[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 ï¿½2000 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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Effects on Survival, Dependency, Seizures, Rebleeding, Subgroups, and Aneurysm Occlusion," 
Molyneux AJ, Kerr RS, Yu LM, Clarke M, Sneade M, Yarnold JA, Sandercock P, The Lancet, Vol. 
366, Issue 9488, September 3, 2005, Pages 809-817.
  "Effect of a U.S. National Institute of Health Programme of Clinical Trials in Public Health and 
Costs," Johnston SC, et. al., The Lancet, Vol.367, pp. 1319-1327, April 22, 2006.
  "MRI versus CT-based Thrombolysis Treatment Within and Beyond 3-hour window after Stroke 
Onset," Kohrmann, M; Lancet Neurology, 2006, published online, July 4, 2006
 "Molecular Imaging in Cancer:  Future Directions and Goals of the National Cancer Institute," 
Hoffman JM, Menkens AE, Academic Radiology 2000, Vol 7, No 10, October 2000, p.905.  Also 
see, "Imaging in Cancer: A National Cancer Institute  'Extraordinary Opportunity,'" Hoffman, JM, 
Neoplasia, Vol. 2, No.1/2, January-April, 2000. 
  "Effect of Screening and Adjuvant Therapy on Mortality from Breast Cancer," Berry, DA, et. al., 
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Chemotherapy and Hormonal Therapy for Early Breast Cancer on Recurrence and 15-year Survival: 
An Overview of the Randomised Trials," Early Breast Cancer Trialists' Collaborative Group 
(EBCTCG), The Lancet, Vol. 365, May 14, 2005, pp. 1687-1717.
  "Screening Mammograms:  Interpretation with Computer-aided Detection-Prospective 
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  See "Diagnosis of Primary Bone Tumors with Image-Guided Percutaneous Biopsy: Experience 
with 110 Tumors," by Jelinek JS, Murphey MD, Welker JA, Henshaw RM, Kransdorf MJ, 
Shmookler BM, Malawer MM, Radiology 2002; 223; 731-737.
  See, "High Dose Intensity Modulated Radiation Therapy for Prostate Cancer: Early Toxicity and 
Biochemical Outcome in 772 Patients," by Zelefsky MJ, et. al., International Journal of Radiation 
Oncology, Biology, Physics, Volume 53, No. 5; pages 1111-1116, August 2002.  
  American Urological Association, "Guidelines for Ultrasound Utilization," accessed May 8, 2006, 
at http://auanet.org/about/policy/education.cfm#ultrasound. 
  ACC/AHA Practice Guidelines for the Management of Patients with Periperal Arterial Disease 
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No. 3, pp. 198-202.
  "Positron-Emission Tomography and Assessment of Cancer Therapy," Juweid ME, and Cheson, 
BD, The New England Journal of Medicine, Vol. 354, No. 5, Feb. 2, 2006, pp. 496-507.
  See http://www.cancerpetregistry.org/index.htm.
34 "Physicians' Views of the Relative Importance of Thirty Medical Innovations," Victor R. Fuchs 
and Harold C. Sox, Jr., Health Affairs, Volume 20, Number 5, September/October, 2001.
  Williams, Testimony before the U.S. House Ways and Means Committee, March 17, 2005
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  See "Report to the Congress: Medicare Payment Policy,"  Medicare Payment Advisory 
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  Ibid.
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  Trends in the Use of CT and Radiography in the Evaluation of Facial Trauma, 1992-2002: 
Implications for Current Costs," Turner BG, Rhea JT, Thrall JH, Small AB, Novelline RA; 
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  "Core-Needle and Surgical Breast Biopsy: Comparison of Three Methods of Assessing Cost," 
Jeffrey H. Burkhardt and Jonathan H. Sunshine, Radiology, 212:181-188, 1999.
  "Report to Congress:  Increasing the Value to Medicare," Medicare Payment Advisory 
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  Mark B. McClellan Remarks to InHealth, the Institute for Health Technology Studies, July 10, 
2006.
  Physician Practice Expense Proposed Rule, Federal Register, June 2006.











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