Insurers Curbing Medical Scans; Fallout for Alliance

Alliance Imaging Inc. of Anaheim and others are feeling the fallout from a cutback in the use of advanced medical imaging services by health plans.

Insurers have seen a double-digit annual increase in the use of computerized tomography, positron emission tomography and other scans, according to a report by the Center for Studying Health System Change, a nonprofit that examines healthcare in 12 areas, including Orange County.

“Health plans are targeting selected, high-cost services, such as advanced imaging, for more aggressive oversight,” Paul Ginsburg, the center’s director, said in a release.

But health plans are treading cautiously in the hopes of avoiding any backlash from doctors and patients over perceived intrusions on physician autonomy. During the 1990s, the managed care industry was rocked by a patient and doctor backlash. Many doctors rebelled against what they saw as burdensome and intrusive requirements imposed by managed health plans.

Health plans are working to control imaging costs in several ways. Those include telling doctors about evidence-based imaging guidelines, requiring prior authorization and credentialing doctors and imaging equipment.

“Despite physician objections, health plans generally have stood firm (about imposing imaging controls) because they believe the cost savings and patient safety gains outweigh the negatives,” said Ann Tynan, a center researcher and study co-author.

Alliance, one of the larger imaging service providers to hospitals and doctors, said during its fourth-quarter conference call that private payers are having an impact on its business.

“Private payers continue to implement initiatives (that) negatively impact volumes by placing undue hardship on patients and nurses providing services in order to cut costs,” Chief Executive Paul Viviano said. “Further, the increase in patient cost-sharing continues to impact our volumes negatively as employers increasingly offer health plans that are designed to shift financial responsibility to their employees.”

Alliance expects the trend to continue as employers look for ways to cut costs, he said.

Hospitals and imaging centers are facing competition from doctors who are adding advanced imaging equipment in their offices, Viviano said.

That leads to excessive service usage, “which hurts the entire industry including Alliance,” he said.

Overuse of services, he said, generally drives prices down. Payers reduce their reimbursement to service providers in order to counter rising use as a cost-cutting measure, according to Viviano.

For the fourth quarter, Alliance posted a pre-tax profit of $39.7 million, down 3% from a year earlier. Revenue was up 2% to $113.6 million.

Alliance’s revenue and pre-tax profits largely were hit by previously announced Medicare reimbursement cuts.

Mazzo on Contacts

Santa Ana-based Advanced Medical Optics Inc., through acquisitions and internal development, has built itself into a big player in several eye markets.

But it’s still on the sidelines when it comes to the multibillion-dollar contact lens market, which rivals Bausch