Radiology benefit managers: cost saving or cost shifting?

Abstract

Radiology benefit managers (RBMs) are widely used by private payers to manage the utilization of imaging services through prior authorization, and they have been proposed for use in the Medicare program. The authors created a framework for evaluating the impact of key parameters on the ability of RBMs to lower costs and used decision-analytic modeling to simulate the net impact of RBMs on health care costs under uncertainty from a societal perspective. The authors' model of a "typical" RBM's prior authorization process used base-case values for each parameter (utilization rate and costs for MR, CT, and PET imaging; physician and staff time spent in complying with RBM requirements; approval and denial rates; and RBM fees to insurers) drawn from published data and the experience of a large, academic institution. Different values were tested in the sensitivity analysis to account for uncertainty in the parameter estimates. A hypothetical 100,000-member private health plan with an imaging utilization rate of 135 per 1,000 members per year was assumed. Under the authors' base-case scenario, in which RBMs have no net impact on costs, they estimated that 28% ($182,066/$640,263) of the projected RBM-related savings are shifted to providers. RBMs were cost saving in 45% of simulations, and 95% of simulations fell between a cost decrease of $397,880 and a cost increase of $341,991. The probability of an initial approval by the RBM, the RBM's fee, and the imaging utilization rate and associated charges had the largest influence on the results. The authors' models shows that RBMs shift significant costs to physicians and that their net impact on societal costs depends on parameters for which supporting data are incomplete.