Patients hurt by high cost of diagnostic imaging

Earlier this year the Health Minister foreshadowed changes to the way health is funded, stating: “We have over 200 million free services through bulk billing … We need to make sure that where people have a capacity to pay for their own health needs that they do so …” In last month’s Federal Budget the Government announced the changes: “From 1 July 2015 previously bulk billed patients can expect to contribute $7 towards the cost of an out-of-hospital imaging service.” Dr Chris Wriedt, President of the Australian Diagnostic Imaging Association, shares ADIA’s concerns.
ADIA is concerned as it believes that many patients will need to contribute a lot more that $7 if the proposed cuts are introduced. This is because the government has reduced the Medicare rebate by much more than $5 for non-concession patients that were previously bulk billed – from around $10 to more than $40 per imaging service.
Furthermore, even before these new cuts were announced, the enormous benefits of diagnostic imaging - to patients and the broader health system - were already under threat, because underfunding by Medicare over the past 16 years has continually pushed up out-of pocket costs for patients.
Patients are bearing the brunt of underfunding
No one can argue that diagnostic imaging plays a crucial role within our health system, both by providing speedy and accurate diagnosis as well as improving treatment by supporting better targeted clinical interventions.
So when funding for diagnostic imaging services is inadequate, or certain services are not funded by Medicare at all, practices can only absorb so much of the cost burden before they are forced to increase patient contributions to deliver quality services.
This can be seen in the growth of out-of-pocket costs for diagnostic imaging patients in recent years. The average patient gap in 2012-13 was $88.02 for a diagnostic imaging service, while the average gap for an MRI service was $157.67. These gaps are high when compared to those paid for visits to GPs and specialists, whose average gaps were $29 and $57 respectively in the same period.
Diagnostic imaging gaps have been growing at rates much higher than inflation, increasing by almost 45 per cent since 2007-08. This has culminated in patients paying $475 million in gaps in 2012-13 which is simply unsustainable. And recent changes will add to this burden.
Further, this figure does not take into account the many MRI services which are not funded by Medicare at all. Only services provided on one of the 338 Medicare-eligible MRI units are funded, and the list of clinical indications which are funded by Medicare is limited. This leaves patients to pay the full cost of unfunded services – which can be more than $1,000 per service. ADIA estimates that patients pay an additional $100 million each year for these services, which include MRI of the:

• breast, ensuring the most appropriate evaluation and treatment of patients, particularly those aged under 50 who are either at high risk or have a previous history of breast cancer


• prostate, enabling earlier detection, recognition of the more dangerous tumors and identifying the best treatment regime


• pelvis, for the evaluation of conditions such as perianal fistulae and inflammatory bowel disease; and


• kidney, liver and pancreas, to identify and characterise malignant growths to allow tailored treatments.

Strong evidence exists that MRI is the most appropriate diagnostic imaging service for patients presenting with these issues. But obtaining Medicare funding to assist patients with the associated costs is problematic as the process is both lengthy and complicated.
The cost burden already borne by patients leaves many with a stark choice – financial hardship or opting out of essential medical services recommended by their GP or specialist.
Therefore it is vital that the Government funds all clinically necessary MRI studies.

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“Strong evidence exists that MRI is the most appropriate diagnostic imaging service for patients presenting with these issues. But obtaining Medicare funding to assist patients with the associated costs is problematic as the process is both lengthy and complicated.”
DR CHRIS WRIEDT

