Mass. audit reveals cash burden of unnecessary imaging

Massachusetts State Auditor Joe DeNucci has reported that the state's Medicaid program, MassHealth, may be losing millions of dollars due to unnecessary advanced imaging services, such as CT and MRI exams.

In a 53-page audit report, DeNucci cited two major reasons for recent increases in Medicaid imaging costs:

• The lack of safeguards against potential conflicts of interest by physicians who refer patients to facilities in which they have a financial interest, or self-referrals.
• The Massachusetts Medicaid reimbursement rate for imaging services has not been reduced to the level used by the federal government for Medicare patients.

The amount of advanced imaging services has increased dramatically during the past decade, according to the report, due to expanded procedures for both diagnostics and medical treatments. In fiscal year 2009, MassHealth paid more than $30 million on 582,000 claims for advanced imaging services.

"We have made great medical advances through the use of advanced imaging services in recent years, but the increase in the use of these services could leave our Medicaid program vulnerable to charges for unnecessary services," said DeNucci.

While the Stark Act and the federal Anti-Kickback Statute are designed to discourage physician self-referrals, Massachusetts does not regulate self-referrals for imaging services. A 2007 report by a special state commission recommended legislative changes to address this issue, but the commission's recommendations have not been implemented.

Based on the report’s findings, DeNucci recommended the enactment of a Massachusetts law that "piggybacks" both the federal Stark Law and the Anti-Kickback Statute.

Also, DeNucci said the audit “raised concerns” about the reimbursement rate that Massachusetts pays imaging providers for Medicaid services. Although the federal government has repeatedly reduced its rate of reimbursement to Medicare providers in recent years, MassHealth has had a net increase in reimbursement rates for imaging services. In addition, the state's Division of Health Care Finance and Policy (DHCFP) sets reimbursement rates using a different methodology than the federal government.

As a result, according to DeNucci's audit, Massachusetts lost the opportunity to save more than $8.5 million in Medicaid payments during fiscal years 2007 through 2009 for Medicaid consumers who also receive imaging services through Medicare.

DeNucci recommended that MassHealth and DHCFP re-examine their methodologies so they can utilize the lower reimbursement rates that the federal government pays.