Supreme Court Ruling a Mixed Bag for Radiology

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In the opinion of Phil Russell, MBA, CEO of South Texas Radiology, the Supreme Court’s decision to uphold the individual mandate in the Patient Protection and Affordable Care Act (ACA) could well be a boon for radiology—and a disaster for Americans. The uneasy paradox reflects a variety of often contradictory notions across the radiology industry, and throughout the United States.

Many health policy gurus expected the Supreme Court to strike down the ACA’s individual mandate, a provision which required individuals to obtain health insurance or pay a tax. But the Supreme Court upheld the vast majority of the law, including the individual mandate, stating that it was constitutional under the federal government's authority to tax.

Medical professionals across the spectrum expressed strong opinions, but Russell points out that the impact ultimately resembles beauty—which is usually in the eye of the beholder.

“If you want to have greater volume, then I think the impact will be good to the point of being absolutely beautiful,” he says. “With more Americans in possession of insurance coverage, we should all expect greater volume of demand for radiology services. Through the narrow tunnel of radiology, this law will be good in keeping everyone in radiology very busy.”

The problem is that increased access could add up to greater spending, a burden that some experts warn could drain government coffers. “More services will mean greater total expenditures in the aggregate, and higher total spending will crush taxpayers,” says Russell. “The meager taxes—aka penalties—prescribed in the law for those who do not purchase real insurance policies will not begin to approach the added level of spending.”

Russell predicts lawmakers will react to the shortfall by cutting rates. “At that point, volumes will still be good,” he says, “but things could be bad for radiology because margins could be so slim as to make it an undesirable pursuit from a profit perspective.”

According to Jonathan Breslau, MD, FACR, a lot depends on a practice’s particular situation. If uncompensated care is a problem, he reasons that the ACA is a plus, because it would cover more people who were previously uninsured at Medicaid rates.

Since the Supreme Court ruled that the federal government could not withhold money from states that choose not to participate in Medicaid expansion, the growth of coverage will vary state by state. At this point, as many as 26 states will not participate.

“In Alabama, for example, about 16% of its citizens are currently uninsured, and nearly half of those would be eligible for new coverage if the state agrees to expand its Medicaid program,” says Breslau, president and chairman, Radiological Associates of Sacramento, Sacramento, Calif. “Governor Robert Bentley [of Alabama] is not supportive of any aspect of the ACA. Interestingly, the federal government will pay 100% of the additional cost for covering those Alabama citizens during the first three years.”

As for care provided under private insurance, Breslau estimates the ACA’s impact as neutral or slightly positive. “More people will have insurance under various provisions of the ACA, but insurers will face greater scrutiny over non-health care costs, and payouts to providers may face downward pressure,” he says. “With the survival of the individual mandate, there will be a viable financial structure to the private insurance system.”

Breslau predicts hospitals will experience a decrease in reimbursement, but the decrease is likely to be more predictable—and less steep—thanks to the ACA. “Now that the ACA will survive, hospital systems will move forward more confidently with new payment models, including ACOs and bundled payments, most of which will result in lower volume of imaging services and lower per-procedure reimbursement,” he says. “With the ACA, there will be lower gross dollars to radiologists. But without the ACA, there would probably be even lower gross dollars to radiologists. I guess that’s a positive.”

The emergence of a so-called “revenue star” could ease the financial crunch, and mammography could well fill that role. “Mammography is less revenue per examination than CT or MRI,” says Phil Russell, “but when done in high volumes, it can be a profitable pursuit.”

A June 2012 Centers for Disease Control (CDC) Morbidity and Mortality Weekly Report is one publication that recently encouraged greater utilization of mammography. The report points to