Effect of physician financial self-interest (FSI) on the volume of diagnostic imaging ordered for illnesses, and on the costs of care

Research Objectives

To measure the effect of physician financial self-interest (FSI) on the volume of diagnostic imaging ordered for illnesses, and on cost of care. Medical imaging is a large component of health care costs in the United States (approximately $100 billion annually), and has one of the fastest growth rates. Imaging is usually provided through physician referral; therefore may be influenced by financial incentives faced by the referring physician. FSI has previously been found associated with 2-4-fold higher levels of imaging. In addition, we will evaluate three principal defenses of FSI in imaging: claims that (i) utilization differences have largely disappeared in the approximately15 years since previous studies (ii) the higher level of imaging associated with FSI arises because patients are older and sicker and (iii) total episode costs are lower with FSI because intensive imaging leads to faster and more accurate diagnosis.

Data and Methods

Using Medicare's 5% Limited Data Set (LDS) for 2004-2005, we analyze the differences in imaging utilization and annual cost of care for an illness between physicians with and without FSI in imaging, controlling for patient characteristics, co-morbidities, physician specialty and region. We use four different operationalizations of FSI to ascertain if findings are robust. To assess generalizability of findings, we study utilization separately for 13 medical conditions. For chronic conditions, we study the effect of FSI on total annual costs of care.

We identify patients with one of the defined medical conditions and whether the physician treating the patient for the condition had FSI in imaging. Outcomes of interest are (a) percent of patients with imaging (b) number of images per patient (c) imaging costs per patient and (d) total Medicare costs per patient, with costs adjusted for geographic price differences.

Preliminary Results

2004 claims show adjusted odds of imaging by a physician with FSI are typically 1.5 to 3 times the odds of imaging by a physician without FSI. The adjusted odds are >1 in all but one of the analyses. When imaging of a given modality takes place, the number of images typically does not differ importantly between physicians with or without FSI. Total costs of care have not yet been assessed.

Conclusions: When FSI exists, physicians are much more likely to order images, and imaging costs are proportionately higher.

Implications: The results of this study will assist policy makers and payers in designing effective incentive structures to ensure appropriate utilization.