Blog Post

Anthem will deny some hospital-based imaging: What you need to know

September 18, 2017

    Anthem, the second largest insurance company in the United States, recently announced that it will no longer pay for certain advanced imaging services at hospital-based facilities. Anthem's leadership cited the substantial price variation between imaging services performed at hospitals versus freestanding sites as justification for the change.

    This marks the latest instance of hospital-based imaging facilities being targeted as a source of unnecessarily high costs. Medicare has been rolling out a site-neutral payment policy and payers have been steering patients to lower cost sites for nearly a decade—although Anthem's latest move takes steerage to a new level.

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    Since Anthem announced this policy, our researchers have received many questions from members. Read on for answers to your top questions, as well as our take on how programs can respond.

    Familiar with Anthem's policy? Click to jump ahead to our take on how hospitals can respond.

    Top questions about Anthem's policy

    Q: What is the new policy, and how will Anthem implement it?

    A: Anthem's specialty benefits management company will consider care setting in CT and MR preauthorization. Anthem—specifically AIM (a specialty benefits management company)—will consider clinical guidelines around "level-of-care" in its approval process for CT and MR services. In a clinical guideline document, Anthem defines hospital-based advanced imaging as medically necessary when at least one of the following criteria are met:

    • The services being provided are only offered at hospital outpatient departments (and therefore are unavailable at freestanding sites);
    • The patient is receiving perinatology services;
    • The patient needs an obstetrical observation; or
    • "There are no other geographically accessible appropriate alternative sites for the individual to undergo the procedure," including because freestanding facilities do not have needed equipment or sedation services.

    Anthem does not define what distance is considered "geographically accessible."

    If the order is approved for appropriateness but denied for site of care, AIM will issue a denial and the ordering provider will be given a list of alternative freestanding imaging facilities in the service area.

    Q: Who will be impacted?

    A: Hospital outpatient imaging programs providing care to Anthem patients in nine states.

    As far as we can tell, this policy applies to both on- and off-campus hospital outpatient departments (HOPDs). In other words, freestanding facilities billing at the higher hospital rate will be viewed as hospital-based, and services may be denied at those locations. This includes newly built or acquired HOPDs that are impacted by the Medicare site-neutral payment policy.

    Q: If my hospital is in a state included in this policy, how will this impact my hospital imaging volumes?

    A: This depends on your location, outpatient imaging footprint, and Anthem's market presence. Follow the five steps below to estimate the impact on your imaging program.

    1. Identify the percentage of your patient base that is insured by Anthem. Use our Demographics Profiler tool.

    2. Estimate your HOPD CT and MRI volumes. Use our Outpatient Imaging Market Estimator tool, customizing your market, and viewing data by site-of-service (HOPD only). Multiply those estimates by your overall market share.

    3. Calculate CT and MRI volumes. Multiply Anthem patient base (step 1) by HOPD imaging volumes (step 2).

    4. Remove emergency department (ED) volumes for CT (MRI ED volumes are too low to make a meaningful difference). Multiply CT volumes (step 3) by 70% (since we assume that 30% of CT volumes are in the ED).

    5. Estimate percentage of HOPD volumes likely lost based on the medical necessity criteria, location of closest freestanding location, and unique services. We assume 80-90% of exams will be deemed unnecessary for HOPDs in non-rural areas. Multiply MRI volumes (step 3) by the estimated percentage. Multiply CT volumes (step 4) by this percentage.

    If you own a lower-priced freestanding imaging center, you will have an opportunity to shift some of the impacted volumes over to that facility. For those volumes you are able to shift, you'll be able to win back about 50% of the lost revenue (according to a 2016 Medicare analysis, on average freestanding facilities are reimbursed at about 45% of the hospital rate). If you do not own a lower cost site, assume 100% of revenue from step 5 above is lost.

    Other considerations:

    • If you own a lower cost facility in an impacted market, expect to see an increase in advanced imaging volumes, especially if your competitors only provide imaging at hospital-based facilities.

    • You may see an overall dip in imaging utilization. From previous consumer surveys we know that patients are more likely skip a recommended medical test or treatment if they have to travel a significant distance or wait a significant amount of time for an appointment.

    For more, read Anthem's FAQ on the site-of-care imaging policy.

    Our take: How should hospitals respond?

    Anthem's new policy is creating plenty of buzz among hospital leaders, radiologists, and other providers. While the policy is likely to reduce costs, many cite concerns that it will harm access to care for patients, particularly in rural communities.

    Regardless of where you fall on this issue, there is one thing we cannot deny: Outpatient imaging is increasingly moving off-campus. It's not just payers that favor lower cost imaging. Patients, now on the hook for their health care costs, actively seek out lower priced services. And even referring providers, increasingly taking on risk, favor cost-effective care. To respond, all imaging providers should develop strategies to position their programs for success in a cost-conscious environment.

    Step 1: Implement short-term strategies

    For hospitals impacted by Anthem's policy, consider implementing these three short-term strategies to retain patients and avoid denials.


    Step 2: Consider building or expanding your freestanding imaging footprint

    All organizations—impacted by Anthem's policy or not—should consider a longer term outpatient imaging strategy.

    Market forces favoring freestanding imaging

    To set your program up for success in the freestanding imaging space, consider the following steps:

    • Evaluate co-ventures with other market players (e.g. radiology groups or independent operators) to lessen the financial burden on your organization;
    • Identify the right market and right services to ensure that you will be providing services that are necessary, rather than cannibalizing volumes; and
    • Maximize operational efficiency to reduce costs while increasing revenue for a financially sustainable facility.
     

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