President James Morgan of After Hours Imaging LLC had an idea: market his low-cost imaging service to high-deductible health plan enrollees and uninsured patients in the Brockport area. He thought he would let primary care doctors in the area know what he was offering, then wait for referrals to roll in.
Morgan took his idea to the Community Technology Assessment Advisory Board last month. Now he is crying foul over the board's rejection, which he says will mean that high-deductible plan and uninsured patients in the Brockport area will pay a lot more than they need to for CT and MRI scans.
The $327 fee that After Hours Imaging would collect for a CT scan of the head with contrasting dye, for example, would be considerably lower than the $1,300 charged for the same procedure by the area's only CTAAB-approved provider, the University of Rochester Medical Center's Strong West urgent care center, Morgan said.
He credits lower overhead for After Hours' ability to undercut other imaging services.
His company leases an MRI and CT scanner from a firm in California that provides the equipment along with a tractor-trailer and drivers to house the scanners and haul them to various sites. Morgan contracts with several radiology groups to interpret scans. The firm does business as far away as Albany, he said.
The fee he proposed to charge in Brockport reflects the reimbursement Excellus offers his service in other areas. Other, larger providers with higher overhead can negotiate higher fees with insurers. After Hours needs to do only a few of each type of scan daily to break even, and it is eager to pass on its savings to consumers, Morgan said, especially high-deductible subscribers.
Such enrollees are an increasing slice of the health insurance market nationally and locally. Fifty percent of employers responding to the Rochester Business Alliance Inc.'s most recently released annual health benefits survey in October 2012 said they planned to offer one or more high-deductible plans in 2013. That was up from 46 percent in 2012 and was three times larger than the share of employers offering high-deductible plans three years ago.
People covered by high-deductible plans, potentially on the hook for thousands of dollars in out-of-pocket medical expenses every year, are a group for which price matters. And in 2014, insurance exchange plans, some of which require more than $6,000 in co-insurance, could add substantially to the high-deductible ranks.
The CTAAB, a 30-member independent board aligned with the Finger Lakes Health Systems Agency, is made up of local businesspeople, community representatives and medical professionals. It recommends for or against installation of costly medical equipment such as lithotripsy machines, linear accelerators and CT and MRI scanners in Monroe and other counties in the Finger Lakes region.
FLHSA provides input to the state Department of Health on area medical facilities' applications to add or build new capacity and provides CTAAB with data and helps it evaluate the area's needs for medical technology.
While they have no legal force, decisions of CTAAB are honored by Excellus BlueCross BlueShield and MVP Health Care, insurers that together account for most of Monroe County's commercial and Medicare Advantage plan business.
Neither insurer pays claims to non-CTAAB-approved providers or counts money spent on non-approved providers' services as credit toward enrollees' deductibles.
That stricture applies within FLHSA's coverage area, a region that includes Monroe, Livingston, Seneca, Ontario, Wayne and several other counties. CTAAB's disapproval thus effectively keeps After Hours out of the Brockport CT and MRI market, Morgan said. After Hours and several other imaging providers do have CTAAB approval for other services such as X-rays and ultrasounds and thus can collect on those claims, he said.
It's hard for him to understand why the more affordable MRI and CT scans by After Hours would not help bring down area medical costs, Morgan said.
Providers' fees are not a direct factor in the technology board's decisions, said Thomas Mahoney M.D., FLHSA's associate executive director.
Cost control is an important goal for FLHSA and CTAAB, he said, but it relies on well-established and widely accepted research showing that too much expensive technology results in too much utilization and thus drives up costs. CTAAB seeks to ensure that high-cost equipment such as MRI and CT scanners is optimally spread around the area.
Strong West, which recently opened in the closed Lakeside Memorial Hospital building, provides a host of services to area residents and needs to have CT and MRI capacity. CTAAB found that letting other providers offer the same services in that region would be duplicative, Mahoney said.
Morgan does not entirely disagree with the glut-of-services theory. However, he maintains, its strict application in this instance unnecessarily harms high-deductible subscribers and lessens an advantage that high-deductible plans-also called consumer-directed insurance-are supposed to offer: the ability of people to manage their own medical costs.
High-deductible subscribers pay relatively low monthly premiums, but before much of their medical coverage kicks in, they can pile up bills in any given benefit year that range from $1,000 to more than $6,000.
Backers of such plans argue for the value of what they call "skin in the game." Making consumers aware of procedures' costs, they say, will restrain rising medical expenses by encouraging patients to shop more carefully.
As such plans have proliferated, however, providers have complained that high-deductible patients are sticking them with more bad debt and that some cash-strapped subscribers are delaying or avoiding needed care.
Unity Hospital is receiving an increasing number of calls to its pricing hotline from people who never seek care, Unity Health System CEO Warren Hern told the Rochester Business Journal in an interview last year. Some of those people may be going elsewhere, but some are unwilling or unable to pay and are not getting care, he said.
Few patients shop among providers for price or other reasons, said Orleans County primary care doctor James Gaden D.O. Most choose providers closest to where they live or go where their primary care doctor sends them. For any who do shop, prices are far from transparent.
"I don't know what anybody charges, myself," Gaden said. "I don't expect my patients to know either."
FLHSA's Mahoney questioned whether the price difference between After Hours and Strong West is as great as Morgan indicates, though he said he could neither confirm nor deny the accuracy of Morgan's claim. For competitive reasons, he said, hospitals see such information as proprietary and prefer not to give it out.
URMC officials declined to comment on the $1,300 price given by Morgan as Strong West's fee for a head CT with contrast.
Morgan said he determined the Strong West price by calling URMC, claiming to be a high-deductible plan enrollee and asking what his cost would be for a CT head scan with contrast. As of this week, URMC officials had not responded to his similar inquiry about the cost of an MRI scan, he added.
A cost estimator on Excellus' website offers help to high-deductible subscribers looking for price comparisons.
According to the Excellus estimating tool, a head CT at Strong would cost $554 to $1,009 without contrast and $1,139 to $1,263 with contrast. The search also provided the procedure's price range at URMC's Highland Hospital-$618 and $683. A search for a Strong West price on a head CT produced no result.
Because its results are a composite of prices cited in various contracts between providers and individual Blues PPO plans, any inquiring party's actual costs might vary, a disclaimer on the Excellus website warns.
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