
    	Lack of Federal minimum standards for operators of equipment
    poses a danger to patients; that is why the ASRT, the Alliance for
    Quality in Medical Imaging and Radiation Therapy, and a large number
    of other organizations support the passage of the Consumer Assurance of
    Radiologic Excellence, or CARE bill.  I would like to thank
    Representative Pickering and Doyle for demonstrating their commitment
    to quality healthcare by introducing the CARE bill, H.R. 1426.  The bill
    currently has 129 cosponsors, and it sets Federal minimum standards of
    education and credentialing for non-physician personnel who perform
    medical imaging examinations.  To receive reimbursement from Federal
    healthcare funds for imaging procedures, States would need to regulate
    technologists according to these standards.
    	The CARE bill will improve medical imaging in three ways.  First,
    the bill will improve quality.  Patients rely on medical imaging for
    diagnosis, treatment, and cure, but any imaging procedure is only as
    effective as the person performing it.  An exam won't reveal a broken
    bone or a diseased organ if the person using the equipment doesn't know
    the basics of anatomy, exposure, and technique.  Poor quality exams can
    lead to additional testing, delays in treatment, and unnecessary anxiety
    for the patient.  The Mammography Quality Standards Act proves that
    the establishment of personnel standards improves patient outcome.
    Under MQSA, people who perform X-ray exams of the breast must meet
    education credentialing and experience requirements.  A study in
    Michigan concluded that breast cancer detection improved by one-third
    with the quality program that included educated and credentialed
    mammographers.
    	The CARE bill would not alter MQSA anyway, but the bill will
    ensure quality for all types of medical imaging exams, not just
    mammograms.  People undergoing tests to diagnose a brain tumor
    deserve the same guarantee of quality that MQSA offers women
    undergoing mammography.
    	Second, the CARE bill will improve safety.  When an X-ray exam
    has to be repeated because of improper technique, the patients receive
    double the radiation dose.  Overexposure to radiation, as we know, can
    cause cancer, shorten lives, and cause birth defects in future generations.
    Taking an X-ray or a CT scan involves much more than pushing a
    button.  Patients could be injured or even killed if the equipment is not
    properly used.
    	Third, the bill will reduce healthcare costs.  More than 300 million
    medical images are performed in the United States every year.  On
    average, 5.5 percent of these procedures have to be repeated.  This means
    that thousands of defective medical images are being produced every
    day, and the Federal government pays for many of these mistakes.
    Medicare spent approximately $9.3 billion on medical imaging in 2003.
    If we can reduce the number of repeated exams by just one percent,
    Medicare would save well over $90 million a year.
    	Last year, as we know and as we have heard, the Medicare Payment
    Advisory Commission recommended the establishment of standards for
    personnel who perform medical imaging.  The MedPAC report stated,
    "Establishing standards for medical imaging services would increase
    diagnostic accuracy and reduce the need for repeat tests, thereby
    improving the quality of care and helping to control Medicare
    expenditures."
    	The safety, quality, and cost of medical imaging procedures affects
    us all.  Only competent personnel should be allowed to perform these
    procedures.  H.R. 1426, the CARE bill, will ensure a minimum level of
    education, knowledge, and skill for those non-physician personnel who
    are responsible for medical imaging.
    	On behalf of the ASRT and the millions of patients that members of
    the ASRT serve, I ask this committee to move this legislation forward.
    Thank you.
    	[The prepared statement of F. Lynn May follows:]

    PREPARED STATEMENT OF F. LYNNE MAY, CHIEF EXECUTIVE OFFICER, AMERICAN
    SOCIETY OF RADIOLOGIC TECHNOLOGISTS

            Mr. Chairman and members of the Committee, my name is Lynn May, and I am the
    chief executive officer of the American Society of Radiologic Technologists. On behalf
    of ASRT's members, thank you for the opportunity to contribute to this dialogue on the
    quality, safety and cost of medical imaging procedures.
            The ASRT represents more than 121,000 radiologic technologists, the health care
    professionals who perform medical imaging examinations. Radiologic technologists are
    non-physician health professionals. They work closely with physicians in a variety of
    medical settings, ranging from imaging departments and cardiac cath labs in hospitals to
    outpatient x-ray clinics. The images radiologic technologists produce can be the best tool
    a physician has to diagnose disease, detect injury and direct treatment.
            Radiologic technologists operate some of the most complex equipment in the
    medical field, including MRI units, CT scanners and gamma cameras. However, this
    amazing technology is ineffective in the wrong hands. That's because the quality of any
    medical image is directly linked to the skill and competence of the person performing the
    exam. Individuals must have extensive education and training to perform the exam
    correctly. Accurate medical imaging leads to an accurate diagnosis, which leads to a
    better outcome for the patient.
            Unfortunately, tens of thousands of people who perform medical imaging in this
    country are not qualified to do so. They have no formal education in the field, and they
    have no certification, license or credential in the profession. That's because Washington,
    D.C., and nine states around the country do not regulate the people who use diagnostic
    imaging equipment. In some states, a person can go from a job operating a forklift one
    day to a job operating a CT scanner the next, with no training in between. And even in
    states where there are regulations and laws, they vary so widely that there is no guarantee
    that personnel are qualified. In many places, a hairdresser is more highly regulated than a
    nuclear medicine technologist.
            The lack of a minimum educational and credentialing standard for operators of
    imaging equipment poses a danger to American patients. That's why the ASRT and 30
    other health, science and patient organizations support the passage of the Consumer
    Assurance of Radiologic Excellence bill, or CARE bill.
    	I would like to thank Representative Pickering for demonstrating his commitment to
    quality health care by introducing the CARE bill, H.R. 1426. The bill currently has 129
    cosponsors. The bill sets minimum federal standards of education and credentialing for
    the personnel who perform medical imaging examinations. To receive reimbursement
    with federal health care funds for imaging procedures, states would be responsible for
    regulating technologists according to those standards.
    	The CARE bill will improve medical imaging in three important ways.
             First, the CARE bill will improve quality. Doctors and patients rely on medical
    imaging for accurate diagnosis, treatment and cure. But any imaging procedure is only as
    effective as the person performing it. An exam won't reveal a broken bone or a diseased
    organ if the person using the equipment doesn't know the basics of anatomy, exposure
    and technique. Poor quality exams can lead to additional testing, delays in treatment and
    unnecessary anxiety for the patient.
            The Mammography Quality Standards Act is evidence that this approach works.
    Under MQSA, the personnel responsible for performing x-ray examinations of the breast
    must meet educational, credentialing and experience requirements. A study in Michigan
    concluded that breast cancer detection improved by one-third with a quality program that
    included educated and credentialed mammographers.1
            The ASRT supports MQSA. The CARE bill would not alter MQSA in any way. But
    the CARE bill will ensure quality in ALL types of imaging exams, not just
    mammograms. Of the millions of medical imaging tests performed every year in the
    United States, only 10 percent of them are mammograms covered by MQSA. People
    undergoing general x-ray exams to detect pneumonia or MR scans to diagnose a brain
    tumor should have the same guarantee of quality that MQSA offers to women undergoing
    mammography.
             Second, the CARE bill will improve safety. When an x-ray exam has to be
    repeated because of improper positioning or poor technique, the patient receives double
    the radiation dose. Overexposure to radiation can cause cancer, shorten lives and cause
    birth defects in future generations.  A June 2005 Public Health Service report listed
    radiation as a carcinogen and concluded that: "there is no dose of radiation, however low,
    that can be deemed completely safe."2  Medical radiation should always be used
    judiciously and only when the benefit to the patient outweighs the risk. Taking an x-ray
    or CT scan involves much more than just pushing a button. Patients could be injured or
    even killed if this equipment is not used properly.
             And third, the CARE bill will reduce health care costs. Repeated imaging
    examinations cost the U.S. health care system millions of dollars annually in needless
    medical bills. More than 300 million medical imaging procedures are performed in the
    United States every year. If just one-half of one percent of those images is performed
    improperly, more than 4,000 defective medical images would be produced every single
    day. And the federal government pays for many of those mistakes. Medicare spent
    approximately $9.3 billion on medical imaging in 2003. The average repeat rate for
    imaging exams is 5.5 percent. If we can reduce the number to 4.5 percent, then Medicare
    would save more than $90 million a year.
            In March of last year, the Medicare Payment Advisory Commission issued a report
    that recommended the establishment of standards for personnel who perform medical
    imaging. The MedPAC report stated, "Providers vary in their abilities to perform quality
    imaging procedures.  Poor-quality studies can lead to repeat tests, misdiagnoses, and
    improper treatment. Establishing national standards for imaging services would increase
    diagnostic accuracy and reduce the need for repeat tests, thereby improving quality of
    care and helping to control Medicare spending."3
            The safety, quality and cost of medical imaging procedures affects us all. Only
    competent personnel should be allowed to perform these procedures. H.R. 1426, the
    CARE bill, will ensure a minimum level of education, knowledge and skill for those who
    are responsible for medical imaging. On behalf of 121,000 ASRT members and the
    millions of patients they serve, I ask the committee to move this bill forward.
    Thank you.

    References
            1.	Fintor L, Brown M, Fischer R, et al. The impact of mammography quality
    improvement legislation in Michigan:  implications for the national mammography
    quality standards act. Am J Public Health. 1998;88:667-671.
            2.	U.S. Department of Health and Human Services, Public Health Service, National
    Toxicology Program. Report on Carcinogens, Eleventh Edition. Washington, D.C.;
    2005.
            3.	Medicare Payment Advisory Commission. Report to the Congress: Medicare
    Payment Policy. Washington, D.C.; March 2005.

    	MR. DEAL.  By the end of the year.  I am sure that request was Mr.
    Pickering's as well.
    	Mr. Baumgartner, you are recognized.
            MR. BAUMGARTNER.  Chairman Deal, Congressman Pallone,
    distinguished members of the subcommittee, I am the CEO for Center for
    Diagnostic Imaging.  I am pleased to be here on behalf of the National
    Coalition of Quality Diagnostic Imaging Services.
    	NCQDIS is a national nonprofit organization representing 2,400
    outpatient imaging clinics and independent diagnostic facilities,
    otherwise known as IDTFs.  I applaud the subcommittee for addressing
    this topic.  NCQDIS believes that appropriate imaging utilization is
    vitally important.  We define appropriate utilization as the right
    procedure at the right time, done right.
    	Our coalition has been actively engaged with CMS, recommending
    criteria to improve quality, reduce improper utilization, and better align
    Federal quality standards with those in the private sector.  Above all, we
    appreciate that the focus of this committee is on ensuring the highest
    value in the services provided to the Nation's Medicare and Medicaid
    beneficiaries.
    	The good news is is that the savings can and should be achieved
    through appropriate utilization, while at the same time improving
    outcomes for beneficiaries through improved quality.  We do not believe
    that the across the board reduction in payments as mandated by the DRA
    is the right approach.
    	For our members, such as my company, CDI, commitment to
    consistent quality standards and appropriate utilization has been critical
    to our success.  It is important to note that as IDTFs, we rely on referrals
    from physicians.  We cannot create our own demand for our services.
    We must prove to referring physicians and their patients that we are
    worthy of their referrals.  We believe this gives us a unique clinical
    perspective on appropriate utilization.
    	Today, I would like to focus on three primary recommendations.
    	First, we recommend that all diagnostic imaging providers be
    required to meet quality standards already set by CMS for IDTFs.  I
    would like to cite for the committee a few examples.  Unlike hospitals,
    IDTFs and physician offices are required to have physician supervision
    of all imaging procedures.  IDTFs, unlike hospitals and physician offices,
    are required to have radiologists as supervising physicians, in some
    cases, Board-certified radiologists.  In addition, IDTFs are required to
    have non-physician personnel be certified technologists, and
    furthermore, have written physician orders, unlike hospitals or physician
    offices that do not have to meet this criteria.
    	NCQDIS recommends that these quality standards established by
    CMS for IDTFs be applied to all outpatient imaging operations.  Raising
    the quality bar across the board will protect beneficiaries from non-
    qualified imaging facilities, reduce repeat examination, and improve
    overall quality of care to the Medicare beneficiaries.
    	Our second recommendation is the continued support of public and
    private-sector efforts and setting consistent quality standards and
    addressing utilization.  Private payers are taking action by implementing
    minimum quality guidelines and employing radiology benefit managers
    to make sure imaging is appropriately utilized.  In addition, many States
    have sought to address utilization in imaging services.  For example,
    Maryland does not permit non-radiologist physicians to refer to imaging
    equipment in which they have a financial interest.  Other States have
    made it illegal for physicians to lease time on imaging equipment not
    located in their facility.  Our members encourage these private-sector
    efforts and believe these steps will help ensure that beneficiaries receive
    a consistent standard of care, regardless of provider, and tests performed
    are medically appropriate.
    	Finally, NCQDIS supports a thorough analysis of imaging
    reimbursement as a critical component of value, recognizing that
    payment cuts will not reduce utilization and that attention to consistent
    quality standards will create better outcome for taxpayers and
    beneficiaries.  By addressing utilization through rate cutting, rate cutting
    alone will have the unintended impact of encouraging providers who are
    able to control volume to increase referrals, thereby reducing any
    potential savings.  Worse, rate cutting could lead to a lack of
    reinvestment in advanced imaging technologies, resulting in the use of
    old or ill-maintained equipment that produces poorer scans.  The results
    will be missed or delayed diagnoses for beneficiaries, resulting in
    additional costs to Medicare.
    	I would like to point out that the NCQDIS members really have not
    seen this level of rate increase that others have seen.  In fact, some of the
    major providers have shown a lack of growth completely, zero to
    negative growth in IDTFs.
    	Let me close by urging members of this subcommittee to support
    Congressman Pitts' legislation, H.R. 5704, requiring a comprehensive
    look at imaging reimbursement policy before any payment cuts are
    implemented.
    	NCQDIS sincerely appreciates this opportunity to testify and
    welcomes any questions.
    	[The prepared statement of Robert V. Baumgartner follows:]

