Imaging costs not cut in states with tort reform

Imaging costs did not drop in states that passed tort reform limiting the amount paid for non-economic damages (NED) in medical malpractice lawsuits, according to a study published in the August issue of the Journal of the American College of Radiology.

Authors Seth I. Stein, MD, of the Temple University School of Medicine, and colleagues also found that imaging costs in some of the states that cap NED payouts were among the highest in the nation.

“The mean (chargemaster) rates for diagnostic services were not lower, and in many cases were higher, in states with tort reform that capped NED for medical malpractice,” the authors wrote.

Non-economic damages refers to compensation for harm caused by pain, disfigurement, and other suffering, rather than economic losses such as property damage. 

California, a state with NED tort reform, was ranked among the most costly for imaging. For example, the $662 mean charge in California for a level I diagnostic and screening ultrasound was 36 percent higher than that for all states, they said. Other NED-capped states with high costs included Florida and Nevada.

Charges were found to be higher in states limiting NED for various imaging modalities by the study, which examined six modalities.

For example, the mean charge for a level II echocardiogram without contrast was $2,015.60 in states with tort reform vs. $1,884.81 in states without it. The cost of a level II cardiac imaging in NED-capped states was $4,670.25, compared with $4,398.58; likewise an MRI and MR angiography without contrast was $2,654.31 in NED-capped states, compared with $2,526.74. A level III diagnostic and screening ultrasound was $1,073.31 in NED-capped states compared with $1,027.32.

Although NED tort reform has been touted as an effective way to keep down health care costs, the study found no evidence that it has held down imaging costs.

The study’s authors pointed to arbitrary charges as a likely cause of higher costs, adding, “the fact that these charges are no lower in states with tort reform tells us nothing about the efficacy of reform but everything about the arbitrariness of the rates.”

The authors also noted a wide variation in charges for imaging by hospitals in the same geographic area.

The researchers used 2011 chargemaster data 2011 to determine if the rates for diagnostic imaging were lower in states with NED tort reform than in states that don’t have it. The authors analyzed the Centers for Medicare and Medicaid Services data on imaging costs at hospitals and outpatient imaging facilities in 49 states and Washington, D.C. The data included six ambulatory patient imaging classifications. The study looked at the association between caps on NED and chargemaster rates for imaging in a sample of 15,218 data points.

The data included charges and payments received by hospitals for 30 selected ambulatory payment classifications (APCs), six of them in the category of diagnostic imaging.

The authors found that the average charge-to-payment ratio in all states was 5.56, while in high-cost NED-capped states such as California, the ratio was 9.03; in Florida, it was 11.67, and in Nevada, it was 10.22.

The mean average charge of an MRI in California, the first state to cap NED, was $$3,533.91, compared with the mean charge in Pennsylvania, which doesn’t cap NED, of $2,532.19, wrote Stein and colleagues.

Over the past decade, imaging charges in California have increased by 400 percent, they noted, despite the NED tort reform.