NYC Transit Authority sues Express Scripts for Failing to Effectively Manage its Prescription Drug Benefit Plan


A recent lawsuit filed by the New York City Transit Authority (NYCTA) raises important considerations for plan sponsors and agencies, such as the NYCTA, that retain the services of Pharmacy Benefits Managers (PBMs). On May 16, 2019, the NYCTA sued Express Scripts in New York state court alleging six counts for breach of contract. The NYCTA alleges that since retaining Express Scripts to manage its prescription drug benefit plan, “the NYCTA has paid tens of millions of dollars in fraudulent, abusive, or excessive prescription drug claims that were managed, administered, and fulfilled by” Express Scripts. On June 3, 2019, Express Scripts filed a Notice of Removal, which took the case from New York state court to United States District Court for the Southern District of New York (a tactic commonly utilized by out-of-state defendants), meaning that the NYCTA must now pursue its claims in federal court rather than in state court.


On June 25, 2019, Express Scripts filed a Motion to Dismiss the NYCTA’s Complaint, wherein Express Scripts does not deny that it processed the fraudulent, abusive or excessive claims, but instead seeks to shift the blame from itself to the NYCTA. Surprisingly, Express Scripts asserts in its Motion to Dismiss that the NYCTA’s “lawsuit is a poor attempt to shift blame for NYCTA’s failure to manage and operate its prescription health plan.” The troubling part of this assertion is that Express Scripts is essentially blaming its client, the NYCTA, for failing to do the work it hired Express Scripts to do.

The NYCTA will have the opportunity to file Opposition to Express Scripts’ Motion to Dismiss and Frier Levitt will closely monitor this important case. In the meantime, it is important that plan sponsors and agencies that use PBMs, including Express Scripts, seriously consider whether they are getting what they bargained for from PBMs.

Frier Levitt routinely works with plan sponsors and other similar agencies to assess PBMs’ performance under the corresponding contracts. If you are a plan sponsor entering a contractual relationship or having a dispute with a PBM, contact Frier Levitt today to speak to an attorney.

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Senate Health Committee Leaders Release Bipartisan Discussion Draft Legislation to Reduce Health Care Costs

The Lower Health Care Costs Act of 2019 aims to deliver better health care outcomes and better health care experiences at lower costs

WASHINGTON, May 23, 2019 — Senate health committee Chairman Lamar Alexander (R-Tenn.) and Ranking Member Patty Murray (D-Wash.) today released the Lower Health Care Costs Act of 2019—bipartisan discussion draft legislation to reduce health care costs.

“There’s one issue I hear a lot about from Tennesseans, and it is, ‘What are you going to do about the health care costs I pay for out of my own pocket?’ Well, we’ve got an answer,” said Chairman Alexander. “Republicans and Democrats in the United States Senate have announced this proposal of nearly three dozen specific bipartisan provisions that will reduce the cost of what Americans pay for health care. These are common sense steps we can take, and every single one of them has the objective of reducing the health care costs that you pay for out of your own pocket. We hope to move it through the health committee in June, put it on the Senate floor in July and make it law.”

“The steps we are taking on important issues like surprise medical billing, drug prices, maternal mortality, and vaccine hesitancy show we can make progress when both sides are at the table ready to put patients and families first,” said Ranking Member Murray. “I appreciate the work Democrats and Republicans on our committee are doing and encourage Republicans to continue working with us on the many other health care challenges families face today—including threats to protections for pre-existing conditions as a result of President Trump’s health care sabotage.”

Since last Congress, the Senate health committee has held five hearings on how to reduce health care costs and four hearings to explore the costs of prescription drugs.

At the conclusion of the last Congress, Chairman Alexander sent to the American Enterprise Institute, the Brookings Institution, governors, state insurance commissioners, doctors, hospitals, patients, and innovators a letter asking for specific recommendations about what Congress could do to help lower the cost of health care services. The Senate health committee plans to mark up this legislation, which is based on those hearings and recommendations, by the end of June.

The Chairman and Ranking Member also commit to continuing to work on two policies with the aim of inclusion in the June markup: the Prescription Drug Rebates Reform Act of 2019, introduced by Senators Romney and Braun, and the Fair Accountability and Innovative Research (FAIR) Act, introduced by Senators Baldwin, Braun, Smith, and Murkowski.

The Senate health committee is requesting comments on the discussion draft. Comments must be submitted to by 5 PM on Wednesday, June 5, to be considered.