    PREPARED STATEMENT OF ROBERT V. BAUMGARTNER, CHIEF EXECUTIVE OFFICER,
    CENTERS FOR DIAGNOSTIC IMAGING

            Chairman Deal, Ranking Member Brown, distinguished Members of the
    Subcommittee, my name is Robert Baumgartner, and I am the Chief Executive Officer
    for Center for Diagnostic Imaging Inc. I am very pleased to be here today as a
    representative for the National Coalition of Quality Diagnostic Imaging Services
    (NCQDIS), of which am a member of their Board of Directors.
            NCQDIS is a non-profit organization, representing 2,400 outpatient imaging clinics
    and independent diagnostic testing facilities (IDTFs) throughout the United States. As
    described by Executive Director Cherrill Farnsworth, "NCQDIS and its members are at
    the forefront of medical technology, providing physicians and patients with the most
    state-of-the-art innovations, techniques and procedures available in diagnostic imaging."
    I applaud the Subcommittee on Health for committing its time and resources to address
    today's important topic. As you know, it has been well-documented by the Centers for
    Medicare & Medicaid Services (CMS) and private payers alike that imaging utilization
    and spending have been growing at a rate faster than other health care expenditures.
    NCQDIS and its members believe that appropriate imaging utilization is an issue for both
    the public and private sectors, and you will learn about some of this coalition's related
    efforts today.
            Our goal is appropriate utilization: the right procedure, at the right time, done
    right. NCQDIS has been actively engaged with CMS on this topic, recommending
    certain criteria that we believe CMS should consider in improving quality in imaging,
    reducing improper utilization, and better aligning federal standards with those in the
    commercial sector. But above all, NCQDIS firmly believes that the focus of this
    Committee should be on ensuring the highest value in the services provided to the
    nation's Medicare and Medicaid beneficiaries, and we believe that this can be done by
    providing clinically appropriate guidelines to all imaging providers that will have the net
    result of reducing over-utilization, and promoting the best possible care for beneficiaries.
    An across-the-board reduction in payments, as promulgated in the Deficit Reduction Act
    (DRA), without due consideration of the nuances of the imaging market and the resulting
    impact on beneficiaries will not improve quality or utilization and may, in fact, have the
    opposite effect.
            My company, CDI, has been a leading provider of outpatient imaging services for
    25 years. Our founder, Dr. Kenneth Heithoff, was one of the first physician pioneers to
    advocate for more cost-effective, convenient and appropriate imaging services - and he
    did so originally by opening one of the first outpatient imaging centers in the country in
    1980. Since that time CDI has grown to now serve 14 communities in Minnesota,
    Wisconsin, Illinois, Indiana, Missouri, Kansas, Florida and Washington. We are pleased
    to have received this year the distinction of "Number One Freestanding Imaging Group"
    in the U.S. by the readers of Medical Imaging magazine, a leading, national industry
    publication.
            The principles of CDI are straightforward and unwavering: to deliver accurate,
    efficient diagnostic imaging services in an accessible and compassionate manner. To do
    so, we partner with specialized, board-certified, local radiologists in conjunction with
    community health systems, hospitals and physicians. For example, in St. Louis we have
    collaborated with St. Luke's Hospital as well as with the St. Louis Cancer & Breast
    Institute. In Minnesota, we are working with the Mayo Clinic in a small city and with a
    rural county-owned hospital and surrounding physicians, as well as providing convenient
    access for patients in the three main population centers of the state.
            For CDI and other NCQDIS members, our commitment to consistent standards and
    appropriate utilization has always been critical to our success. As an independent imaging
    provider, we cannot create demand for our services. Let me underscore this point: the
    volume of procedures referred to NCQDIS members cannot be initiated or self-promoted,
    and we therefore represent an independent clinical viewpoint. We, like other IDTFs, must
    prove to referring physicians and their patients that we are worthy of their continued
    referrals. At CDI, we prove ourselves by maintaining a national, robust peer-review
    program, ongoing patient satisfaction surveys, sophisticated quality assurance initiatives,
    use of advanced imaging equipment, ACR accreditation of our MRI and CT scanners,
    electronic portal access to images and reports for referring physicians, and an insistence
    on radiologist specialization. Other NCQDIS members offer similar listings of service
    and quality indicators.

            I. 	Industry Overview:  Trends and Types of Providers in Outpatient Imaging
            Before discussing specific utilization and quality topics, it is important to recognize
    the macro healthcare environment. Two significant national trends have and will continue
    to cause a natural and positive increase in diagnostic imaging utilization in the United
    States.
            First, the use of imaging tests and procedures increases as we get older, and the
    'Baby Boom' generation continues to age. By 2010, it is estimated that this generation
    will constitute 79 million people in the U.S.  Appropriate use of imaging procedures will
    play a crucial role in the early detection and treatment planning for the medical needs of
    these beneficiaries, so that overall costs on repeat exams, incorrect/non-concise and/or
    late-stage diagnoses and complications are avoided.
            Second, demand for imaging services overall is also increasing due to advances in
    technology and applications. For example, new and less-invasive - yet efficacious and
    cost-effective - image-guided procedures are being developed and used as alternatives to
    costly and more invasive procedures like surgeries. Advanced applications, new contrast
    agents, refined scanners and new protocols are being brought to market and focused on
    specific medical specialties, benefiting patients with diseases or injuries such as cancer,
    neurological and cardiovascular diseases and musculoskeletal injuries (e.g. hips, knees
    and spines). As former Senator and Medicare Payment Advisory Commission (MedPAC)
    Commissioner Dave Durenberger recently noted, "Innovation is a value in healthcare and
    needs to be encouraged by policy."

    The Outpatient Diagnostic Imaging Environment
            To better understand the issue of imaging utilization, it is important to understand
    exactly who provides imaging services. Imaging services are delivered in a variety of
    ways to Medicare beneficiaries.
            First, an imaging procedure is performed only after a physician has evaluated a
    patient's condition and produced an order (similar to a prescription) for a specific
    imaging procedure that he or she feels is necessary to aid in the patient's diagnosis. The
    procedure has two components - the exam itself, and the radiologist's interpretation.
    The imaging exam (the experience of the patient coming to the clinic and having the
    actual procedure done) is typically referred to as the "technical" component. Types of
    diagnostic imaging examinations include:
             MRI (Magnetic Resonance Imaging);
             CT or CAT (Computed Tomography);
             PET or PET.CT (Positron Emission Tomography);
             Ultrasound;
             X-ray;
             DEXA/Bone Densitometry;
             Mammography; and
             Nuclear Imaging.

            After the "technical" imaging procedure is complete, the images are then sent for
    interpretation to a radiologist, who studies the images and delivers a written report back
    to the referring physician with the results of the imaging examination. Radiologists are
    physicians who must complete an additional 4 to 6 years of education and internships
    after completing their medical degrees before being licensed as a general radiologist.
    Fellowship-trained radiologists are further trained in specific areas of the anatomy or on
    specific imaging equipment, and require another two years of fellowship training.
            Imaging equipment is owned, and technical services are provided by, a variety of
    sources.
    The major provider segments are:
             Hospitals (both inpatient and outpatient);
             Independent Diagnostic Testing Facilities (IDTFs);
             Radiologist Offices; and
             Non-radiologist Physician Offices.

            Hospitals typically provide both inpatient and outpatient imaging services at the
    hospital, and may also own imaging facilities geographically distant from the hospital
    campus to provide better community access. Hospitals are regulated facilities that provide
    on-site radiologists for required procedures and to supervise staff and assuring
    compliance with accreditation requirements such as JCAHO (Joint Commission on
    Accreditation of Healthcare Organizations). Hospitals provide imaging services for
    trauma patients, inpatient care and outpatients. Outpatient referrals come from on-staff
    hospital physicians, independent hospital physicians and community physicians.
            Independent diagnostic testing facilities (IDTFs), which NCQDIS represents, are
    imaging facilities that exist outside the hospital setting and are not physically located in
    physician offices. They may be owned by hospitals, radiologists or investors. IDTFs have
    more rigorous federal regulations than other imaging providers; they must provide on-site
    radiologists for certain procedures, have qualified and certified technologists to operate
    the imaging equipment, and typically have their equipment certified by the American
    College of Radiology (ACR). Nationwide, there are approximately 5,000 IDTFs. As
    noted earlier, independent facilities, IDTFs cannot refer to themselves or create demand
    for their services. They provide service only after a physician has ordered an imaging
    procedure for his or her patient. IDTFs provide quick, convenient and high-quality access
    to imaging procedures that may not be available through the local hospital and generally
    provide same-day service for patients.
            Radiologists may or may not own imaging facilities. Oftentimes radiology groups
    practice inside the hospital to provide interpretation services and consultation to hospital
    physicians. In certain instances, the radiologist may own the imaging equipment in the
    hospital or at hospital-based facilities. A radiologist may also own an IDTF in partnership
    with hospitals and investors. Radiologists also provide interpretation services to IDTFs
    and physician-owned imaging equipment. By law, radiologists are deemed not able to
    refer patients, and are considered independent imaging providers since they do not
    examine patients and order imaging services.
            As a result of the in-office ancillary exceptions provided by Stark I and Stark II, non-
    radiologist physicians are able to install imaging equipment inside their offices or
    collaborate with other physicians to own or lease imaging equipment. In physician-owned
    imaging centers the primary source of referrals is from the physicians who own the
    equipment. Physician practices are not subject to the same requirements as IDTFs in
    terms of having a radiologist on site, nor are they required to have certified technologists
    as required for IDTFs.
            NCQDIS believes this information to be critical in discussing consistency in
    standards, in understanding where and how over-utilization is occurring, and in
    discussing reimbursement.

    II. 	Consistent Standards for All Imaging Providers:
    Assuring Value for Medicare and Medicaid Beneficiaries
            NCQDIS and its members believe that the first step in consistent standards for all
    providers is the uniform application of IDTF regulations to all types of imaging
    providers.
            Effective July 1, 1998, Medicare regulations provided for the implementation of the
    new provider designation of independent diagnostic testing facility ("IDTF") . The
    IDTFs replaced the previous provider category of independent physiological laboratory
    (IPL). IDTFs are to be independent of a physician's office or a hospital, although either
    can apply to be an IDTF and therefore are not barred from meeting higher standards.
    The Medicare carriers are charged with determining that all IDTF applicants meet the
    IDTF standards as required by CMS prior to enrollment and granting an IDTF applicant a
    Medicare billing number.
            Arguably, the purpose of creating the IDTF classification was to ensure that
    diagnostic testing performed outside the traditional inpatient hospital or radiologist office
    setting met certain quality and safety standards, which also help to assure appropriate
    utilization. However, many believe that the Stark "in-office ancillary exception" has
    fostered the proliferation of imaging in physician offices, raising the question as to
    whether the goal of quality and safety has been achieved beyond the enrolled IDTFs. In
    fact, those entities that enroll and bill as an IDTF are disadvantaged from a competitive
    standpoint due to the regulatory requirements placed on the IDTF but not the other types
    of outpatient imaging entities. These include:

             Supervising Physician Requirement
    	Currently Medicare Carriers are taking the position that, with limited exception
    for certain specialties, each supervising physician in an IDTF needs to be a
    radiologist. Some carriers have extended that definition to require board-
    certified radiologists. The goal of the regulations is clearly to ensure that the
    "supervising physician" oversee the quality of the testing equipment and the
    technologists who will be performing the tests utilizing such equipment.
    However, the Carriers place no such supervising physician requirements upon
    non-IDTF imaging providers such as outpatient hospital facilities or physician
    office imaging facilities;
             Non-Physician (Technologist) Requirements in the IDTF Setting
            The Medicare Carriers are given the authority to determine whether an imaging
    center technologist is qualified to conduct the diagnostic tests the IDTF is
    performing. Some Carriers have taken the position that such training and
    proficiency must be to the level of specific accreditation in the imaging
    modality in which the technologist is operating. This goes above and beyond
    state licensing or national credentialing of American Registry of Radiologic
    Technologists ("ARRT").  Thus, the Medicare beneficiaries who are receiving
    services in the IDTF setting are being treated by highly credentialed
    technologists under the supervision of radiologists. In other outpatient settings
    the technologists are not required to meet these same standards. Again, if
    having a technologist, who is not only certified but certified in a specific
    imaging modality, is important to have in place in an IDTF, then it should be
    important in all settings where Medicare beneficiaries are receiving outpatient
    imaging;
             Written Orders are Mandated at IDTFs
            While not clarified for physician offices, IDTFs are specifically required to
    proceed with care only with a written order in place. This small step is useful in
    assuring appropriate utilization. Certainly, if CMS is adhering to the quality
    components of patient safety and effectiveness, such a requirement is at least as
    important in a physician office setting or hospital.