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Bulk billing not the answer
The introduction in 2009 of the bulk billing incentive for diagnostic imaging brought with it a perverse incentive for practices to bulk bill as many services as possible. Due to practices receiving an additional 10 per cent rebate for bulk billed services, many seek to maximise their bulk billing rates by increasing patient gaps for non-bulk billed services – usually the most clinically complex with high levels of professional input – to subsidise their bulk billed services. Public hospitals are able to access Medicare funds through this business model for services provided to outpatients.
This is a further impost for the sickest patients in our community, who rely upon affordable access to these essential services to expedite diagnosis and get on with treatment.
Australia is quickly moving towards a two-tiered health system as the sickest patients – who tend to receive multiple diagnostic imaging services and face out-of-pocket costs in other parts of the system – are expected to subsidise everyone else.
As the Consumer Health Forum has noted, “It has become clear to us that we have to challenge the tide of rising costs fuelled by the status quo system if we are to ensure that health care remains in reach of all Australians”.
Chronic underfunding
Unlike many other Medicare services, the Government had not indexed Medicare rebates for diagnostic imaging since 1998. Until 2008 the Government worked collaboratively with the sector to manage the growth in funding and ensure it was sufficient to deliver high quality services. However, when the final Memorandum of Understanding between the Government and the sector expired in June 2008, indexation was not reinstated.
The freeze in rebates is in contrast to services like allergy testing, contacts lens attendances and optometrical services for which rebates are indexed. This anomaly makes no sense and directly affects patients who need access to affordable, quality diagnostic imaging services.
Rebates have stayed flat while the cost of providing a quality diagnostic imaging service continues to rise. In a study commissioned by ADIA in 2010, Access Economics found that 60 per cent of the cost of delivering a diagnostic imaging service is labour. This includes both medical specialists (radiologists and nuclear medicine physicians) as well as allied health professionals (radiographers, sonographers and imaging technicians).
The cost breakdown may come as a surprise to many patients and policy makers who presume that state of the art technology is the dominant cost for diagnostic imaging providers – in fact capital costs only account for 19 per cent of the cost of the average service.
No relation between rebates and costs
With rebates remaining mostly flat for 16 years, it is of little surprise that they no longer cover the cost of delivering many essential services. For example, diagnostic mammography (as opposed to breast screening) is a tailored service which involves repeated imaging and review over 30 minutes or so, attended by a radiologist for the duration of the service. This complex and resource intensive service attracts a non-bulked billed rebate of $45.90 – there is absolutely no relation between the rebate and what it costs to deliver the service.
There are dozens of similar examples across the various diagnostic imaging modalities, especially the more clinically complex services which require high levels of medical specialist input.
It isn’t just particular individual services that are underfunded though. Access Economics found a shortfall of $38 between the average rebate and the cost of delivering the average services, and the shortfall is growing every year that rebates are frozen.
The failure to index rebates is effectively an ongoing policy of real cuts to diagnostic imaging services. While these cuts may have generated desirable efficiencies at first, those days are now long gone. Instead, practices are being forced to increase out-of-pocket costs for patients, or alternatively reduce clinical input or stop offering particular services altogether.
Underfunding - a false economy
When services are not adequately funded, more patients choose to delay or refuse diagnostic imaging recommended by their GP or specialist because they simply can’t afford them. This can have catastrophic effects on their prognosis as they miss out on the benefits of earlier diagnosis and treatment.
For the Government, diagnostic imaging represents an investment at an early stage in the patient’s journey through the health system, and can improve the standard of diagnosis and allow for more targeted treatment. Underfunding of diagnostic imaging, to the extent that patients are delaying or refusing services to avoid paying large gaps, is false economy for the Government. It leads to increased costs in the rest of the health system, with patients spending more time in hospital and requiring additional treatment to deal with more advanced illnesses and conditions.
Indexation is now more important than ever
Despite the constrained fiscal environment and the recent Budget announcements, it is imperative that the Government addresses the urgent need for indexation of diagnostic imaging rebates. Patient gaps are growing at well above the level of inflation, making access to services less and less affordable, particularly for the sickest patients who need these services the most.
Better targeting of spending within the existing funding envelope for diagnostic imaging will make a significant difference by increasing efficiency.
However, only indexation of rebates – to restore appropriate funding of the sector – will prevent the continued escalation in out-of-pocket costs for patients, and reduce the associated impact on patient health and overall health funding. And, while a mandatory minimum co-payment could help create a more equitable distribution of out of pocket costs and could see gaps come down – this will only happen if the Government also addresses the policy settings which are undermining cost efficiencies.
ADIA is calling on government to work with the sector to ensure patients have equitable access to diagnostic imaging services. To achieve this, government must reinstate indexation of Medicare rebates for diagnostic imaging services, ensure that public hospitals concentrate on providing services to in-patients and progress the sector-led Quality Framework. Adopting these policies would have a significant positive impact on the sector, improving patients’ access to diagnostic imaging services to ensure a healthier Australia while providing significant savings in the health budget.

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“The failure to index rebates is effectively an ongoing policy of real cuts to diagnostic imaging services. While these cuts may have generated desirable efficiencies at first, those days are now long gone.”
DR CHRIS WRIEDT

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Dr Chris Wriedt
President of the Australian Diagnostic Imaging Association
ADIA represents medical imaging practices throughout Australia, both in the community and in hospitals, and promotes ongoing development of quality practice standards so doctors and their patients can have certainty of quality, access and delivery of medical imaging services.
Visit our website www.adia.asn.au