Personal Drug Importation is Protected by Congress

As reported in Kaiser Health News, the personal drug importation cause had a little victory recently. A bill focused on the opioid crisis, H.R. 6, slated for final passage, includes language that is protective of individuals who import medicines for their own use, even illegally.

While its focus is curbing opioid abuse, H.R. 6 reforms drug importation laws that have nothing to do with opioids but empowers the FDA to stop imports of prescription drugs considered by the FDA to be misbranded (which can mean prescription drugs that have a Canadian not U.S. label). Those reforms will make it more difficult on people and business engaged in illegal, wholesale prescription drug importation. An earlier version of H.R. 6, from the House, included language that exempted imports for personal use. That language was quietly removed in a Senate version, which passed in that chamber. Then, apparently there was some protest among certain members of Congress and the language was put back in during conference – and is now in the final law.

Now I’m getting a lot of questions about the law and personal drug importation. There are several parts of law, regulation and policy very favorable to personal (but not wholesale) importation, which have yet to be compiled and addressed in one article. I endeavor to do that here. The gist is that Congress doesn’t want the FDA to unnecessarily stop Americans from buying medication from Canada and many other countries – even if it’s technically illegal. The position of Congress is clear in law if you look comprehensively and closely.

What is personal drug importation?

Personal drug importation is the practice of individuals buying a medicine from a pharmacy in another country and importing it for their own use (not re-sale). For millions of Americans, personal importation has been a lifeline of savings for decades due to lower drug prices in Canada and other countries. Detractors of the practice say it’s not safe due to counterfeit and substandard drugs, but most of them are getting paid directly or indirectly from pharmaceutical companies.

The fact is, and commonsense dictates, that importing medicine from licensed pharmacies with high quality medicines in other countries is exceedingly safe. Against the best interest of public health, personal importation is under most circumstances technically illegal. However, within the law and regulations, personal importation is clearly recognized as permissible, important and even necessary under certain circumstances, including because of cost.

This post identifies and discusses those parts of law, regulation and practice that are strongly in favor of personal drug importation.

FDA’s Personal Drug Importation Policy

It’s not uncommon for advocates, or even opponents, of personal importation to cite the U.S. Food and Drug Administration’s Personal Importation policy in explaining that the FDA essentially permits personal importation. See FDA’s Coverage of Personal Importation. While this policy does not (and cannot) make personal drug importation legal, it generally allows FDA employees to not enforce the law when it comes to stopping imports of small quantities of medicine that will not be resold and do not represent a serious risk to the importer, who is the patient:

“FDA personnel may allow entry of shipments when the quantity and purpose are clearly for personal use, and the product does not present an unreasonable risk to the user.”

By itself, that language is very open-ended but later in its policy, the FDA greatly narrows the scope of personal drug imports that the agency will permit. This article argues that the FDA’s policy is more restrictive than Congress would like. In the language of the law and legislative history, it’s clear that Congress wants patients to use personal drug importation if they can’t obtain medicines domestically.


The FDA’s policy states that the enforcement discretion given to its personnel “should not be interpreted as a license to individuals to bring in such shipments.” Since this is simply guidance, the use of the word “license” must only be a reminder to FDA personnel tasked with enforcement that permitting imports doesn’t make it legal.

The policy then goes on to specify certain imports for which the FDA may use its enforcement discretion. FDA personnel “may consider a more permissive decision” when:

1) the product’s use is clearly identified and not for treating a serious condition and the product is not known to “represent a serious health risk;”

2) the intended use is unapproved and for a serious condition for which there are no available domestic treatments;

            • the people selling the drug didn’t promote it to the individual;

            • the product doesn’t “represent an unreasonable risk”; and

            • the patient attests in writing that the drug is for personal use only and provides the name and address of the licensed healthcare provider responsible for treatment.

This policy describes how the FDA uses enforcement discretion to allow imports for personal use of medicines that are otherwise illegal. Enforcement discretion is when a federal agency decides on a case-by-case basis or through regulation not to enforce the law, but it does not change the law, which can only be done by Congress.

This guidance on specific conditions for permitting illegal imports, namely for unapproved drugs that are not available in the U.S., does not mean that the FDA can’t permit an otherwise illegal import due to cost. The language of the law very specifically allows the FDA to use enforcement discretion to permit any type of personal drug importation that does not represent an unreasonable risk to public health.