    	To summarize, the following chart is a comparison of IDTF requirements to other
    imaging settings:

    Type of Imaging Provider
    CMS Criteria
    IDTF
    Physician
    Hospital
    Physician Supervision
    Required
    Required
    Not Required
    Supervising Physician
    Qualifications determined by
    Carrier (Radiologist, and for
    many Carriers, Board-
    Certified)
    Required
    Not Required
    Not Required
    Non-Physician Personnel
    (Technologist) Qualifications
    Required
    Not Required
    Not Required
    Written Orders
    Required
    Not Clarified
    Not Clarified

            Let me underscore: NCQDIS and its members are not seeking an advantage in either
    regulatory oversight or reimbursement, but rather, IDTFs are simply seeking a level
    playing field on which to operate. Advances in diagnostic imaging have led to
    tremendous strides in patient care: from reducing the need for invasive surgical
    procedures to early detection of life-threatening diseases. However, imaging equipment
    and facilities operated by providers not specifically trained to provide complex diagnostic
    imaging services can be sub-optimal with regard to equipment quality, technologists
    operating the equipment, the quality of images produced, and ultimately interpretation of
    these diagnostic images. In addition, images taken by technologists who do not meet
    IDTF qualification standards may produce lesser-quality images that even the best-
    trained physician will have trouble interpreting.

    Recommendation:
            NCQDIS recommends that the existing IDTF regulations be used as a model to
    address all outpatient imaging operations, including those that fall under the Stark "in-
    office ancillary exception," hospital outpatient imaging facilities, and outpatient imaging
    facilities that are not enrolled in the Medicare program under the IDTF classification.
    This will guarantee progress in assuring appropriate utilization and offer more value for
    the beneficiary, as consistent standards will discourage non-qualified imaging facilities
    and reduce repeat examinations and diagnostically poor images caused by quality issues
    with either imaging equipment or staff.

    III. 	Identifying, Measuring and Reporting Quality - Here and Now
            NCQDIS has and will continue to advocate for Medicare's IDTF standards, as well
    as for additional community standards for the patients we serve. Several of our members
    have initiated efforts with their regional payers and purchaser-employers to identify
    community standards and best practices for imaging, and to measure and report their
    impact on utilization.

    Identifying Quality Indicators
            For example, CDI has been directly involved with an effort to identify best practices
    based on the components of quality as originally identified in Crossing the Quality
    Chasm, the landmark Institute of Medicine (IOM) series of reports.  We have found our
    mid-sized employers and collectively-bargained (Taft Hartley) Trusts are especially
    appreciative of this characterization because it is one that they can use with their
    employees/membership to help promote more knowledgeable consumers of value
    services. Below are several categories as an illustration that the goal of consistent
    standards for imaging providers is not a years-long process, but rather an attainable,
    short-term goal.

    Indicators for Purchasing Value in Imaging

    Categories are those identified by the IOM in Crossing the Quality Chasm to assist consumers
    in making value-based decisions about imaging providers.

    Safety:
    	MRI and CT equipment that have been accredited by a national accrediting body
    	Registered Technologists
    	Safety and Adverse Event Reports
    	Active Peer Review Program with full participation of all radiologists
    	Adequate and accessible Patient Education to assure the patient understands the
    	procedure being undertaken and the risks of it.

    Effectiveness
    	Fellowship trained sub-specialists
    	*Registered Technologists
    	Online report access for treating physicians
    	*Accredited MRIs and CTs
    	Internal and Referring Physician Education - development and promotion of best
    practices.

    Patient-Centered
    	Access/Locations
    	*Fellowship trained sub-specialists
    	*Registered Technologists
    	Patient Satisfaction data (tracked over time)
    	*Patient Safety Records
    	*Patient Education - customized to appropriate audience
    	Cost competitive with providers maintaining similar standards
    	Prohibition and/or reporting of Self-referral/ownership/leasing for any imaging services
    over $100

    Timely
    	Turn Around Time on Reports (average time from when patient comes in or referred to
    facility to when report arrives at treating physician)
    	*Online Report Access for treating physicians (this might be a sub-head of previous item)
    	*Patient Satisfaction data (i.e., patient's view of if service was timely)

    Efficiency
    	State-of-the-art Radiology Information System
    	High-field equipment
    	*Online Report Access
    	*Access and Location, including evening and Saturday hours

    Equity
    	*Cost competitive with providers maintaining similar standards
    	*Prohibition on Self-referral for any imaging services over $100
    	*Reasonable Access/locations

    *Indicates item is used in more than one category of quality

    Measuring and Reporting Indicators of Quality
            Another project CDI has contributed to is a program to assist employees in choosing
    health care providers based on value, which is defined through the formula of:
    Service, Access, Convenience, Safety, and Quality Outcomes
    Cost

            This measurement-for-public-reporting effort requires that imaging providers be
    measured based on three weighted-value categories. With this model, the score for
    professional services is weighted at 40%, a weight of 30% is given to each imaging
    facility, and another 30% designated for service and consumer satisfaction. In a June 30,
    2006, communication to CMS Administrator McClellan, NCQDIS shared the specific
    measures included in each of these weighted categories and would be pleased to share the
    same with any Member of this Subcommittee. Currently, a white paper is in development
    which will link each of these indicators to peer-reviewed literature regarding specific best
    practices in imaging, or to another type of community standard, such as the CAHPSr
    Clinician and Group Survey.

    Other Marketplace Activities Related to Appropriate Utilization
            Private payers have become not only aware of the potential for over-utilization of
    imaging services, they are taking action. Many private payers and purchasers have started
    to impose minimum quality standards for imaging facilities and equipment, and/or have
    hired third-party utilization review companies, often referred to as radiology benefit
    managers (RBMs).
            As HealthHelp CEO Cherrill Farnsworth has explained:
            "The second generation RBMs are encouraging and facilitating quality and
    safety. Measures such as tools for ordering the most appropriate tests and
    consistent quality standards for all imaging providers are saving 20-25% of
    total imaging costs. Cuts to reimbursement have been shown to save little or
    nothing. It is time that all payers, including CMS, reward quality and safety -
    and in the process, control over-utilization and costs. NCQDIS is happy to
    demonstrate this through actual case studies from the private sector."

            NCQDIS has spent the last year monitoring and collecting publicly available
    information from commercial payers and radiology benefits management companies
    (RBMs). We produced a tracking chart which we shared with CMS Administrator
    McClellan earlier, and which is appended to my testimony here today. Taken as a whole,
    the information on this chart indicates a sophisticated understanding by the majority of
    private payers that capital intensive imaging services must be managed in a more
    comprehensive manner than simply slashing reimbursement, and to encourage
    appropriate utilization.
            In addition, many states have adopted more stringent Certificate of Need (CON)
    laws to review the need for higher-end equipment (such as MRI, CT and PET/CT) in the
    community before the equipment may be ordered. One state, Maryland, has passed a law
    that does not permit non-radiologist physicians to refer to imaging equipment or facilities
    in which they have a financial interest. Other states have made it illegal for physicians to
    lease time on imaging equipment which is not located in their facility and then bill for
    those procedures, essentially receiving a profit for each scan that they order.

    Recommendation:
            NCQDIS and its members not only support but strongly encourage private and
    public efforts to develop and utilize consistent standards for all imaging providers. In
    addition, NCQDIS supports efforts to restrict leasing of imaging time on equipment not
    located in the physician office. NCQDIS believes both of these efforts will help reduce
    imaging over-utilization by ensuring that beneficiaries receive a consistent standard of
    care regardless of provider, and that tests performed are medically appropriate and
    accurate.

    IV. Parity in Reimbursement is Critical to Achieving Value
    in Imaging Services
            In the current absence of consistent standards of quality for all imaging providers,
    cutting reimbursement seems the natural alternative to curbing over-utilization. However
    cutting reimbursement alone will not yield the desired effect, as value in healthcare
    cannot be measured by price.
            Additionally, rate-cutting alone will likely have the unintended impact of
    encouraging some providers who are able to control volume to increase referrals to
    "make up the difference" in lost revenue, reducing any potential savings to CMS or its
    beneficiaries. Worse, rate-cutting could lead to a lack of reinvestment in advanced
    imaging technologies, and thus extended use of older or minimally maintained equipment
    that produces poorer scans. The result could be missed or delayed diagnoses for
    beneficiaries.
            To be clear, NCQDIS and its members support parity in reimbursement for all
    imaging providers when consistent standards are met, but believe this parity must be
    determined carefully and in context of the different types of imaging providers and their
    business/cost structures, and of the reasoning behind current CMS reimbursement
    categories.
            Medicare uses two reimbursement categories today for imaging services: HOPPS
    and MPFS. Hospitals are paid for outpatient services provided to Medicare beneficiaries
    through a methodology called Hospital Prospective Payment System (HOPPS). The
    HOPPS payment methodology was determined using the following process: Hospitals
    allocate costs for capital equipment, supplies, staff and other expenses into cost centers
    that they then submit in aggregate (with charge data) to CMS on an annual basis. CMS
    calculates a cost-to-charge ratio (CCR) for each department and for the hospital as a
    whole. HOPPS groups 'clinically similar' services together into Ambulatory Payment
    Classifications (APCs), whose costs are determined by multiplying each charge on every
    claim for a service in that APC by the hospital-specific CCR. The resulting HOPPS rate,
    in aggregate, is meant to reimburse the hospital for 82% of their costs.
            Non-hospital outpatient imaging, independent diagnostic treatment facilities (IDTF)
    and physician offices are paid under a methodology called the Medicare Physician Fee
    Schedule (MPFS). MPFS bases payment for each imaging service on the costs associated
    with providing that service, including clinical staff, disposable supplies, capital
    equipment and administrative overhead. For each service provided, the MPFS assigns a
    payment rate based upon the actual costs of the services.
            Unlike the MPFS, under which IDTFs are paid, HOPPS rate does not represent the
    true cost of providing imaging. The result of the methodology behind HOPPS is that
    neither the hospital, nor CMS, is able to identify the costs of providing individual
    imaging services within a particular hospital, especially over time. On the other hand,
    MPFS assigns a payment rate based upon the actual costs of each service.
            It is also worth noting that hospitals receive additional payments from federal, state
    and local governments that are not available to non-hospital outpatient imaging providers.
    These additional payments are hospital-specific and are not figured into the national
    HOPPS payment rates. They include Disproportionate Share Hospital (DSH) payments
    for inpatient care (meant to offset the monetary losses hospitals incur when providing
    care to indigent patients), credit for bad debt, and, in some non-profit instances, tax-
    exempt bonding for capital expenditures and property taxes.
            Last, hospitals provide a wide mix of services that subsidize one set of unprofitable
    services with others that are profitable. IDTFs instead concentrate on cost and quality of
    imaging services only.

    Recommendation
            The disparity between HOPPS payment methodology and actual cost of providing
    individual services for IDTFs will lead to less competition in the imaging industry.
    Without a payment system that allows IDTFs to recoup actual costs of providing imaging
    services, IDTFs will not be able to meet consistent standards of quality nor improve
    services.
            As mentioned previously, an IDTF cannot independently create demand for its
    services, and therefore relies upon providing quality services to attract the necessary
    demand.  It is therefore the position of NCQDIS that the discussion around quality and
    utilization is wholly ineffective and possibly counterproductive to have without including
    discussion on reimbursement. NCQDIS asks for the Members of this Subcommittee to
    consider the provision in H.R. 5704 that requires this comprehensive look at imaging
    reimbursement policy and we ask your support for it.

    V. Conclusion
            Medical advances are one of our society's great achievements, and the frail and
    elderly who depend on Medicare and Medicaid should be afforded the same access to this
    lifesaving and life-enhancing technology as those in the private sector. From the
    utilization perspective, rate cuts alone will not curb utilization. Congress and CMS have
    the tools to ensure this equality, and by promoting policies that move beyond short-
    sighted reimbursement-only methodologies to the more nuanced quality and value-based
    metrics such as those being used in the private sector, true parity for all imaging
    providers can be achieved, benefiting beneficiaries and taxpayers alike.
            NCQDIS sincerely appreciates this opportunity, and we look forward to working
    with you and your colleagues, and the Administration, in the days ahead to address this
    important public need.

