Democrats in the health overhaul debate have been hammering private health plans for charging high administrative costs compared with government-run health insurance programs, but that argument overlooks pioneering work done by private insurers in controlling certain costs such as that of high-tech imaging, an industry briefing suggested Monday.

The briefing by America’s Health Insurance Plans (AHIP), the nation’s largest health insurance lobby, focused on the successes of certain private sector insurance plans in restraining growth in the costs of imaging procedures such as MRI and CT scans, a fast-growing area of health spending that critics often identify as a place to go to reduce unnecessary health care spending.

Industry officials noted in particular a recent report by the Government Accountability Office (GAO) that found a rapid increase in imaging costs in Medicare and that recommended a private sector tactic called “prior authorization,” a strategy in which doctors must receive the approval of a health plan before ordering a test for it to be reimbursed.

“In-office imaging spending per beneficiary varied substantially across geographic regions of the country, suggesting that not all utilization was necessary or appropriate,” the GAO found. (See related story, CQ HealthBeat, July 14, 2008) “By 2006, in-office imaging spending per beneficiary varied almost eight-fold across the states — from $62 in Vermont to $472 in Florida.”

AHIP President Karen Ignagni said, “Within our health care system, health plans often serve to identify and address emerging issues of patient safety and cost, and they set out to devise solutions to these problems. The GAO report is a good illustration that the private sector is serving as an early warning system on critical quality, safety, and cost issues in the U.S. health care system.”

Ignagni said that prior authorization has evolved in such a way that a number of plans now rely instead on “prior notification.” Although prior notification sometimes gets lumped into the category of prior authorization, the two approaches are different, with authorization involving the health plan saying yes or no to whether an imaging test is paid for and notification still leaving with the doctor the authority to order a reimbursable test.

Lewis Shandy, a senior vice president with United HealthGroup, said the primary purpose of his company’s “advance notification with evidence-based dialogue” approach “is to really address and reduce variation” in the degree to which doctors order high-tech imaging tests.

Doctors in the United network must notify the plan that they’ve ordered such a test. The plan checks whether the test is appropriate by reviewing specialty society clinical practice guidelines. If the test seems inappropriate or the doctor hasn’t supplied enough information to decide whether the scan is warranted, a “physician to physician dialogue” occurs between the plan’s consultant doctor and the doctor ordering the test.

“The ordering physician always has the final say,” Shandy said. But doctors often withdraw orders if they don’t comply with norms among their peers, officials at the briefing said.

“By far the largest source of waste . . . is clinical care and clinical services that don’t benefit the patient,” Shandy said.

George Isham, chief health officer for Minneapolis-based Health Partners, said his company’s combined costs for MRI and CT scans were growing at 15-to-18 percent clip before adopting a prior notification system. Rates of imaging haven’t increased among plan doctors in 2006 and 2007 because of the program, Isham said.

Ignagni said arguments that private health plans have much higher levels of administrative spending than Medicare overlook the fact that some of that spending goes for programs such as those controlling imaging costs.

In a “white paper” released at the same time as the briefing, AHIP emphasized the need for radiation benefits management, saying that “system wide spending on high tech imaging is approaching $100 billion a year, and that it is expected to double over the next four years. “

Unnecessary imaging not only drives up costs but increases the incidence of cancer, the paper said. “One estimate indicates that as many as 1.5 to 2 percent of all cancers in the U.S. may be attributable to radiation from CT scans, a concern that is magnified for children and pregnant women,” the paper says.

Imaging suppliers have taken aim at prior authorization, saying it denies access to needed care. But they have expressed support for reviewing imaging request against accepted professional society guidelines to determine whether tests are appropriate.