Prescription Drug Import Fairness Act of 2000 – Section 746

The Prescription Drug Import Fairness Act of 2000 was passed into law as Section 746 of an appropriations bill applicable to the FDA and other agencies in 2000 (H.R. 4461). In this law, Congress articulates these findings:

“Patients and their families sometimes have reason to import into the United States drugs that have been approved by the Food and Drug Administration (“FDA”).”

This is not about Congress’ intent but its position on personal drug importation. These findings were identified because some Americans who imported medication because of cost were receiving letters from the FDA —instead of their prescription order— which “failed to inform the individual of the reasons underlying the decision to send the notice.” In Section 746, Congress instructs the FDA that it must provide “to the individual involved a statement of the underlying reasons.”

The language is specific to individuals importing for personal use, not people in the business of importing and/or reselling prescription drugs. It appears that this law is the basis for the letters currently sent by the FDA to patients when they refuse an import. It forces the FDA to give them an explanation. The FDA must find that the drug “appears to be adulterated, misbranded” or “otherwise in violation of Federal law.”

The contradiction between Congress’ position on personal importation and the law is clear. It is inconsistent with good policy-making to assert that Americans have reason to import medicine for their own use, yet the action is technically subject to prosecution, including fines and jail time.

The language of Section 746 is found in the notes of Section 801 of the Food, Drug and Cosmetic Act (U.S. Code 381), the main statute governing imports and exports. Generally, Section 801 states which drug imports are allowed (801a). It also includes what is famously known as the ban on re-importation, which notably excludes manufacturers, who can reimport their own drugs (801d). The United States imports – legally – many if not most of the medicines sold in U.S. pharmacies in accordance with Section 801, a process controlled almost entirely by pharmaceutical companies.

That system, which does help keep substandard or counterfeit drugs out, also blocks access to more affordable high-quality drugs, and is one of the reasons we’re in a crisis of high drug prices. What speaks volumes in favor of personal importation is that, at the end of the statute governing drug imports and banning reimports, are notes to articulate Congress’ position that Americans have reason to import for personal use, despite the prohibitions.

The Medicine Equity and Drug Safety Act of 2000 – Section 745 (MEDS Act)

The Medicine Equity and Drug Safety Act of 2000 (MEDS Act) was also passed into law as part of H.R. 4461. You’ll notice that it comes right before Section 746, discussed above. The MEDS Act amended the law to make importation of lower-cost medicines legal from several high-income countries (Australia, Canada, Israel, Japan, New Zealand, Switzerland, or South Africa; or countries of the European Union), ones known to have adequately strict pharmaceutical drug safety regulations, but only if the Secretary of Health and Human Services (HHS) certifies that such importation poses “no additional risk” to the public’s health and the new importation would result in “significant savings.” No HHS Secretary has done so, however.

The MEDS Act envisioned an elaborate regulatory framework to create new wholesale channels for safe importation of medications for re-sale. Ironically, it is language that comes in the Congressional findings of the Act yet is absent from the Act that is relevant to personal importation and our discussion.

Notable findings from the MEDS Act, 3-5:

“(3) Many life-saving prescription drugs are available in countries other than the United States at substantially lower prices, even though such drugs were developed and are approved for use by patients in the United States.

(4) Many Americans travel to other countries to purchase prescription drugs because the medicines that they need are unaffordable in the United States.

(5) Americans should be able to purchase medicines at prices that are comparable to prices for such medicines in other countries, but efforts to enable such purchases should not endanger the gold standard for safety and effectiveness that has been established and maintained in the United States.”

That these findings and this section come right before Section 746 further demonstrates the extent to which Congress recognizes that Americans are buying medications outside the country because of the lower cost on the same products sold here. Yet the MEDS Act does nothing to expressly allow personal drug importation, such as buying medication directly from a pharmacy in Canada. It instead seeks to bring those lower prices to U.S. pharmacy wholesalers. However, the findings of Section 745 further explain why Congress viewed Section 746 as necessary: there’s a reason for Americans to import medicines for personal use.

Medicare Modernization and Improvement Act of 2003 – Section 1121

The legislation that gave birth to a pharmacy benefit in Medicare, or Part D, also included changes to the law that affect importation. Section 1121 (U.S. Code §384). Much of Section 1121 is similar to the MEDS Act, except for three key features:

One, a new Section 804 would only make it legal to import lower-cost medicines from Canada, whereas MEDS listed several countries.