    Appendix:

    Private Payer / Radiology Benefits Management Activity
    Related to Standards in Diagnostic Imaging

    	MR. DEAL.  Thank you.
    	Dr. Rucker.
            DR. RUCKER.  Thank you.  My name is Don Rucker.  I am Vice
    President and Chief Medical Officer of Siemens Medical Solutions,
    United States, and I am also a practicing emergency department
    physician.  I am testifying today for the National Electrical
    Manufacturers Association.  NEMA represents the manufacturers who
    provide about 90 percent of the world's imaging equipment and NEMA
    has been the standard-setting organization for imaging equipment for
    many decades, leading to an extraordinary high level of quality in that
    equipment.
    	Thank you for holding the hearing today about Medicare patients and
    the care they receive.  You have heard a lot of testimony about various
    perspectives on growth in imaging services.  We believe that the
    tremendous advance in science is by far the main reason for growth in
    imaging.  This is a worldwide phenomenon.  It is actually independent of
    reimbursement schemes and by country.
    	To understand that, I think it is worth understanding modern imaging
    devices: ultrasound, CT, MR, PET scanners are computers.  Almost half
    of our cost of goods in these devices is actually software, and as you
    know, computer power has been doubling every 18 months for decades.
    So when you look at what has been going on in imaging, I think if you
    see these things as computer devices it gives a little bit of perspective on
    this.  Let me just give an example about CAT scanners, computer
    tomography, to spell it out.  About 10 years ago, CAT scanners became
    advanced enough in resolution that you could see the appendix.  When
    that happened, you eliminated lots of exploratory laporotomies and the
    notorious observation admit where we just see if the patient got worse.
    Five years ago, CAT scanners gained enough resolution to be able to
    look at 5 milliliter dropoffs in blood vessels in the lung.  Now, you can
    actually look at pulmonary embolus blood clots in the lung, eliminating
    the need for what are known as ventilation profusion scans, eliminating
    the need for pulmonary angiography.  Today, high resolution cardiac CT
    scanners are so fast and so accurate that we can stop in the middle of a
    heartbeat and look at coronary arteries, a resolution detail of 2 to 3
    millimeters.  This will certainly, as this technology comes on, reduce
    hospital admissions for chest pain as well as a number of diagnostic
    cardiac catheterizations, huge cost savings.
    	In talking about imaging, I think often statements about self-referral
    are blended in with statements about imaging growth.  It is worth
    understanding, certainly as we look at the Medicare data, that in fact the
    growth of imaging has been pretty much uniform by all physicians,
    whether they have any opportunities for self-referral or not.  This is true
    by ordering physicians who have absolutely no way of making money
    and for whom ordering a study incurs incremental costs and time that are
    not directly reimbursed.
    	It is also worth noting that when you look at some of the data that the
    mix of imaging studies is remarkably constant.  The top five: heart,
    brain, spine, abdomen, and extremities actually don't change from a
    year-to-year basis.  I mean, they are almost like constants of nature,
    which suggests that specialty-specific self-referral, while it certainly goes
    on on some level, is probably much smaller than we think, possibly
    based on the assumptions that increased utilization is equivalent to
    inappropriate utilization or mis-utilization.  The Deficit Reduction Act
    makes what we feel are disproportionate cutbacks in medical imaging.
    As other witnesses have testified, these cutbacks have a randomizing
    effect.  The philosophy there also absolutely does not address the billions
    of dollars of cost savings from having precise diagnoses, and that is
    something I think that Medicare and CMS and MedPAC really need to
    look at.  NEMA feels that these large cuts will slow the adoption of
    imaging technologies, will slow down the option of earlier diagnosis for
    Medicare patients, and less invasive treatment.  We would like to thank
    Congressman Pitts and the members of the committee and subcommittee
    who have sponsored H.R. 5704 to reassess these cutbacks in this broader
    context.
    	I would like to conclude by suggesting that imaging is growing not
    because of self-referral or sort of devious things, but because physicians
    would like to provide Medicare patients with precise answers and
    targeted treatment, rather than educated, I would like to think highly
    educated, but nevertheless, educated guesses and empiric therapy.
    Medicare reimbursement policy should reflect the true cost of providing
    imaging and Medicare reimbursement policy should reflect the total cost
    of providing care, not just the 10 percent most divisible in imaging costs.
    	Thank you very much.
    	[The prepared statement of Dr. Donald W. Rucker follows:]

    PREPARED STATEMENT OF DR. DONALD W. RUCKER, VICE PRESIDENT AND CHIEF MEDICAL
    OFFICER, SIEMENS MEDICAL SOLUTIONS USA, INC.

            Mr. Chairman and Members of the Subcommittee:
            My name is Donald Rucker.  I am a practicing emergency physician and serve as
    Vice President and Chief Medical Officer of Siemens Medical Solutions USA.  I am
    speaking today on behalf of the National Electrical Manufacturers Association.
            NEMA is the largest association representing medical imaging manufacturers in the
    world.  It represents companies whose sales comprise more than 90 percent of the global
    market for X-ray imaging, computed tomography (CT), radiation therapy, diagnostic
    ultrasound, nuclear medicine imaging, magnetic resonance (MRI), and medical imaging
    informatics equipment.
            NEMA is also the world's primary standards-development organization for medical
    imaging equipment.  Such standards establish commonly-accepted methods of design,
    production, and distribution for medical imaging products.  Sound technical standards
    benefit the user and patient, as well as the manufacturer, by improving safety, fostering
    efficiencies, and assisting the purchaser in selecting and obtaining the appropriate
    product.  We have been setting standards for 75 years.
            I want to thank the Chairman for conducting this important hearing on imaging.  On
    behalf of NEMA, I also want to thank the Subcommittee members who have taken steps
    to ensure continued beneficiary access to critical imaging services.

                             Summary and Overview
            In my testimony today, Mr. Chairman, I wish to leave the Subcommittee with
    several points:
            Scientific Advances are the Primary Reason for Imaging Growth:  The primary
    drivers of imaging utilization are the dramatic scientific and technical advances that allow
    physicians to see soft tissues and organs inside the human body.  The power of imaging
    to offer more precise and less-invasive care has sparked what can only be described as a
    fundamental transformation in medicine.  Physicians can now use imaging for more
    conditions, for more patients, and for a much broader array of purposes than ever before.
    Modern imaging devices today are sophisticated computers, and the imaging power
    behind them continues to grow in parallel with the growing computing power that drives
    so many other sectors of the economy.
            Medical Imaging Has Become a Standard of Care:  Given this new ability to make
    specific diagnoses-rather than educated clinical guesses-before treating a patient,
    physicians have incorporated medical imaging into practice patterns across medical
    conditions and diseases.  In fact, imaging has become a standard of modern care for
    virtually all major medical conditions and diseases.  This includes cancer, stroke, heart
    disease, trauma, and abdominal and neurological conditions.
            Utilization Growth Arises from Complex Causes: No one can doubt that financial
    incentives play a role in the use of imaging.  But the impact of these incentives pales in
    comparison to these broad, patient-centered changes.  Interestingly, growth in utilization
    is remarkably similar across medical specialties that can bill for imaging and those that
    cannot.  Growth in utilization is also remarkably consistent across organ systems,
    suggesting that a desire to address patient care questions is behind the growth, not
    practice changes by specific medical specialties.
            Continued Innovation and Patient Access Require Informed Policies:  Public
    policies that influence the use of medical imaging-including reimbursement decisions
    such as the Deficit Reduction Act of 2005-must take into account this fuller view and
    richer context of utilization growth.  Basing imaging reimbursement policy almost purely
    on year-over-year growth rates overlooks these deeper realities and patient desire for
    diagnostic certainty.
            I will elaborate on each of these today, Mr. Chairman, before turning to our policy
    recommendations on reimbursement of imaging and issues directly related to growth in
    the use of imaging.

           Scientific Advances are the Primary Reason for Imaging Growth
            As a first step, it is important to explore why imaging has become such a driving
    force in how physicians practice and how medical delivery is structured.
            For centuries, physicians diagnosed patients by using the physical examination.
    With the advent of plain film x-rays a little over a century ago, physicians could see
    bones and outlines, as well as shadows of some organs such as the heart and the lungs.
    Today, with modern imaging devices, physicians can see every single soft tissue, organ,
    and clinically significant blood vessel.  Complemented by a parallel, computing-based
    revolution in genomics, we simply have the opportunity to take care of patients in
    entirely new ways.   In this context, it does not seem surprising that Medicare is seeing
    rapid growth in these clinical practices.
            How has medical imaging technology transformed health care?
            Redefining Care:  Advances in imaging have provided physicians with new tools to
    improve care and do so in new ways.   As a result, they use imaging in more clinical
    situations, for more diseases, and for more patients.
             Diagnosis of heart disease was once confined to a stethoscope and an EKG.
    Today, physicians use imaging procedures such as cardiac catheterization, CT
    angiography, cardiac ultrasound, and nuclear imaging to address heart disease.
    These foster early diagnosis and treatment and improved survival.   With
    intravascular ultrasound, the very basis of coronary artery care has moved from
    treating "hardening of the arteries" to addressing "vulnerable soft plaque".
             For decades, cancer physicians were limited to guesswork and indirect
    evaluations in judging the effect of cancer drugs on a tumor.  Today, PET scans
    allow them to visualize the tumor on a individual cellular level, determine how
    well cancer drugs are working, and calibrate therapy to the patient's exact
    circumstances.

            New Information for Diagnosis and Planning:  Imaging has also brought about
    significant change by providing physicians with vast amounts of new information and
    visualization for every body part.  This allows them to diagnose disease and plan
    treatment more effectively and confidently.
             CT and MRI now allow physicians see the blood vessels in the brain and the
    precise location of a stroke-reducing guesswork-and guide them in choosing
    between surgery or clot-busting drugs.
             Physicians use CT and MRI, rather than surgery, to visualize and pinpoint brain
    tumors and aneurysms-even view them in 3D.   This gives them critical
    information about the approach to treatment, sparing as much normal brain
    tissue as possible.

            As these examples also show, the power of medical imaging is increasingly blurring
    the lines between diagnosis and treatment delivery.
            Less-Invasive Treatment:  Medical imaging has also transformed medicine by
    enabling physicians to provide medical treatments deep within the body without surgery,
    blood loss, or their related risks.  So care is easier, complications fewer, and recovery is
    faster.  As a result, patients who may have avoided surgery or whose health conditions
    did not allow surgery may now elect to receive care.
             Screening for abdominal aortic aneurysms now allows elective surgery or even
    minimally invasive aortic stent placement preventing largely fatal aortic
    aneurysm ruptures.
             Physicians can now use image-guided embolization to correct uterine fibroid
    tumors without a hysterectomy.  This permits patients to get back to work in
    two weeks, rather than six.
             Physicians can use stereotactic radiosurgery which targets very narrow but
    extremely powerful beams of radiation on small brain tumors and early
    metastases.  The procedure requires no hospitalization and substitutes for brain
    surgery.

            Substitution for Other Health Care Costs:  Innovations in medical imaging also
    provide physicians with new capabilities to substitute imaging for other interventions or
    procedures, including observation days in the hospital.
             Physicians can use ultrasound to guide them in placing large-bore intravenous
    catheters in central veins-substituting for blind guesses about where the vein
    is located.  The result is reduced pain and complications-and shorter hospital
    stays.
             With high resolution CT scans, physicians can now precisely diagnosis
    appendicitis.  As recently as several years ago, the standard of care for possible
    appendicitis included hospital admissions to observe for clinical deterioration
    and exploratory surgery to enable the surgeon to look directly at the appendix
    and see whether it needed to be removed.
             CT scans can tell physicians whether a pulmonary embolism has developed in
    the lung, thereby reducing the need to thread a catheter through the heart to
    reach the lung.
             Intensity-modulated radiation therapy allows physicians to pinpoint tumor
    location and "sculpt" each beam of radiation, thus avoiding harm to
    surrounding healthy tissue.

            New Settings of Care:  Medical imaging is now smaller and more portable, enabling
    care in a variety of new settings such as physician offices and imaging centers.  For
    patients, the result is convenience and easier access-increasing the likelihood they will
    get the tests, treatments, and follow-up they need.
             Shrinking ultrasound machine size allows physicians to diagnose
    cardiovascular, obstetrical, abdominal, and many soft tissue problems in
    independent imaging facilities, physician offices, and other non-hospital
    locations as well as at the patient's bedside.  Hand-carried ultrasound machines
    are used in emergency rooms, ambulances, and even on the battlefield.
             Similar changes are occurring in other imaging technologies, including digital
    radiography, CT, and MRI.  These technologies now allow diagnosis and
    treatment in a variety of non-hospital settings.

            The Computer Revolution and Imaging:  Modern imaging devices are in large part
    sophisticated computer systems that perform incredible transformations of signals
    acquired via sound waves, x-ray beams, or radio frequency waves and proton spins.
    Computing power over the last 40 years has in fact grown as described by "Moore's
    Law", a remarkable prediction by Gordon Moore, one of the founders of Intel, who stated
    back in 1965 that, as far as he could see, computing power would double every 18
    months.  For Medicare patients and physicians, this has come to mean that every two to
    three years, entirely new aspects of the body come into focus and, what was before a
    clinical guess is now a precise answer from an imaging study.
            Mr. Chairman, I want to stress that any of these trends individually would have been
    enough to bring about important improvements in medical care.  Taken together,
    however, they have brought deep change to the health delivery system:
             Diagnosis is earlier than ever.
             Physicians have more information and insight.
             Care is less invasive and less painful.
             Access to tests and treatments is easier as imaging procedures are available in
    convenient settings.
             Patient outcomes-from fewer complications to saved lives-are dramatically
    improved.
             System-wide savings and efficiencies abound.

              Medical Imaging Has Become a Standard of Care
            Another factor in the transformation of medicine is that imaging has become a
    standard of modern care for virtually all major medical conditions and diseases.

