Thu, Jan 08, 2009
A patient undergoes a positron emission tomography CT scan — often called PET-CT. It's among the medical imaging tests affected by congressional cutbacks in Medicare spending.
Mike Groll / The Associated Press

Business

MRI, X-ray firms fight Medicare cuts

By Matthew Perrone
the associated press
Tucson, Arizona | Published: 06.26.2007
WASHINGTON — Medical imaging equipment makers are lobbying to overturn Medicare cutbacks after weathering some of the worst sales numbers in recent memory.
Congress made the cuts after critics charged that some health-care providers were performing more tests than necessary simply to boost revenue. But equipment makers such as General Electric Co., and providers of diagnostic tests such as Alliance Imaging Inc., are waging a campaign to convince federal lawmakers that the six-month-old policy is having a negative effect on public health.
The cuts took effect in January and reduce how much doctors are paid for running X-rays, medical resonance imaging and other tests on patients enrolled in the government-run health program for seniors. For example, nationwide reimbursements for MRI scans, one of the most commonly performed procedures, dropped 38 percent on average, with payments varying by county.
The Medicare payment changes, which are expected to save $2.8 billion over five years, sent sales of scanners made by GE, Siemens AG, Toshiba Corp. and others tumbling more than 20 percent last quarter, according to data provided by an industry group.
Opponents argue that if fewer doctors offer in-office imaging, patients will have to travel farther and wait longer for medical scans that detect cancer, heart disease and other ailments.
"When you see legislation like this that retards and restricts the availability of diagnostics, it's just a bad long-term decision that can negatively affect people's health," said Joe Hogan, president of GE's health-care business.
Medicare officials say they are monitoring whether patients are having trouble getting access to imaging. And they point out that payment reductions don't affect hospitals, where the majority of imaging services are performed.
For now, it appears there is little sympathy on Capitol Hill for the imaging industry, which had close to $25 billion in revenues last year, according to Kalaroma Information. There are no hearings on the issue scheduled, and Democrats and Republicans have vowed to trim Medicare spending further this year.
Imaging advocates have formed a lobbying group in Washington dubbed the Access to Medical Imaging Coalition, which they say represents more than 75,000 patients and health-care professionals.
The group's public-policy arguments aside, at least part of the motivation for its efforts is the impact that Medicare cuts are having on the industry's bottom line. GE, which dominates the U.S. imaging market, said the payment cuts hurt its first-quarter sales by $150 million.
The company's health-care division spent nearly $250,000 lobbying Congress last year, according to public records cited by http://opensecrets.org/. Two trade groups that represent imaging manufacturers in Washington — the National Electrical Manufacturers Association and the Advanced Medical Technology Association — together hired 23 lobbyists in 2006 to work on Medicare issues.
The reimbursement changes also affect companies that provide imaging services, such as Anaheim, Calif.-based Alliance Imaging, which operates mobile centers that travel from site to site.
Although 90 percent of Alliance's business is tied to hospitals, which are unaffected by the cuts, its management warned that reduced payments would hurt earnings by $14 million this year. Alliance is a member of the Access to Medical Imaging Coalition.
The threat of fewer physicians performing scans has also raised concerns for companies such as Nighthawk Radiology Inc., which outsources the interpretation of scans taken in the United States to sites in Australia and Switzerland.
Washington's unresponsiveness may reflect a more troubling trend for these and other medical technology companies: Health-care experts that advise lawmakers are not convinced that more medical technology translates into better health care.
"We have communities with half as many scanners as those in other parts of the country, and their outcomes are just as good, and in some cases better, than communities spending twice as much on imaging," said Elliot Fisher, a professor at Dartmouth Medical School who consulted for government advisers on the imaging issue.
Research by Fisher and his colleagues found that patients live about the same length of time regardless of their access to imaging.
Imaging industry representatives counter that basing the technology's value on whether the patient lives or dies isn't valid.