Two, it makes personal drug importation from Canada expressly legal.

Three, it allows the Secretary of Health and Human Services to permit personal importation on a case-by-case basis or through regulation. There are no limitations on Congress’ license to the Secretary to permit such importation.

Congress declares that enforcement against individuals involving drug importation prohibitions should:

“Focus enforcement on cases in which the importation by an individual poses a significant threat to public health; and (B) exercise discretion to permit individuals to make such importations in circumstances in which— (i) the importation is clearly for personal use; and (ii) the prescription drug or device imported does not appear to present an unreasonable risk to the individual.”

Like in the MEDS Act, it appears that for the new importation regulations to go into effect, the Secretary needs to certify “no additional” safety risk. Upon a close read, you’ll notice two competing safety standards within this section, which are subject to debate. Part (l) states that the Section doesn’t become effective unless the Secretary certifies that implementation will:

(A) pose no additional risk to the public’s health and safety; and

(B) result in a significant reduction in the cost of covered products to the American consumer.

This could be used to argue that the entire section is meaningless without such certification, but that doesn’t make sense. Congress was clear in its instruction to the Secretary to permit personal imports that do “not appear to present an unreasonable risk to the individual” not “pose no additional risk”. The latter, stronger, standard, clearly applies only to the new regulations in that section that affect lawful wholesale and personal imports from Canada, not personal drug imports permitted through “enforcement discretion.” What else explains Congress’ specific carve out for “enforcement discretion” on personal drug importation?

Customs and Border Patrol Cannot Use Funds to Stop Personal Imports Carried by Patients

For several years, a provision has usually been included in Homeland Security appropriations bills that prohibit funds from going toward preventing individuals from importing medicine for personal use from Canada that they physically carry themselves. In this case, Congress explicitly cuts funding to stop enforcement action to prevent personal drug importation.

See: Section 206 of H.R.244 – Consolidated Appropriations Act, 2017

The imports must be FDA-approved drugs: those would include medications made in the U.S. and those made in foreign manufacturing plants registered with FDA, which are also sold in the U.S. However, many generic drugs and foreign versions of FDA-approved drugs would not technically be allowed under this policy.

This is yet another clear example of Congress siding with patients on illegal personal importation.

What about prosecuting patients who illegally import medicine?

No one has ever been prosecuted for importing small quantities of prescription medicine for their own use. However, the statute covering illegal drug importation includes fines and jail time. For importing a misbranded drug, the penalty is up to one year in jail and a $1000 fine [21 U.S. Code § 333 a1].

Recall that a misbranded drug could be any FDA-approved drug that does not have the U.S. label. There is no carve out for personal or wholesale importation within the law. So, it could apply to wholesale quantities of misbranded drugs with a plan to resell those drugs domestically; or a person who imports a misbranded blood pressure medicine from Canada by mail. Generally, these would be medicines manufactured outside the U.S. [21 U.S. Code § 333 a1]

The penalty for reimporting a drug is much harsher: the guilty party “shall be imprisoned for not more than 10 years or fined not more than $250,000, or both” [21 U.S. Code § 333 (b)(1)(a)]. Again, there is no qualification about quantity, personal or wholesale importation.

People and businesses have been criminally prosecuted for illegal wholesale importation, including jail time. This includes instances where counterfeit drugs were found, but also where there were no problems with the medication in terms of safety; just that the medicines were misbranded and sold within the U.S.

People who import medicine for personal use “get caught” thousands of times per year when the FDA refuses an import at an international mail facility. The importers are warned that the drug is misbranded, unapproved, or reimported. With tens of millions of Americans having imported medicines for their own use, no one has ever been prosecuted. Why?

It’s the general assumption that the FDA would never investigate and recommend for prosecution a patient for illegal personal importation because it would be unethical, and the politics would be awful. It’s also possible that a grand jury would never agree to indict someone for personal drug importation. I believe those are both true.

A potentially more important reason is that Congress has made clear that Americans have reason to import medicines because prices are too high here and that enforcement should focus “on cases in which the importation by an individual poses a significant threat to public health.” [U.S. Code 384 (J)]. Public health means the health and safety of the general public to which a personal drug import cannot pose a significant threat.