    Heart Disease
            One of the most dramatic contributions that imaging has made over the past 30 years
    has been its role in the significant reductions in mortality and morbidity of heart
    disease.  Advances in cardiac imaging have enhanced every aspect of cardiac care,
    including screening, diagnosis, treatment, and follow-up monitoring-providing detail
    unachievable even a decade ago.   Cardiac catheterization, ultrasound, and CT scanning
    provide physicians with vital information and precise images of blood flow, artery
    blockages, and heart functioning.   This information allows physicians to make earlier,
    more accurate diagnoses and to better target therapy.  Also, medical imaging facilitates
    coronary angioplasty which has become the therapy of choice for opening clogged
    arteries and has been shown superior to drugs in more than 20 clinical trials.
            Advances in imaging continue to offer new insights and detail about cardiac activity.
    Today, multi-slice CT provides rapid images of coronary artery plaque and precise
    visualization of clogged arteries without use of invasive catheters.   In addition, MRI
    and nuclear imaging scans show functioning of the heart muscle at the cellular level
    allowing effective treatment of CHF, one of Medicare's most costly illnesses.

    Stroke
            Medical imaging has made modern stroke therapy possible through early, accurate
    diagnosis and new treatment options.   Numerous imaging technologies, such as
    ultrasound and MRI, provide high-resolution images of the vascular system, and the brain
    to identify blockages or the thickening of the artery lining, thus allowing stroke
    prevention.  CT scans, diffusion-weighted imaging, and PET scans aid physicians in
    assessing whether carotid endarterectomy is appropriate-a surgery that removes plaque
    from the arteries that supply blood to the brain.
            When stroke hits, imaging tests such as CT and MRI provide rapid information
    about the nature and location of stroke and the extent of brain injury, allowing physicians
    to make well-informed judgments rapidly.   This information enables physicians to
    differentiate between ischemic stroke, involving a blockage in the arteries, and
    hemorrhagic stroke, which involves rupture or loss of blood.  With this information,
    physicians can prescribe cost- and life-saving thrombolytic therapy-a drug treatment for
    ischemic brain attack.  Or they can use imaging to guide delicate surgical procedures to
    close ruptured arteries.  Imaging also enables use of microcoil stents to correct brain
    aneurysms without open surgery, thus reducing patient hospital stays by half and
    allowing patients to recover months earlier.

    Lancet study identifies productivity gains from stroke therapy
            Let me add one more small, but important point, with regard to the role of imaging
    in diagnosing and treating stroke.  A study published this past April in The Lancet, one of
    the premier medical journals in the world, reported that three NIH studies on techniques
    for diagnosing and treating stroke-in which medical imaging plays a critical role in
    guiding physician decisions-led to a net economic benefit to society of roughly $8
    billion in the 10 years following completion of the studies.   These are the benefits in
    dollar terms that arose from use of the approaches suggested in the studies, minus the
    total treatment costs.
            These treatments-in this case, use of clot busting drugs following stroke onset and
    carotid endarterectomy to clear clogged arteries to the brain-would not be possible
    without the sophisticated imaging provided by CT, MRI, ultrasound, and other
    modalities.  In addition, a separate study published online by The Lancet on July 4, 2006,
    added a new prospect for even greater value.   It found that advanced MRI is effectively
    able to extend the time window-which has traditionally been understood to be three
    hours following the onset of symptoms-during which certain patients can benefit from
    clot-busting drugs.  This holds the potential for dramatic new savings in lives and costs.

    Cancer
            Medical imaging is also a primary tool in the battle against cancer.  Over the past
    two decades, advances in medical imaging have dramatically improved cancer diagnosis
    and treatment.
            Earlier detection of breast cancer through mammography has reduced death rates in
    the U.S. and other countries,  with ultrasound and MRI aiding in diagnosis and
    treatment.  CT, MRI, and PET scans give physicians vital information about the location
    and nature of cancer to aid in treatment planning.  And computer-aided detection, or
    CAD, systems enhance the ability of mammography to detect breast cancer in its early
    stages.   Minimally invasive imaging procedures allow biopsies of breast, bone, and
    other tissue without open surgery, dramatically reducing infections, complications, and
    recovery time.
            Sophisticated new radiation treatment systems provide targeted radiation therapy
    that matches the tumor shape, but protects surrounding tissue. The result:  better success
    rates, quicker pain relief, and fewer complications.
            PET and other cell-metabolism specific nuclear scans also allow physicians to
    identify cancer cells when they number in the hundreds of cells rather than waiting for
    the cancer cell doubling to the millions of cells that are needed to be seen with other
    modalities.

    Physician Practice Guidelines Specifically Recommend Imaging
            The central role that medical imaging plays in addressing disease is captured in
    medical practice guidelines developed by many medical specialty societies, including the
    American College of Radiology and the American College of Cardiology.  The
    guidelines reflect clinical recommendations developed by the specialty physician groups
    themselves on how best to diagnose or treat specific medical conditions.  They are based
    upon proven and widely accepted standards and evidence.
            Recent examples of such guidelines include:
             Guidelines by the American Urological Association recommending use of
    ultrasound to assess prostate size or abnormalities, guide minimally
    invasive kidney biopsies, and examine the bladder for suspected bladder
    stones.
             Guidelines by the American Heart Association and the American College
    of Cardiology recommending use of ultrasound, CT, and other imaging
    technologies to diagnose peripheral arterial disease.
             Recommendations of the U.S. Preventive Services Task Force-the
    nation's pre-eminent preventive services panel-to use ultrasound screening
    to detect abdominal aortic aneurysms in elderly male smokers.   The
    USPSTF has long-established recommendations on the use of imaging to
    detect breast cancer and colorectal cancer.

            Governmental bodies also frequently underscore the importance of imaging in
    diagnosis and treatment.  Many of the national coverage decisions issued by Medicare
    over the past 18 months have involved medical imaging-PET scanning in particular.  In
    2005, the Medicare program covered PET for Alzheimer's disease and for diagnosing and
    determining the stage of esophageal, colorectal, head and neck cancer, and non-small-cell
    lung cancer, as well as lymphoma and malignant melanoma.   Medicare also agreed to
    provide payment for use of PET for virtually all other types of cancer if provided as part
    of a clinical trial or a national registry, such as the National Oncologic PET Registry.
    Medicare coverage clears the way for use among the program's 40 million beneficiaries.

    Physicians Say Imaging is Most Important Innovation
            In light of the impact of imaging on the practice of medicine, Mr. Chairman, it is not
    surprising that it has been rated highly by physicians and medical journals alike.
            A 2001 study published in the policy journal Health Affairs asked 225 leading
    general internists to rank the relative importance of 30 medical innovations in terms of
    their value in improving patient care.   These physicians, a group who do not do imaging
    themselves, overwhelmingly picked two imaging technologies-CT and MRI-as the
    most significant medical innovation. The next highest choice, a heart drug, was rated
    much lower.  Of the top five innovations chosen by these physicians, three involved
    imaging:  CT and MRI, image-guided balloon angioplasty, and mammography.
            While this survey focused on general internists, the same broad adoption of imaging
    has occurred among medical specialty physicians as well.  This includes oncologists,
    surgeons, cardiologists, internists, and emergency room physicians, among others.  In
    March 2005 testimony, a coalition of more than 20 physician specialty groups
    characterized the importance of imaging in the way they practice in this way:

            "In addition to traditional diagnostics employing medical imaging, we now use
    imaging to guide minimally invasive treatments and to track ongoing treatment
    protocols through judicious use of medical imaging.  We are enabled as
    physicians to adjust patient care plans mid-therapy to achieve the best possible
    outcomes.  Several specialist groups intimately integrate medical imaging in the
    most delicate and intricate aspects of their care.  The prudent use of medical
    imaging in the actual treatment regimen is not only excellent medicine: it also
    manages short- and long-term costs by minimizing wasteful and ineffective
    treatments."

            It is not surprising that The New England Journal of Medicine called imaging one of
    the top 11 innovations of the past 1,000 years-ranking it alongside such milestones as
    the invention of anesthesia, the discovery of the cell, the understanding of genetics, and
    the synthesis of antibiotics.

               Utilization Growth Arises from Complex Causes
            Unfortunately, these broad, patient-centered changes that underlie growth in
    imaging are not often heard in policy discussions about utilization.  As noted earlier,
    utilization growth is judged almost entirely on the size of the year-to-year change, not on
    whether the reasons behind it are sound or unsound.  In fact, increase in the number of
    imaging procedures per patient is one of the primary metrics used to demonstrate
    excessive utilization.  Yet it is this very metric that captures the transformation of
    medicine brought about by imaging-physicians use it more broadly, in more patients,
    for more conditions because it improves care.
            In addition, it is widely accepted that financial incentives for physicians-usually in
    the form of self-referral-are behind the increase in imaging growth.  Yet, detailed
    analysis of Medicare payment data done for NEMA suggests that the growth in imaging
    utilization has been remarkably consistent across all specialties and procedures whether
    or not there is an opportunity for "self-referral."  In particular, the percentage of dollars
    spent on each of the top five imaged areas-the heart, spine, brain, extremities and
    abdomen-has stayed remarkably constant.  This suggests that-rather than performing
    new studies largely for reimbursement-physicians are using better studies to answer
    age-old clinical questions, such as why the patient is not able to talk or move or is in pain.
    Notably, these imaging patterns cross all specialties-those that have the opportunity for
    self-referral and those for whom ordering, explaining, arranging, and tracking imaging
    studies done by someone else is purely an additional cost, not specifically reimbursed.
            To complicate the issue of utilization further, the costs associated with increases in
    utilization are often overstated.  In its March 2005 Report to the Congress: Medicare
    Payment Policy, the Medicare Payment Advisory Commission argued that utilization of
    imaging technologies was increasing out of proportion to growth in other health care
    services and that these increases contributed to steep cuts in physician reimbursement
    through a budgeting mechanism known as Medicare's Sustainable Growth Rate (SGR)
    formula.
            In fact, imaging costs have grown at about the same rate as other portions of health
    care spending.  With regard to the SGR, imaging services grew 4.6 percent per year faster
    than other services that were included in the SGR mechanism.  But a study done for the
    National Electrical Manufacturers Association found that more than half of that was due
    solely to a shift in imaging services from hospital outpatient departments to physician
    offices and other non-hospital settings.  When this "site-of-service" shift-from hospital
    to non-hospital settings-is taken into account, imaging services grew about 2.0 percent
    faster than other services.
            A 2005 study by the Lewin Group found that when growth in imaging costs are
    compared to growth in all Medicare Part B services, imaging grew at roughly the same
    rate.  From 1999-2003, the average annual growth in all Medicare Part B services across
    providers was 7.8 percent, while the comparable growth in imaging was 8.7 percent-
    only about 0.9 percentage points faster.
            Similarly, a study of overall hospital costs over the seven-year period of 1996-2002
    at Massachusetts General Hospital found that medical imaging costs rose more slowly
    than overall hospital costs.  The study also found that use of imaging was linked to
    shorter hospital stays.

    Utilization Growth Often Means Offsetting Savings
            In this regard, Mr. Chairman, I want to underscore that, despite frequent assertions
    to the contrary, medical imaging reduces costs and creates new efficiencies in health
    delivery and improved productivity in patients.  In these cases, greater utilization means
    greater savings.
             The American Heart Association journal Stroke reported that a "scan-all"
    strategy for stroke patients ultimately saved money-when compared to
    later, or reduced, use of CT scans for such patients-because the
    information from the scans led to better diagnoses that led to better
    outcomes and shorter hospital stays.   Thus, greater use of CT scans, and
    greater expenditures on CT scans as a result, translated into dollar savings
    overall.
             Physicians at Massachusetts General Hospital reported in the American
    Journal of Roentgenology that increased use of state-of-the-art CT imaging
    in treating facial trauma patients led to a reduction in overall imaging costs
    of 22 percent per patient between 1992 and 2002.  The primary explanation
    for the findings, according to the researchers, is that CT cost less than it did
    10 years earlier, did more, and increasingly substituted for X-ray
    examinations, which dropped by 50 percent over the period.
             A study from Radiology found that image-guided breast biopsy costs
    roughly a third of what a surgical biopsy does. This minimally invasive
    procedure uses ultrasound or mammography images to locate a suspicious
    lump or nodule in the breast.  It takes one-fifth the amount of time as
    surgical biopsy, reduces complications, and allows women to return to
    normal activities in half the time that it takes after open surgery.    In
    Medicare patients, use of this procedure is increasing, while use of more
    invasive procedures, such as surgery, is declining.

            In each of these cases-and the peer-reviewed literature contains many more
    examples like them, for virtually all imaging modalities-the number of imaging
    procedures per patient increases.  Yet in each case, more utilization of imaging is better,
    not worse, because it represents cost-savings.  This underscores the point that increases in
    utilization do not automatically equate with inappropriate utilization.
            Another complicating issue is that the budgeting and accounting systems that public
    and private payers use for imaging procedures fail to take into account any savings that
    arise from the use of that imaging.  Thus, savings that offset other costs-such as
    substitution of minimally invasive breast biopsies for open surgery-are never reflected,
    while the increase in the number of imaging studies performed is tabulated.  The result is
    a skewed picture of both imaging utilization and its costs.  It is interesting to note that, in
    exploring the potential for Medicare payment analysis based on grouping care into all-
    inclusive episodes, even MedPAC acknowledges that paying for isolated pieces of care is
    fundamentally flawed.   NEMA believes that disproportionately forcing cutbacks in
    imaging when it can drive cost savings in other areas of care is inappropriate.
            Mr. Chairman, this is our view of the forces behind utilization of imaging.  To be
    sure, inappropriate utilization exists.  It is a serious issue and we do not wish to underplay
    it.  But as we look at the real world of health delivery, there isn't the degree of wasteful,
    out-of-control utilization that many observers suggest.  Instead, what is prominent is a
    glimpse of the power of science to offer better views inside the human body and greater
    insight about a patient's condition.

