GO: Effective October 10 for all diagnostic imaging services in the following categories: CT, MRI, Nuclear Cardiology, and PET Scans, a prior authorization by the plan is required. It does not apply to diagnostic imaging performed in association with inpatient hospitalizations or emergency room care. We have engaged the services of American Imaging Management (AIM) to provide those prior authorization services. This policy applies to all of our managed care lines of business in Pennsylvania, New Jersey and Delaware. In New Jersey we actually launched this program in the second quarter of 2003 as a pilot and used that pilot as the predecessor to the more widespread program.

GO: A number of factors, number one of which was a doubling of the costs for advanced radiologic imaging between the years 2001 and 2003 for our plan membership – and that was based on a relatively flat membership, so you can’t attribute that to membership growth. There was also a national increase in utilization for these studies at about 20 to 30 percent annually during the same time period. You couple that with data that comes out of places like the American College of Radiology, as well as the Pennsylvania Healthcare Cost Containment Council, that suggested somewhere between 20 and 30 percent of advanced imaging studies either are not the appropriate study, do not add anything to the diagnosis, or are being repeated at a time interval too short from the previous study. CMS has undertaken similar studies and has come up with similar numbers. In the forum of the American College of Radiology, published in 2004, Kenneth Kaiser – CEO of the National Quality Forum – is quoted as saying that there is a quality gap in imaging technology composed of five components: overuse, underuse, misuse, errors and waste. He further asserted that these deficiencies have been tolerated in the past, but increasing recognition of the problem, rising health care expenditures, purchaser activism and consumerism are converging forces that will demand fundamental system changes.

An article published February 9^th of this year in the Journal of the American Medical Association says, "Not surprisingly, insurers and Medicare officials are concerned about this rapid cost increase. They worry diagnostic imaging growth is simply not the result of natural evolution of health care delivery, but that some part of the equation includes physicians seeking new revenue streams." They go on further to say that to control medically inappropriate imaging, Medicare is considering implementing controls used by private insurers, including profiling physicians’ patterns of imaging and requiring preauthorization to reduce imaging use that is inconsistent with practice guidelines. So, private health plans are not alone, and indeed IBC is not alone in this. There are numerous health plans throughout the country that have implemented this. We’re actually late to get into this process. Highmark will be implementing a radiology prior authorization program beginning in 2006 – they have actually implemented a network redesign program first, to be followed by a prior authorization program. The largest Blues plan, Anthem-Wellpoint, which covers about 30 million lives in the country, have radiology prior authorization. Aetna has radiology prior authorization. Blue Cross of Massachusetts will be launching a prior auth program, the Blues of Michigan and also in Texas have had it for a number of years. And that’s just naming a few.

Several factors drive overutilization. One is the sheer number of sites that provide diagnostic imaging. There’s data out there to show substantial growth of imaging centers in Pennsylvania and nationwide. A second thing we have is our own database from our pilot program in New Jersey which shows a significant flattening of the growth of utilization of these studies, pre- and post-program. In the year prior to the program in New Jersey, the number of CAT scans performed per 1,000 members increased by about 25 percent. In the year the program was launched that increase was about 0.9 percent for the same study. Similar data was available for MRI scanning. In both pre- and post-study the rate of PET scans actually grew, which is probably appropriate because it’s an emerging technology with emerging indications.

GO: The main thrust is to educate our providers about appropriateness of utilization of these studies by implementing guidelines that are mainly derived from two major sources: the American College of Cardiology for nuclear cardiology and the American College of Radiology for advanced imaging studies. When a study is requested, if it does not meet criteria, attempts are made to educate physicians through either peer-to-peer contact with AIM radiology advisors, or on some occasions with IBC medical directors, about more appropriate studies or other alternatives. The AIM process is to refer cases that cannot be certified with the initial information to a nurse reviewer, who will further discuss and ask for additional clinical information. If after obtaining that additional clinical information, the case can’t be certified, it’s referred to a medical director at AIM for review. If the medical director approves it, the case is given an authorization. If the AIM medical director issues a non-certification, then the provider has the ability over the next 24 hours to contact an AIM advisor to discuss that case on a phone call. Physicians have been informed in mailings about these guidelines, and have the ability to access them online through the AIM website, and through our NaviNet site.

