It’s no secret that radiology ranks among the medical specialties with the highest mean markups on list prices. However, a new review of Medicare data on prices listed and payments made shows that, far from being arbitrarily set—as is often assumed if not alleged—many of radiology’s highest prices reflect real-world, case-by-case factors involving heightened risk, greater clinical complexity and increased need for subspecialized expertise.

The Journal of the American College of Radiology posted the study online July 20.

Andrew Rosenkrantz, MD, MPA, of New York University and colleagues used the 2014 Medicare Physician and Other Supplier Public Use File to identify submitted charges (“list prices”) and payments for radiologists’ professional services (as distinct from hospital, or “technical,” charges).

The sweep of their study was broad, as they found good data on 26,715 radiologists (out of somewhere in the neighborhood of 34,000 practicing rads in the U.S.).

To determine excess charges, the team computed charge-to-payment ratios for individual radiologists and examined publicly available information on radiologist-level factors such as years of experience, teaching vs. nonteaching and subspecialist vs. generalist.

They found radiologists’ mean charge-to-payment ratio landed at 4.2 ± 2.0. (This is in line with research published in JAMA earlier this year placing the median ratio for diagnostic radiologists at 3.8 and for interventional radiologists at 4.5).

Rosenkrantz and colleagues further report:

• A greater charge-to-payment ratio was most strongly predicted for those serving higher-complexity patients (ratio ranging from 3.8 ± 1.8 to 4.1 ± 1.6 for radiologists in the first through third quartiles in terms of patient complexity, compared with a ratio of 4.8 ± 2.8 for radiologists in the highest quartile in terms of patient complexity).
• A higher charge-to-payment ratio was also observed among those with, rather than without, a teaching institutional affiliation (4.7 ± 2.8 versus 4.0 ± 1.8, respectively) and among subspecialists rather than generalists (4.4 ± 2.5 versus 3.9 ± 1.5, respectively).
• Among subspecialties, charge-to-payment ratios ranged from 3.3 ± 1.3 (breast imaging) to 5.7 ± 4.1 (interventional radiology). Charge-to-payment ratios showed weak inverse correlations with total service volume (r = −0.13) and total payments (r = −0.11).

Observing that radiologists’ charge-to-payment ratios had minimal inverse correlations with their total Medicare service volumes and total Medicare payments, the authors point out that simply raising prices, for those who feel inclined, probably wouldn’t lift profits in the present era as it may have in the past.

“In fact, in the era of price transparency, it is possible that very high markups could ultimately lead to a financial loss [by] disincentivizing patients to seek care at a given practice,” they write. “Given our findings, radiologists should be aware of their own practice’s prices and degrees of markup, as well as how these compare to competitors’ prices when considering geographic region, practice type (e.g., teaching status), radiologist practice mix (i.e., degree of subspecialization) and patient mix (i.e., average patient complexity).”

Rosenkrantz et al. add that radiologists would do well to stay up on their hospital partners’ technical-billing practices, as thrifty patients may shop around for better all-around deals.

“This aim would be facilitated by the availability of benchmark price data from an independent catalog encompassing a wide spectrum of practices,” they write. “Our present investigation may serve as the first step in such an effort.”