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The Reading Room

Obama's deficit reduction proposal would increase equipment utilization factor, implement prior authorization for advanced imaging

Nick Bartz, Imaging Performance Partnership

President Obama on Monday unveiled a deficit reduction proposal that would include an increase to Medicare's imaging equipment utilization factor and the implementation of prior authorization for advanced imaging, as part of a broader proposal that would cut over $320 billion from Medicare and Medicaid over the next decade.

Taking its lead from MedPAC, the Whitehouse is seeking to update Medicare payments to more appropriately account for utilization of advanced imaging. Beginning in 2013, the president’s proposal would implement a “payment adjustment for advanced imaging equipment to account for higher levels of utilization for certain types of equipment.” It is unclear at this point whether the equipment utilization rate would be raised to 90%, as has been proposed in the past, or to some lower rate, but the Whitehouse is suggesting that its adjustment would save approximately $400 million over 10 years.

A second part of the president’s proposal would require physicians to obtain authorization prior to utilizing advanced imaging services in order to reduce the number of costly imaging exams ordered inappropriately. MedPAC proposed a similar preauthorization requirement earlier this year in its report to Congress; however their suggestion was that it should apply only to physicians who utilize advanced imaging significantly more than their peers. In contrast, the president’s proposal would submit all physicians to the pre-authorization requirement. Citing the experience of private insurance companies and a 2009 GAO report, the administration has suggested that this proposal could save approximately $900 million over 10 years.

The plan is designed as Obama's "starting offer" for the newly created debt “Super Committee,” which is charged with finding $1.5 trillion in savings by the end of November. Proposals to increase the equipment utilization rate and to implement the use of prior authorization for advanced imaging have faced stiff bi-partisan resistance in past budget negotiations, but given the magnitude of the Super-Committee’s debt reduction mandate, it seems likely that the measures may very well be seriously considered.