       Continued Innovation & Patient Access Requires Informed Policies
            DRA Cuts will Harm Patients, Providers, and Even Medicare
            It is in this broader context of forces underlying utilization growth that that we offer
    these observations about the payment reductions of the DRA.
            We view the DRA imaging cuts as excessive and unjustified.  Given their size, these
    reductions will set off a chain reaction that will force many physicians to discontinue or
    greatly reduce the availability of imaging services.  In turn, patients will find it harder to
    get care, will have to travel further, and will face long delays as they seek care in hospital
    outpatient departments.  I have attached to my testimony a short policy brief summarizing
    our view of the DRA cuts.  It was prepared by the Access to Medical Imaging Coalition,
    of which NEMA is a member.
            To ensure continued quality care, we urge Congress to pass H.R. 5704, the Access to
    Medicare Imaging Act.  The measure would impose a two-year delay on the cuts while
    the Government Accountability Office analyzes the likely impact of the cuts on Medicare
    beneficiaries, especially those living in rural areas.  We see this as sensible health policy
    and prudent fiscal policy.

    DRA cuts will harm Medicare beneficiaries
            The Subcommittee should be aware of the breadth and significance of systemic
    issues that will arise from the DRA cuts.
             First, utilization will not be improved.  These are budget cuts, nothing else.
    They affect imaging procedures without regard to whether such procedures are
    overused, inappropriately used, or underused.
             Second, the rate reductions bear no relationship to the real-world costs of
    providing imaging services.  Some 80 percent of the services subject to the
    DRA caps will fall to levels below the office-based cost of providing the
    service.  Many will fall to less than half of these real costs.  This stands in sharp
    contrast to efforts by CMS, as described by Administrator Mark McClellan just
    last week, to ensure that payment decisions "accurately reflect the cost of
    providing quality care."
             Third, costs are dictated by the site of care. The DRA ignores legitimate
    differences in the costs of providing imaging services in different settings-
    specifically hospital outpatient departments versus physician offices and
    independent imaging facilities.  The legislation does this despite the fact that
    both Congress and Medicare have long recognized and adjusted for these
    differences.  In fact, the DRA largely presumes that the hospital outpatient and
    the physician payment systems are interchangeable.  They are not.  They are
    very distinct systems with unique designs that reflect the nature of care
    delivered in very different settings.  Rates on the physician fee schedule reflect
    the costs of specific procedures; hospital outpatient rates reflect the estimated
    cost of a bundle of different services, adjusted to reflect the expected severity of
    the patients who will likely need that care.  Mixing these systems, especially to
    hunt for the lowest rates, poses threats to office-based treatments and tests that
    go well beyond the DRA imaging cuts themselves.
             Fourth, the DRA reductions contradict efforts in CMS and Congress to add
    reason and predictability to Medicare payment systems, including value-based
    purchasing proposals.  It seems ironic that, at a time when CMS states that its
    goals for the Medicare physician payment system are to make rates
    "understandable, intuitive and stable," that the DRA imposes reductions that
    contradict this intention.
             Finally, the DRA cuts may actually increase inappropriate utilization.  The
    reason is the cuts are so deep they create incentives for providers to increase the
    number of procedures to compensate for extreme financial shortfalls.

            Future diffusion of important imaging advances requires reimbursement policies that
    are equitable and reflective of the resources required to provide high-quality, appropriate
    care. The Deficit Reduction Act of 2005 reductions to imaging payments will slow -
    maybe greatly - the adoption of medical technologies that free patients of the older, more
    invasive alternatives which often require longer recoveries and hospital stays.

    Policies: NEMA Should Participant in Standards-Setting for Medical Imaging
            I want to add one final note in closing, Mr. Chairman.  If Congress decides the
    development of quality or performance standards is necessary to address use of medical
    imaging, NEMA should play a central role.
            NEMA is not only an association of imaging manufacturers, it is also a standards-
    setting organization.  For the past 75 years, NEMA has developed hundreds of medical
    imaging standards for product quality, safety, and performance.
             NEMA developed a standard for ultrasound equipment enabling the physician
    or sonographer to monitor the acoustic output display in real time, during an
    ultrasound examination.  This helps minimize the ultrasound exposure, while
    maximizing the diagnostic information that can be acquired from the exam.
             NEMA developed a performance standard and quality control guidelines for
    single photon emission computed tomography (SPECT) devices used in nuclear
    medicine, to inform clinical users whether their SPECT devices are performing
    properly, and therefore suitable for use with patients.
             NEMA successfully developed, and continues to update, one of the most
    significant standards in improving efficiency and communications in health
    care delivery. The Digital Information and Communications in Medicine
    (DICOM) standard established a common digital "language" to facilitate the
    interchange of information between digital imaging computer systems in
    medical environments.

            NEMA knows the technology.  We know how it is used.  We understand how to set
    standards and maintain them.  NEMA needs to be at the table.

                                    Conclusion
            Let me conclude my remarks today, Mr. Chairman, with these final thoughts.
            Perhaps at its most basic level, the increased use of medical imaging reflects the
    human desire to know-with more certainty-what is wrong, or why something hurts, or
    whether a dangerous disease is present.  Medical imaging devices are the ultimate digital
    cameras that can help answer those questions.  And the ability to look inside the human
    body with these tools-in new ways, with more precision, and with confidence in the
    result-arises from advances in computing technology and, in essence, science itself.
    Because computer power doubles roughly every 18 months, we can expect-and hope--
    that these technical and technological advances to continue.
    Mr. Chairman, we believe that it is short-sighted to base imaging reimbursement
    policy-and particularly our broader attitudes about imaging utilization-on year-over-
    year growth rates overlooking these deeper realities, desires, and needs.  We believe that
    the starting place for finding sound policies to manage imaging utilization must begin
    with these fundamental realities.

    Attachment

    Access to Medical Imaging Coalition
    Protecting and Preserving Access to Quality Imaging Services for our Nation's Medicare
    Patients
    _______________

    Imaging Cuts in Deficit Reduction Act 2005 Will Harm
    Patients and Physicians

    ISSUE:  Severe, last minute payment cuts in medical imaging in the Medicare physician
    fee schedule included in the Deficit Reduction Omnibus Reconciliation Act of 2005
    (DRA) will lead to a wide range of adverse, unintended consequences for Medicare
    beneficiaries and providers.

    BACKGROUND: Section 5102 of the DRA directs severe reductions in payments for
    many imaging services under the Physician Fee Schedule (PFS).   Under this provision in
    the DRA, effective January 1, 2007, the payment for the technical component (e.g.,
    equipment, non-physician personnel, supplies, and overhead) of an imaging service will
    be set at the Hospital Outpatient Department (HOPD) payment rate, if the PFS payment
    rate is higher.

    CONCERNS: This change in Medicare payment policy raises a number of disturbing
    issues such as:
     Rushed and Inadequate Process - Neither Congress, nor MedPAC, nor any other
    public forum has held a public hearing or meeting on this proposal.  This proposal
    has received no public comment or testimony.
     Disproportionately Large Cuts for Imaging - The cuts enacted for imaging by the
    DRA comprise roughly one-third of the total Medicare savings in the bill.  Yet
    imaging only comprises roughly one-tenth of Medicare spending.  Examples of
    these cuts include:
            o Ultrasound - Reimbursement for ultrasound guidance procedures, performed
    as part of a minimally invasive biopsy for the diagnosis of breast cancer (a
    biopsy method which saved the Medicare program $88 million from 2001 -
    2003), would be reduced by 35 percent.
            o PET / Nuclear Medicine - Reimbursement for PET/CT exams used to
    diagnose cancerous tumors and determine the effectiveness of cancer treatment
    would be reduced by upwards of 50 percent (an unprecedented cut for a new
    technology whose HCPCS code was just provided by CMS in April 2005).
            o DEXA - Reimbursement for bone densitometry studies necessary for the
    diagnosis of women at risk for osteoporosis (a recently enacted Medicare
    screening benefit) would be reduced by over 40%.
            o MRI - Reimbursement for MR angiography of the head used to detect the
    location of aneurysms would be reduced by 42%.
     A Failure to Recognize the Fundamental Differences between the costs
    associated with practicing medicine in a physician's office, and practicing
    medicine in a hospital outpatient department - The different payment formulas
    for each site of service are specifically designed by Congress to take into account the
    unique differences and costs of providing care in each setting.  Linking
    reimbursement under the PFS system to the HOPD system ignores real-world costs
    in personnel, rent, and supplies that physicians in non-hospital settings must deal
    with daily.
     Limiting Beneficiary Access to Critical Imaging Services - These cuts have the
    very strong potential to drive imaging from the physician office and free-standing
    facilities back into hospital outpatient departments, thus limiting Medicare
    beneficiaries' access to nearby imaging services that allow for more timely
    diagnosis and initiation of treatment.
     Longer Wait Times for Medicare Patients - On average, patients already wait 10
    days to two weeks for non-urgent imaging services in the hospital outpatient
    department. Reduced access to imaging services in the physician's office and in
    free-standing imaging centers could increase these wait times dramatically.
     Reduced Access For Medicare Patients in Rural Areas - Beneficiaries may be
    forced to drive long distances for needed imaging services if providers reduce or
    eliminate imaging locally.  Also physicians may choose not to invest in telemedicine
    equipment that allows specialists at distant locations to help interpret a patient's scan
    -again harming rural access.

    SOLUTION: Please support HR 5704 to delay implementation of DRA Sec. 5102 for
    two years, while the GAO conducts a thorough study of the impact on patient access and
    services.

