Health-reform moves proposed by the White House and pursued in Congress have largely steered clear of direct hits to the medical-technology sector, with one big exception: medical imaging.

Makers of expensive devices that glance inside the body are staring down plans that could hurt business by lightening Medicare payments to doctors and limiting the number of scans performed. Such proposals follow years of rapid growth for medical scanning that has provoked questions about overuse.

The big imaging-machine manufacturers include units of General Electric Co. (GE), Siemens AG (SI) and Royal Philips Electronics NV (PHG). Through their lobbying groups, they have been pushing the case that cutting spending for imaging will hurt patients and rural hospitals, and that prior rules passed by Congress already halted rapid growth.

Imaging became a target based on "some dated perceptions," said Ilyse Schuman, managing director of the Medical Imaging & Technology Alliance, which represents many imaging companies.

Dated or not, evidence of a fast-expanding imaging market has made it a target as the government searches for ways to control costs while expanding health coverage. A report from the Government Accountability Office released in June last year noted that from 2000 through 2006, Medicare spending for physician imaging services more than doubled to $13.8 billion.

Health-reform legislation in the House of Representatives would squeeze the industry by boosting the assumed rate at which machines like MRI and CT scanners are used to 75% from the current 50%. Factoring in a higher utilization rate means Medicare would pay less per scan, according to critics.

The Senate's reform efforts haven't progressed as far, but the industry is leery the Senate could aim for a higher utilization rate. Meantime, the House plan also calls for a reduction in government payments for additional scans done on nearby body parts.

The imaging industry has highlighted the utilization-rate issue, which it argues uses an inflated number based on a limited-scope report from the Medicare Payment Advisory Commission, or Medpac. They also argue that boosting the assumed utilization rate will hurt rural hospitals where machines are likely to be used less often than in busy, urban facilities.

Another key argument for the imaging sector is that it's already taken its medicine, in essence, due to payment caps mandated by the Deficit Reduction Act of 2005, which went into effect in 2007 and has since slowed the market.

As the GAO noted in a report last September, Medicare expenses for physician imaging services in 2007 fell to $12.1 billion - a 12.7% drop from 2006. But utilization of tests still increased, which weighs against industry and doctor suggestions that reducing fees would hurt patients' access. Also, despite the 2007 decline, expenses for each Medicare beneficiary were still nearly 71% higher in 2007 than they were seven years earlier, GAO said.

The Centers for Medicare & Medicaid Services "remains concerned about the high volume of imaging services and their value to beneficiaries," GAO said in the September report.

A study from an outside research firm, paid for and recently promoted by the imaging lobby, concluded that this growth can be pegged to rapid technological improvements. James Thrall, radiologist-in-chief at Massachusetts General Hospital in Boston, agreed.

"Growth has been confused with overutilization," he said.

Thrall is also chairman of the board of chancellors at the American College of Radiology. The group says it has not taken a position either for or against current congressional health-reform proposals.

The House bill as now configured may restrain imaging, but it could have been gone further. The bill does not include a plan from President Barack Obama's proposed 2010 fiscal budget to use so-called "radiology benefit managers" to vet and clamp down on scans for Medicare patients, for example. Private insurers commonly use these services.

William Peck, who directs the Center for Health Policy at Washington University in St. Louis, said it's beyond debate that medical imaging has revolutionized patient care, but is also used too much. But he doesn't think the House legislation gets at the causes of overuse, such as doctors hedging against the threat of malpractice suits.

-By Jon Kamp, Dow Jones Newswires; 617-654-6728; jon.kamp@dowjones.com