GO: We want it to be immediate. If you data enter it on one of our systems like NaviNet, and all criteria are met, you will get an immediate certification number. So far, data from our open phone lines shows that the average talk time for a case is a little bit under five minutes.

GO: I don’t have the savings projections. In general, we’re looking more to change the trends in the rate of rise. I think if our trends in Pennsylvania look similar to our pilot program in New Jersey, we will consider it a successful program. So in some terms, it’s not real dollar savings but in savings off of projected increases, which in the end translates into controlling the rate of rise of premiums for our subscribers.

GO: The cost to IBC, which includes the cost to our subcontractor AIM, is confidential. We expect that after the program is completed there will be substantial savings. I have no way of estimating the costs to individual providers because that would be based on their own operating costs, including their fixed costs, their staff salary costs and the rate at which they order these types of studies.

GO: Actually, it’s made an incredible resurgence in the last couple of years. What the industry found is that, while it appeared that preauthorization was not doing what it was believed to be doing when precertification was discontinued for selected services, medical costs escalated significantly, causing a number of health plans to reinstitute selected – not broad-based – preauthorizations. In these cases, the precert process is appropriate. More health plans are moving to more medical management techniques simply because of the double digit rate of rise of premiums that started occurring around 1998 and persisted through 2004. Basically, our customer base told us they could no longer sustain those rates of rise.

GO: We had some system issues that needed further resolution before we could move forward. There were issues about member and provider databases that needed to be resolved so that providers could quickly and accurately locate eligible members and the radiology sites. We wanted to be sure when we launched this program that everything worked as smoothly as possible, so we believed it worth the extra wait to pull back at that point.

GO: The second phase of our program, which will begin in early 2006, will actually be what Highmark has already accomplished: to take a look at our radiology network and, using guidelines established by the American College of Radiology and other sources, and evaluate our network capabilities against these criteria. Our criteria will be independently developed here at IBC and we haven’t finalized how we’re going to reassess our network. It will be a provider credentialing change and a network assessment change.

We are also in the process of interviewing and reviewing vendor capabilities for doing physician benchmarking. We are looking at potential programs that will allow us to profile physicians by quality outcomes, utilization patterns, hospital utilization, rates of various studies – those kinds of things. In addition to that, we do have products that have radiology copayments incorporated into them, and some of our new products that are meant to be mated up in a consumer-directed manner – things like health savings and health reimbursement accounts – have higher deductibles and copayments. We’re looking at all the options.

On a more global basis, we have pay-for-performance initiatives already implemented and we’re exploring various new pay-for-performance options, including using them as the basis for high-performing networks. Those initiatives, however, are not mated to a single procedure or group of procedures, like radiology imaging. We also have our Quality Incentive Program (QIP) for primary care physicians in our HMO, but it does not measure utilization of diagnostic studies.

GO: In general, as with any new policy, there are a lot of questions and initial user uncertainty. We have attempted to work with that by doing mailings to physicians with Q&As in them, and have advised our physicians of how this works through our provider update bulletin. We have advised members through similar means. We have held town hall meetings to educate physicians about this process. We will and do have our provider service reps trained specifically to help people with problems on this. We can do targeted education for physician offices that have problems using the system. Some of our medical directors have devoted their time to talking to physicians who have problems with the system. In essence, we have tried to bend over backwards to make this as easy as possible, including the two-month initial period that is totally educationally focused: from the launch on October 10^th through December 1, the program is a registry program and only educational efforts will be undertaken.

GO: Relatively small number. We have thousands of physicians in the network. A handful have called. I think no one likes the addition of an extra step in the authorizations. On the other hand, no one has been forthcoming with another suggestion as to how to manage what amounts to a crisis situation.

GO: Very small, considering this impacts more than two million members. We’ve received communications from probably less than 50 members. In many cases we have received consumer applause for being responsible stewards of their premium dollar. I believe our employer groups and our consumers understand that sometimes some things, while they may be difficult, are necessary in order to help control their rapidly rising premium costs. In our pilot program in New Jersey, which is coming up on two years in early 2006, we have not had any significant consumer backlash.

GO: Yes. All our appeal mechanisms are consistent with the appeal mechanisms established by Pennsylvania regulations under Act 68 for the HMO, and our PPO process mirrors those. Any decision, literally, that this health plan makes can be appealed by a member or by a provider on behalf of a member. Nothing has changed in the appeals.