Canon Medical Systems USA

Understanding Your Business - Healthcare Reimbursements

Tom Szostak - Healthcare Economics Manager, TAMS | May 18, 2015

Understanding the economics and policy trends of medical imaging will become increasingly more important as the pressures for cost containment of the US healthcare system escalates. In order for hospital and non-hospital based radiology operations to survive, having a strong foundation of the “business” of imaging will be essential. 
This is the first in a series of articles designed to build the foundation for a better understanding of healthcare reimbursements and the public policy landscape.
The Value of Technology
Technological breakthroughs in diagnostic imaging have been instrumental to the advancement of healthcare.   This rapid growth and adoption of medical imaging technology over the course of the past ten years is resulting in greater scrutiny from government and commercial payers that seek to reduce cost from the healthcare system.  Policy makers will look to the medical imaging community to provide data that demonstrates the cost-effectiveness of new technologies with improved health outcomes.  
  “Policy makers will look to the medical imaging community to provide data that demonstrates the cost-effectiveness of new technologies with improved health outcomes."
Healthcare Revenue Cycle for Imaging Services - Where Does the Process Start?
In general, radiology administrators do not have much exposure to the entire revenue cycle; especially when it comes to the hospital setting.  Scheduling, pre-certification, coding, payer contracts, physician credentialing, accreditation, billing, and collections are all important aspects of the business of radiology that are critical in successfully funding the operation.   A good radiology administrator will not only have a sound knowledge of the operational aspect of an imaging department or center, but they will also understand the components of the procedures and the requirements of the payers that must be met in order to receive payment for services. 

Where does the revenue cycle begin for imaging services? 
Subdural Hematoma The following are various healthcare scenarios in which imaging is a key component in diagnosing the patient’s symptoms:
  • A primary care physician orders an MRI Lumbar Spine for a patient based on the clinical indication of spinal stenosis.
  • A cardiac patient has an inconclusive stress test and the cardiologist orders a cardiac catheterization in order to reach a definitive diagnosis.
  • A stroke patient arrives at an emergency room where the attending physician orders a non-contrast CT brain scan to check for bleeding.
Remember, for all radiology services, the treating physician is responsible for ordering the radiology procedure to be performed on a patient.
Facilities for Imaging Services
Once the imaging exam has been ordered there are several locations that could perform the ordered imaging study, other than those procedures ordered in an emergency room situation.
  • Physician Office Setting
  • Free Standing Imaging Centers (e.g. Independent Diagnostic Testing Facilities – IDTF)
  • Hospitals – Four points of entry:
    • Inpatient
    • Emergency
    • Same Day Surgery
    • Outpatient or Outpatient Center
The exam could be performed in a physician office setting, or in a free standing imaging center, also known as an independent diagnostic testing facility or IDTF. 
There are four possible points of entry when an imaging service is performed at a hospital. The first point of entry is an inpatient, where an order has been placed for an imaging exam on a patient that is already in the hospital. Next is the emergency room where imaging studies are ordered by the ER physician to help diagnose and treat trauma patients. Same day surgery centers could require imaging, such as a chest x-ray, as part of a pre-operative work up prior to the patient going under anesthesia, or use imaging for guide wire placement or breast lesion localization to help guide the surgeon during the operation.  The last point of entry could be an outpatient center that is either within or adjacent to the hospital, or at a designated site within the local community.
Healthcare Insurance Categories
Now that there is an understanding of the various places of services where a patient might obtain imaging services it is important to understand the types of healthcare insurances used by patients to pay for these services.
The Centers for Medicare and Medicaid Services (CMS) administers the national Medicare program and works with states to administer Medicaid programs.
“Failing to receive the appropriate authorization prior to executing an imaging study can be a costly error to any facility that provides imaging services; resulting in a delay or loss of reimbursement.”
Medicare provides health insurance to those who are 65 and older or with conditions that are considered to be long-term disabilities.

Medicare beneficiaries tend to make up a large portion of the patients that are seen in radiology.  Coverage is divided into two components. Part A, which provides coverage for hospitalization.  And Part B, which provides coverage for ancillary services.

Medicaid provides healthcare payment assistance for low-income individuals and families.

TRICARE is a federally funded healthcare program that provides military personnel with medical care.

And last of all, we have commercial payer plans.  These plans are offered by most employers and usually exist in the form of a managed care plan.  Most employer based commercial plans offered are either a Preferred Provider Organization (PPO) or a Healthcare Maintenance Organization (HMO).  Indemnity plans do exist, but most of these insurance plan products are very expensive and are the rare exception in today’s world of healthcare coverage.

Today, a significant majority of managed care plans require some form of pre-certification or pre-authorization for high-end, imaging services; such as CT, MR, Nuclear Medicine, PET, or Echocardiography.   Failing to receive the appropriate authorization prior to executing an imaging study can be a costly error to any facility that provides imaging services; resulting in a delay or loss of reimbursement.
Understanding the fundamentals of healthcare reimbursement is important in supporting the day-to-day operations of an imaging department.  Radiology administrators that do not understand the fundamentals can find their facilities carrying large debt while they wait for delayed reimbursements and can face greater government scrutiny on imaging studies.