Mark D. Hiatt MD, Presenter: Officer, HealthHelp

Theoretically and empirically substantiated, UM offers a feasible and efficacious response to the exigency of controlling costs in the reform era by reducing redundancy and waste.

The Patient Protection & Affordable Care and Health Care & Education Reconciliation Acts of 2010 are expected to extend coverage to 32 million Americans who currently lack it. With so many more receiving care, the costs necessitated by such extended coverage may also expand even beyond their usual annual rise. One contributor to these increasing costs often cited as a major culprit is advanced imaging such as CT, MR, nuclear medicine, and PET. Utilization management (UM) has been suggested as one way to control costs related to these exams.

To evaluate UM as a potentially feasible and efficacious means of controlling radiologic costs, two means were employed: one theoretical and the other empirical. First, the standard tools of classical macroeconomics were employed to illustrate the outward shift in demand expected from expanded coverage as well as a possible remedy in an inward shift achieved by limiting inappropriate and unnecessary exams through UM. Second, shifting from theory to practice, the application of this theory was assessed in practice by examining the results of a UM program administered by a leading specialty benefits management company for a large health insurance plan for ~5 million subscribers across the country over the past 5 yr.

Theoretically, the increase in demand expected from expanded coverage shifts the demand curve outward in a graph whose x and y axes are Care and Cost, respectively, with a consequential rise in both Care demanded and the associated Cost. Solutions to reining in this rising Cost include an (a) arbitrary cut in payments to providers, with a consequential inward movement along the supply curve such that a shortage ensues, with the resultant need for rationing, and (b) inward shift of the demand curve accomplished by reducing inappropriate and unnecessary exams. In practice, limiting such exams through UM saved ~5 million members ~$100 million over 5 yr. The supposition of savings from UM thus has both theoretical and empirical support.

Hiatt, M, An Answer to Rising Health Care Costs in the Reform Era: Seeking Savings from Reining in Redundancy and Waste in Radiology through the Decision Support of Utilization Management.  Radiological Society of North America 2010 Scientific Assembly and Annual Meeting, November 28 - December 3, 2010 ,Chicago IL. http://archive.rsna.org/2010/9013846.html