    	MR. DEAL.  Well, thank you all.  A very interesting panel.  I think it
    demonstrates how difficult it is to get our hands around this issue,
    because you all are coming at it from somewhat different points of view,
    perhaps, at least in part.
    	Let me see if I can find some indication of where we are on some of
    the issues that have surfaced.  One of the issues that surfaced, obviously,
    is the question of standards, whether they should be federally imposed
    standards, and whether there should be standards that maybe, as Dr.
    Douglas suggested, may be incorporated into pay-for-performance type
    of approach to it.  I will go down the line and I will start with Dr.
    Douglas, how many of you feel that there is a need for Federal standards
    to be adopted in the imaging area?
    	DR. DOUGLAS.  I think there's a need for Federal standards, provided
    that they respect specialty-specific knowledge.  I don't think any of you,
    God forbid you had a heart attack, would want anybody but a
    cardiologist taking care of you.
    	MR. DEAL.  I am going to come back to that next.
    	Dr. Van Moore.
    	DR. VAN MOORE.  Clearly, I think we would advocate because of the
    fact that there is a lack of uniformity.  There can be a relatively disparate
    lack of uniformity in the way the States are handling the IDTF issue--
    	MR. DEAL.  So you would be a yes?
    	DR. VAN MOORE.  --for Federal standards.
    	MR. DEAL.  Yes.
    	MR. DONAHUE.  I would be for it, Chairman Deal.  I believe that
    Federal standards imposed that consider the nuances in specialty and
    modalities would be very effective in improving the quality of care.
    	MR. DEAL.  All right.
    	DR. LAUBE.  I would be against, as our imaging capabilities are
    primarily those of ultrasound, which I think we handle on a voluntary
    basis through various--
    	MR. DEAL.  You would be opposed to Federal standards on
    ultrasound, even?
    	DR. LAUBE.  Yes.
    	MR. DEAL.  Okay.
    	Dr. Griffeth.
    	DR. GRIFFETH.  Speaking strictly personally, I have general support
    for standards.  I think it is a very delicate issue that should be approached
    primarily through education rather than any sort of punitive system, and I
    think this, once again, raises the question of how much we are going to
    single out imaging.  Are we going to adopt standards for imaging that are
    different or higher than standards for other practices of medicine, say
    surgery or psychiatry?  I think it is a very difficult issue.
    	MR. DEAL.  Mr. May?
    	MR. MAY.  We advocate standards for non-physician personnel
    operating medical imaging equipment.
    	MR. DEAL.  Mr. Baumgartner.
    	MR. BAUMGARTNER.  We would agree with those recommendations
    as well as the equipment standards for providers.  There is a lack of
    consistency amongst the various administration regions on standards
    today.
    	MR. DEAL.  Dr. Rucker.
    	DR. RUCKER.  We think there are already quite a few standards in
    many different areas.  Many of these sort of standards are sort of thinly
    disguised, I think, turf battles, and don't lead to cost-competitive and
    cost-effective medical care.  Certainly in looking at the MedPAC written
    testimony, it doesn't look like any of the studies that were cited actually
    showed actual harm to patients.
    	MR. DEAL.  All right.
    	Let us go back and dissect that a little bit.  That is a good word to use
    in medical terms.
    	DR. DOUGLAS.  We try to avoid the point until we get to dissecting.
    	MR. DEAL.  Dr. Douglas's point is that it needs to be specialty-
    specific.  Now, I understand that, and I tend to agree with that.  I think it
    maybe can go further and that is whether or not it also needs to be test-
    specific, instrument specific, whatever test you are using, and the
    examples we have already heard here are, let us see.  We had, of course,
    ultrasound, whether or not that needs to be carved out as an area that is
    dealt with as a specialized area.  We have also heard Dr. Griffeth say
    PET scanning needs to be considered, perhaps, in a little different arena
    and is already regulated in terms of usage.
    	So let me ask this question then.  Are there certain types of imaging
    procedures that should be carved out and certified, based on the specialty
    of the medical practice of the person so that someone who may be carved
    out for ultrasound may not be carved out for certification for CTs or PET
    scans or whatever else  Is there any common sense to an approach of
    that nature  Dr. Douglas.
    	DR. DOUGLAS.  I think there are, if you can envision what it takes to
    do quality imaging.  It starts with picking the right test for the right
    patient, and that is obviously very specific to the patient and to the test.
    The next thing that happens is you acquire images, you acquire pictures
    very specific to the test.  Things that might make a good CT scan might
    make a lousy ultrasound, and vice versa.  But there are specific things,
    specific imaging protocols, completeness of the study, that would judge
    quality that are generic, but how the particular measure might be for each
    modality.
    	You want the interpretation to be done by a skilled observer who
    knows what they are doing, has been trained to do it, and meets standards
    that exist for those things, and you want the reporting to also meet
    quality measures.  Then, of course, that gets translated into altered care
    for the patient and hopefully improved outcomes.
    	MR. DEAL.  Unfortunately my time has run out before I get complete
    answers to my questions, so I will yield to Mr. Pallone.
    	MR. PALLONE.  Thank you, Mr. Chairman.
    	I wanted initially to ask Mr. Baumgartner a question.
    	It seems there are several levels of technical skill that are required,
    depending upon the complexity of both the patient's individual
    circumstances and the imaging procedure being performed.  For
    example, some services like an OB ultrasound seem possible and even
    preferable to be performed at a physician's office, but I am sure there are
    other examples of more complex procedures that should be referred to an
    imaging specialist.  I just wanted to ask what guidance you can give us to
    assure we are meeting the needs of the patients and physicians while also
    assuring the highest possible quality with any standards.
    	MR. BAUMGARTNER.  Sure, and I would agree with that statement,
    Congressman.
    	We are not advocating that certain physicians not be allowed to
    perform those procedures.  It is absolutely necessary, but I think you
    have heard from Mr. Donahue and others that there is some over-
    utilization going on.  NCQDIS is supporting quality standards, and we
    think that should be based by equipment type, regardless of who is
    providing that procedure.  So whether it is an orthopedist or a radiologist,
    we think the standard should be the same.
    	MR. PALLONE.  Okay, thank you.
    	Then I wanted to ask Dr. Laube, on the first panel we heard a lot
    about standards for imaging services; however, I know that ACOG--is
    that right, ACOG?
    	DR. LAUBE.  Yes.
    	MR. PALLONE.  Has tried very hard to educate its members about the
    appropriate use of imaging services.  And when you discussed what
    ACOG is doing in this area and the model programs it uses to help train
    its members, when to order an ultrasound and when an ultrasound is not
    clinically indicated?	DR. LAUBE.  Yes.  We have a variety of ways that we educate,
    beginning in our postgraduate training years, that is the residency,
    beginning year one through year four on a progressively more complex
    basis.  For the graduate of a residency program, ACOG offers a number
    of different types of CME courses for practicing physicians to gain CME
    in this area.  Our specialty societies, the cancer group, the GYN cancer
    group and the reproductive endocrinologists and infertility doctors are all
    working with AIUM, the American Institute of Ultrasound in Medicine,
    to develop various types of, for lack of better word, credentialing
    procedures or accreditation procedures.
    	So education occurs at a general level through residency for our
    general OB/GYNs on a postgraduate basis, and for our subspecialists on
    a subspecialty basis.
    	MR. PALLONE.  Okay, thanks again.
    	And then last, I had a couple of things for Mr. Donahue.
    	I heard concerns that many of the programs that are put in place to
    reduce the utilization of radiology services, such as preauthorization of
    services, are by design broad brush and may simply create additional
    bureaucracy for tests that are appropriately ordered.  So wouldn't it be
    more effective to simply identify the providers whose ordering patterns
    are irregular compared to other similarly situated providers and work
    with them to bring their practices into alignment? By implementing
    across the board programs that affect all providers, doesn't that cause
    providers whose practices are actually doing the right thing to incur
    unneeded administrative costs?	MR. DONAHUE.  That is a very good question, Congressman Pallone.
    I think firstly, you have to take a very specific causal factor look at what
    is driving utilization in any region of the country.  What we endeavor to
    do is exactly what you described.  We use the data, the historical claims
    data, the clinical evidence that we have to design a radiology program
    that fits the community.  One of the things that we have learned over the
    last 10 years, ordering patterns, quality concerns, safety concerns, and
    the capacity and network and access concerns are unique in all of these
    50 States.
    	So our programs, in fact, do very much address the uniqueness of
    specialty ordering.  As an example, we have a Board-certified radiologist
    who will have peer-to-peer discussions with radiologists, Board-certified
    cardiologists who will dialogue on the clinical merits of a case when
    cardiologists interact with us, Board-certified gynecologists who will
    interact with us on OB/GYN issues.  So I agree with your concern, a
    broad brush approach is not the most effective was to take this on, but
    programs like ours, radiology benefit management programs that address
    the uniqueness of the community and the specialties do work, do add
    value, and we feel could unlock billions of dollars in savings in the
    Medicare Advantage, in the Medicaid programs for this country.
    	MR. PALLONE.  Can I just ask a brief follow-up to him?	MedPAC recommended to create a profiling mechanism to allow
    physicians to compare their use of imaging with their colleagues.  Is that
    something that you agree with, just quickly?	MR. DONAHUE.  I think physician profiling and peer assessment on a
    confidential basis that MedPAC recommended are very effective.
    	MR. PALLONE.  Okay, thank you.
    	MR. DEAL.  Dr. Norwood.
    	MR. NORWOOD.  Thank you, Mr. Chairman.  I just want to point out
    at the beginning, I would like to associate myself with the remarks of all
    of this panel, except Mr. May and Dr. Donahue.  Mr. May, I don't have
    any problems with what you were saying.  That is not what this hearing
    is about, and perhaps we will deal with that at another hearing.  Whether
    we have Federal standards or not makes me extremely nervous, because I
    never know who is going to write them.  Mr. Donahue's outfit may write
    them, and that scares me to death.  I would much rather have physicians
    writing these standards who I believe in and can trust.
    	The first panel we had today proves to me without a doubt that we
    need to pass Mr. Pitts's bill.  Perhaps we need to go further than that.
    Perhaps we need to not put this off for a year, but strike it from the
    record because MedPAC and CMS have no clue what they are talking
    about yet.  They proved that all morning; they couldn't answer questions.
    They had not done thorough studies, and we need to do what you are
    doing now, Mr. Chairman, as the beginning process of trying to learn
    what is going on so we actually--if we do need to legislate, we can do so
    from a point of knowledge rather than speculation.
    	I hear even today some say well, there must be some over-utilization
    going on.  Well, maybe there is.  I would like somebody to come along
    and say, and here is why I am saying that.  We have the proof of that.
    We know nationally why there is over-utilization, because it is always
    sort of well, we sort of assume it.  Surely, there are bad guys--as many
    bad docs as there congressmen, so most likely there is over-utilization
    going on.  You can't prove statements like that unless you are there with
    the patient, and these Board-certified cardiologists that are 10,000 miles
    away from the actual treating physician can't diagnose over the phone
    very well.  They are often wrong.  I have been there, done that, and know
    a lot of people who have done the same thing, so you can't depend on
    stuff like that.
    	So Mr. Chairman, rather than answering questions, I would urge the
    Commerce Committee to get rid of this language, and let us do, unlike
    the Ways and Means Committee did, let us study this issue and try to
    come up with some sensible reforms.
    	With that, I would like the panel to finish answering the Chairman's
    question that he asked earlier.
    	MR. DEAL.  Thank you for that, and if you would yield, I would like
    to modify that just a little bit and clarify what I am getting at.
    	I think we need to understand whether or not there can be certain
    types of test that are so uniquely aligned with certain specialties that they
    should be treated differently for purposes of setting standards of usage,
    certification of equipment perhaps. That was really the base of the
    question.  I appreciate your allowing them to answer that, and I guess we
    got to Dr. Moore.
    	DR. VAN MOORE.  Thank you, Chairman Deal.
    	It is our belief that if you look at a specific imaging procedure,
    regardless of what it is, whether it is an MR of the knee, a CT of the
    heart, that the physicians that are involved in the interpretation and
    evaluation of the exam should, regardless of specialty, have the same
    criteria in quality in terms of the training that they have, the requirements
    that they have in terms of providing the reports and rendering an opinion
    on that examination.  I think not to have that, to have different specialties
    have different standards or different ways, patients will not benefit from
    it.  So we would advocate for uniform standards for individuals that are
    providing a study regardless of the specialty.
    	MR. DONAHUE.  Thank you, Mr. Chairman.  I would like to make an
    attempt to draw consensus from the group, because I think there is one
    area of standards that we would all agree on, and that is on the safety of
    imaging equipment and the rendering of imaging as it relates to the
    patient, and the very concerning issue of radiation exposure.  I am sure
    the panel is familiar with the National Academy of Sciences' study that
    was conducted in 2005 that indicated as the intensity of particularly CT
    equipment increases the level of radiation exposure to a patient, there is a
    clarion call to monitor radiation dosages for patients and to ensure that
    there are standards on the equipment to make sure that it doesn't
    erroneously emit radiation that could further provoke carcinogenic
    effects.
    	MR. DEAL.  And that is not being done in all instances now?	MR. DONAHUE.  In all instances, Mr. Chairman, it is not, and there
    are a number of clinical studies that are taking place.  And this is another
    important factor I think all of the various distinguished members of the
    panel would agree on.  As it relates to your primary focus on the
    question, I believe there are probably categories of specialists who are
    better equipped, in terms of their clinical training and experience, to
    ordering exams, but I wouldn't go so far as to say that specialty A only
    has the capacity to perform an exam.
    	I will give you just one brief example, lumbar spine MRIs.  There are
    radiologists, there are cardiologists, there are specialty trained internists
    who focus on sports medicine who all have terrific credentials and
    experience to order this.  One may not.  There are some specialties that
    don't examine the lumbar spine that we would want to assure have no
    opportunity to order an exam like this.
    	MR. DEAL.  I have more than exhausted Mr. Norwood's time.
    	Mr. Pickering.
    	MR. PICKERING.  Thank you, Mr. Chairman, and just as an effort to
    try to find both the consensus and clarification, as we talk about
    standards there are different forms of standards in different areas, but is
    there consensus among the panel that there should be standards as far as
    to the education and the credentials of any group performing imaging
    services? Is there a consensus on that front? I would like to ask the
    panel if there is agreement or any disagreement, and if so, what are those
    areas of disagreement?	MR. DEAL.  Could I ask for clarification?	MR. PICKERING.  Yes.
    	MR. DEAL.  In light of your bill, it relates to the technologists and the
    equipment.  Is that where you are focusing it?	MR. PICKERING.  The focus is there, but it would say for physicians
    or technologists, or anybody who is providing the service.  It would
    make the distinction but it would have a minimal Federal standard that
    then the States would implement in order to be eligible for the
    reimbursements.
    	DR. DOUGLAS.  We believe that imaging is a whole process, and that
    education of the technologist or stenographer or whoever, as well as the
    physician, is critically important.  We think that the standards for each
    laboratory or each type of test have been generated by multi-specialty
    groups and need to do so on a local level with people who understand
    those tests best.  That is not necessarily cardiology, it is not necessarily
    radiology, but we need to respect the standards that are out there and
    work with them.
    	ACC has been part of the Intersocietal Accreditation Commission for
    ultrasound, nuclear, MRI, CT vascular laboratories and we feel it is a
    model program.
    	MR. PICKERING.  Dr. Douglas, would you say that additional Federal
    standards on education, would that be helpful, or are you saying that
    what is already out there as far as different specialty groups, this is
    currently sufficient?	DR. DOUGLAS.  I think an additional standard might be duplicative.
    What would be better and what the ACC supports is mandatory
    accreditation for reimbursement, specialty-specific generated
    accreditation.  It could be ACR, it could be cardiologist groups, but
    mandatory for reimbursement.  But there is no need for additional
    standards beyond that.
    	MR. PICKERING.  And just for clarification, the bill that I introduced
    does not include physicians.  We allow you all as you have said to go
    ahead and do your specialty-specific accreditation.
    	DR. DOUGLAS.  Lab accreditation includes education and standards
    for stenographers and technicians as well, and not necessarily under
    radiology.
    	DR. VAN MOORE.  I think there are two aspects of the question that
    you have.  One is as Dr. Douglas talks about, the accreditation programs
    and the American College has got accreditation programs which looks at
    the facilities, the equipment, the quality of the images, the quality
    training of the physicians, the quality of training of the technologists to
    ensure those all meet certain standards.  If you look at also then the
    MQSA, that clearly that if you are going to do mammography and if you
    are going to be involved in the care of those patients you need to have
    certain minimum requirements and continuing medical education
    specific to the area that you are rendering the high level of expertise in.
    So that if you combine those with respect to accreditation, looking at
    some of the components that have made MQSA so successful and also
    look at the requirements of IDTFs and how if you fold all those into a
    complete package, we believe that that will be a solution where
    utilization in and of itself, because there will be fewer exams that are
    ordered or requested or performed that are less appropriate, that in and of
    itself will reduce utilization of procedures, and by doing that will save
    the money that you are looking to save with respect to the offset, as I said
    in my initial comments.
    	MR. DONAHUE.  I would add, Congressman, that this is such a
    dynamic and evolving technology that the notion of continuing education
    standards that keep up with the evolution of this technology greatly
    appeal to me.  I agree with Dr. Douglas.  There are numerous folks,
    physicians, and ultrasound techs and rad techs and others who are
    involved with this who need to keep up with the nuances and the
    emerging opportunity to use this technology in the most effective way.
    	DR. LAUBE.  Yes, I think I support standards in education, obviously,
    as I am an educator, and we have what in effect is a Federal or
    nationwide standards, and that is called Board certification.  So we
    already promote the notion of standards that are applicable to all the
    Nation's 50,000 obstetricians, gynecologists, as well as our efforts at
    continuing medical education.  In this regard for us, of course, as I have
    mentioned, it is ultrasound, but yes, I certainly support standards.  That is
    what we are all about.  But I think we can go about it through our own
    expert specialty societies.
    	MR. DEAL.  I am going to ask indulgence of the committee.  This
    end never gets to answer anything because we run out of time.  Unless
    somebody objects, let us let that end of the panel answer that question.
    Dr. Griffeth, you may proceed.
    	DR. GRIFFETH.  The scope of my comments is limited to positron
    emission tomography, means that I have a little less to say probably
    about this since PET imaging has come along later than the other types
    of imaging.  We are talking about even though it was invented back in
    the mid-'70s, it has been clinically adopted much more slowly,
    predominantly because it was the later of the advanced medical imaging
    technologies to come along which provided the opportunity for CMS to
    regulate or over-regulate its utilization and has provided opportunities for
    other State regulatory agencies to impose those sorts of criteria regarding
    who can do PET imaging.  My guess is that a Federal regulation
    regarding the interpretation of PET imaging is likely not to be any more
    strict than what is already involved in most State regulations regarding
    performance and interpretation of tests utilizing radioactive materials.
    	MR. MAY.  Standards of quality will affect the overall quality, safety,
    and cost of imaging services.  Dr. Norwood asked why we were here,
    and I think the answer is because quality standards will restore money
    back to Medicare, if the tests are--
    	MR. PICKERING.  Mr. May, could you pull the microphone a little bit
    closer?	MR. MAY.  I am sorry.  Thank you.
    	MR. PICKERING.  No trouble.
    	MR. MAY.  The standards will affect overall quality, safety, and cost
    of providing medical imaging services, and unfortunately, the States
    haven't done their job.  There was a bill passed in 1981 that addressed
    this issue, and it set forth discretionary standards for the States.  Only 41
    States now regulate radiographers.  Those are people that administer X-
    rays.  Only 30 States regulate radiation therapists.  Those are people that
    use medical imaging or radiation to treat cancer, and only 25 States
    regulate nuclear medicine technology.  These are people that use radio
    pharmaceuticals to detect imaging.
    	So unfortunately, the States have not done their job.  We do need
    standards that may vary from modality to modality, but the outcome, the
    quality standards should be the same in terms of good patient care.
    	MR. BAUMGARTNER.  Congressman, we would support minimum
    education standards, and if the States would like to add to that, they
    could feel free to do that still, but I think some minimum education
    standards for technologists is appropriate.
    	DR. RUCKER.  I think physicians order imaging studies to ask and
    answer clinical questions, and I think those questions vary widely.  For
    example, I might ask Dr. Douglas, who as it turns out was my resident
    several years ago, for an elaborate cardiac echo on valves.  If I am taking
    care of somebody in cardiac arrest, I might just look quickly at that heart
    to see whether the heart is beating or not.  So you know, both are echo of
    the heart, but very, very different and probably need different billing
    codes.  So I think there are some very different specialty-specific uses of
    these imaging studies.
    	MR. DEAL.  We are going to have to try to hurry if we get these
    questions in.
    	Mr. Pitts, you are recognized.
    	MR. PITTS.  Thank you.  I will start down at the other end, Dr.
    Rucker.
    	DR. RUCKER.  Thank you.
    	MR. PITTS.  In light of the fact that MedPAC raises doubts about the
    value of imaging and, in particular, bases much of that concern on the
    rapid growth in imaging utilization, are you aware of any peer-reviewed
    literature that sheds additional light on this point?	DR. RUCKER.  There is a tremendous amount of peer-reviewed
    literature looking at the benefits of imaging, literally in the tens of
    thousands of articles.  For folks who are interested in that in any specific
    specialty, the National Library of Medicine has a wonderful website,
    pubmed.gov.  Just type in the name of the imaging study, the disease,
    and you will get a flavor of the simply stunning amount of scientific
    literature that backs up many of these practices.
    	MR. PITTS.  I don't know if you passed out this booklet to the
    members or not, but this seems to tell the story of imaging.  Can you
    comment on what this illustrates for the members? I don't know if they
    have it or not.
    	DR. RUCKER.  Yes, and we are happy to provide any member who
    may not have gotten a copy of it.  It is a book of images from 64 sliced
    CT scans.  It shows, I think, the tremendous technology.  It shows the
    stunning clarity of these computer-generated images, and I think it
    highlights, Representative Pitts, the rapidity of the change which also
    gets to whether standards could begin to evolve anywhere near as rapidly
    as the imaging technology that the manufacturers are providing is
    changing.  We suspect that is not the case.
    	MR. PITTS.  Dr. Griffeth, why is it so important for such advanced
    imaging to be available out in the community rather than having patients
    get their imaging done at large medical centers and just having the
    treatments done in the communities?	DR. GRIFFETH.  The simple fact is that most of us believe that the
    most effective cancer care is integrated cancer care, and there has been a
    huge push over the past couple of decades, both from the provider
    community whose primary issue is the delivery of this better patient care,
    and from the payer's standpoint, who as far as I know, the vast majority
    of their data showed that care is more economic out in the community
    than it is at major medical centers.  I think the value of having the
    imaging close by for patient convenience--we are talking about cancer
    patients who are very ill who may have, unfortunately, as part of the
    discussion today, repetitive imaging studies who have to have those
    imaging studies integrated very closely into their patient care.  It is not a
    matter of being able to often get back a report of a study and be able to
    utilize that.  There generally is a considerable benefit from one-to-one
    interaction between the imager and the physician treating the patient.
    	So for all of those reasons, not to mention the fact that so much of
    our patient base in oncology is out in rural areas that are pretty remote
    from major medical centers that the simple added burden on a patient
    population that need to know more added burdens I think would be the
    crux of my issue.
    	MR. PITTS.  Dr. Douglas, in your statement you state that
    appropriateness criteria will weed out inappropriate utilization, improve
    imaging quality, and facilitate reimbursement in a performance-based
    system.  To what extent are these criteria followed, and what, if anything,
    is done to ensure compliance? Is it voluntary? Are physicians penalized
    for not following them? How do the guidelines work?	DR. DOUGLAS.  At this point, the guidelines have just been published
    a few months ago and we are in the process of implementing them.  We
    work very closely with the medical directors of payers and have our fifth
    annual Medical Directors Institute coming up this fall and hope to learn
    from them how they are using these criteria to better understand imaging
    amongst their beneficiaries.
    	MR. PITTS.  And Dr. Griffeth, you mentioned in your statement a
    Trailblazer, Dr. Burkin, and you support his approach to establishing
    appropriate frequency guidelines for imaging.  Can you elaborate a little
    bit on that?	DR. GRIFFETH.  Dr. Burkin is one of the medical directors for
    Trailblazer Healthcare, one of CMS's carriers, and CMS as part of their,
    as I mentioned before, tight regulation of eligibility requirements for
    patients having PET study has also given the carriers leeway to establish
    these frequency guidelines, particularly for follow-up studies performed
    to determine how a patient's treatment has worked or whether a patient's
    disease has recurred.  Several payers have addressed this as a possible
    area of over-utilization.  Dr. Burkin has, I think, taken a very rational
    approach that is still in evolution of consulting very closely with folks
    from both the imaging side and from the treatment side to determine
    what appropriate clinical guidelines might be for those frequency
    limitations.
    	MR. DEAL.  Dr. Burgess, you are recognized for questions.
    	MR. BURGESS.  Thank you, Mr. Chairman.
    	Dr. Griffeth, we tried to get the information from MedPAC and
    CMS, and it was difficult to do, but do you have an opinion as to the
    value of imaging in regards to the Medicare system? Is this something
    that costs or pays?	DR. GRIFFETH.  Obviously, I wouldn't be sitting here if I didn't think
    it paid, but you know, the fact of the matter is while we have spent a lot
    of time talking about cost effectiveness, and I am here primarily as a
    patient advocate, I would be here talking to you and saying the same
    thing even if I did think that PET imaging in specific was costing the
    budget money, because I believe that this is appropriate patient care.
    	Having said that, yes, I believe we are saving money on a daily basis.
    I do believe that there is opportunity for over-utilization.  In my
    experience, if there is considerable over-utilization, it overwhelmingly is
    coming from physicians who might be being overly cautious with taking
    care of their patients and they have been convinced of the value of
    advanced medical imaging to answer questions they couldn't have
    answered before.
    	So my personal opinion is that yes, we are certainly saving money.
    Perhaps with some refinement of utilization guidelines and education, we
    could save a bit more.
    	MR. BURGESS.  On the--and I apologize if you have already
    answered this question.  I got distracted by this very colorful booklet that
    was handed to me, Dr. Rucker.  The issue came up, I think Mr.
    Baumgartner brought up the issue about a ban on self-referral.  How
    would that affect a group such as yours, U.S. Oncology, and your ability
    to interact with physicians in your own group?	DR. GRIFFETH.  Well, I am not sure.
    	MR. BURGESS.  I was actually addressing it to you, Dr. Griffeth.
    	DR. GRIFFETH.  I need to make clear, I am not a member of U.S.
    Oncology.  U.S. Oncology reimburses my department for part of my time
    to help them determine appropriate utilization of PET and their oncology
    patients.  I must say that our interaction with the oncologists is, as I
    alluded to earlier, crucial in the care of the patient.  The two-way
    interaction, educating them both in terms of the value and the limitations
    with PET, and them educating us regarding what sort of patient care
    decisions they need to make is invaluable.
    	MR. BURGESS.  Dr. Laube--and I guess our time is drawing to a
    close, Mr. Chairman.  I get the impression from you that ultrasound in
    OB/GYN is different than perhaps other imaging technologies in other
    specialties.  Is that a fair statement?	DR. LAUBE.  Yes, different in the sense that we need to have it day-
    to-day in our clinical practice onsite in real time.  And so I think we are
    considerably different from the others.  We don't want to do MRIs or
    CTs for sure, and we don't want to learn how to do them.
    	MR. BURGESS.  The issue was brought up on standards for education.
    In your testimony, you have certainly drawn--posed a question, I think in
    my mind at least, and that is as the residency training for the average
    OB/GYN resident in ultrasound has increased, the training for the
    average radiology resident may have reduced in OB/GYN because of the
    lack of clinical material which is being, of course, attended to
    appropriately by the OB/GYN resident.  Do you see that as an issue for
    us going forward?	DR. LAUBE.  I personally don't.  I think that is an appropriate shift,
    from my perspective, of course, for the reasons I just mentioned.  We
    need to have our tool day-to-day, 24/7, 365, and I think that--
    	MR. BURGESS.  Let me just interrupt briefly.  When it comes then to
    the issue of accreditation, is an OB/GYN residency going to be an
    acceptable credential for someone who is to be accredited in ultrasound,
    and conversely, is a radiology residency going to be an acceptable
    credential in the same field?	DR. LAUBE.  I don't think for us that the radiologist can or should
    accredit us.  I think we should take care of ourselves because that is what
    we do, and as you pointed out, with our experience going vastly up in the
    last 10 years, theirs has gone dramatically down in our field.
    	MR. BURGESS.  Yes, sir.  Thank you, Mr. Chairman.
    	MR. DEAL.  Thank you.
    	Ms. Myrick.
    	MS. MYRICK.  Well, I know we are out of time, so in interest of that,
    I know everybody has to go vote.  I will just thank you all and any
    questions I have I will get to you individually.  Thanks.
    	MR. DEAL.  Let me also thank all of you, and I apologize that we are
    having to rush out, but we are just about out of time on the floor for a
    vote that has been going on.  Very interesting panel, very interesting
    discussions.  If you wish to supplement any of your answers or provide
    additional information, we would encourage you to do so.
    	Thank you all for your presence today.  With that, this hearing is
    adjourned.
    	[Whereupon, at 1:45 p.m., the subcommittee was adjourned.]

    RESPONSE FOR THE RECORD OF HERB KUHN, DIRECTOR, CENTER FOR MEDICARE
    MANAGEMENT, CENTERS FOR MEDICARE & MEDICAID SERVICES, U.S. DEPARTMENT OF
    HEALTH AND HUMAN SERVICES

    RESPONSE FOR THE RECORD OF GLENN M. HACKBARTH, CHAIRMAN, MEDICARE PAYMENT
    ADVISORY COMMISSION

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