Section 708 Not Protective of Personal Importation but Due Process is Invoked

Section 708 of the Food and Drug Administration Safety and Innovation Act of 2012, gave the FDA greater latitude to destroy drug imports that appear to be adulterated, counterfeit, unapproved or misbranded, which are valued at $2500 or less. That is not an example of Congress protecting importation for personal use. However, in Section 708, Congress requires that the FDA give people “due process” to defend such personal quantity imports before such drugs are destroyed.

Against the grain of my general argument about Congress’ support for personal drug importation, Section 708 was partially a victory for the pharmaceutical industry, which strongly opposes personal drug importation. To date, however, it has not been used by the FDA to significantly ramp up refusals of personal drug imports. Today, with greater resources appropriated by Congress to stop illegal imports of fentanyl and other opioid drugs, the FDA could stop personal imports of non-controlled, prescription medicines.  

Section 3022 (b) of the Opioid Bill of 2018

October 2018: H.R. 6, “Substance Use–Disorder Prevention that Promotes Opioid Recovery” also called “Treatment for Patients and Communities Act” or the “SUPPORT for Patients and Communities Act”, goes to the president for signature. It contains explicit language to deter enforcement actions related to personal importation.

Section 3022 (b)(2)(D)(ii) empowers the FDA to bar people (prevent them from being in the business of) importing misbranded or adulterated drugs. In an earlier Senate version of this bill, that language was not qualified, therefore it could empower the FDA to bar a patient from continuing to import or, potentially, people in the business of helping that patient. Again, Congress made its intent clear by adding qualifying language:

“(5) DEFINITION. — For purposes of paragraph (3)(D), the term ‘pattern of importing or offering for import’ means importing or offering for import a drug described in clause (i) or (ii) of paragraph (3)(D) in an amount, frequency, or dosage that is inconsistent with personal or household use by the importer.”

Simply, but importantly, this means that personal or household use imports are not Congress’ target, and people involved in such personal drug importation should not be burdened by this law.


Congress has not made personal drug importation legal, but it has protected people who violate the law by importing more affordable prescription drugs. Congress has stated in law that:

1) Americans have reason to import lower-cost medicines when the prices are too high domestically;

2) The Secretary of Health and Human Services can and should permit personal imports that are not an unreasonable risk to public health; and

3) Personal drug importation should not be targeted for enforcement actions.

While most personal imports reach patients, who have a valid prescription, about 0.5% are refused and some are destroyed. Furthermore, the FDA threatens businesses and people that help Americans import medicines from licensed pharmacies that require valid prescriptions, saving them money and helping them avoid rouge online pharmacies.

For many Americans, personal drug importation is their only access to prescribed medicines. Based on the arguments presented above, it’s time for American consumers to challenge the FDA if the agency refuses their imports, not just administratively but through the courts.

I believe that Americans can prove that when it comes to personal drug importation the law is on their side after all.


Walmart Charts New Course By Steering Workers To High-Quality Imaging Centers

Walmart Inc., the nation’s largest private employer, is worried that too many of its workers are having health conditions misdiagnosed, leading to unnecessary surgery and wasted health spending.

The issue crystallized for Walmart officials when they discovered about half of the company’s workers who went to the Mayo Clinic and other specialized hospitals for back surgery in the past few years turned out not to need those operations. They were either misdiagnosed by their doctor or needed only non-surgical treatment.

A key issue: Their diagnostic imaging, such as CT scans and MRIs, had high error rates, said Lisa Woods, senior director of benefits design for Walmart.

So the company, whose health plans cover 1.1 million U.S. employees and dependents, has recommended since March that workers use one of 800 imaging centers identified as providing high-quality care. That list was developed for Walmart by Covera Health, a New York City-based health analytics company that uses data to help spot facilities likely to provide accurate imaging for a wide variety of conditions, from cancer to torn knee ligaments.

Although Walmart and other large employers in recent years have been steering workers to medical centers with proven track records for specific procedures such as transplants, the retail giant is believed to be the first to prod workers to use specific imaging providers based on diagnostic accuracy — not price, said employer health experts.

“A quality MRI or CT scan can improve the accuracy of diagnoses early in the care journey, helping create the correct treatment plan with the best opportunity for recovery,” said Woods. “The goal is to give associates the best chance to get better, and that starts with the right diagnosis.”

Walmart employees are not required to use those 800 centers, but if they don’t use one that is available near them, they will have to pay additional cost sharing. Company officials advise workers that they could have more accurate results if they opt for the specified centers.

Studies show a 3% to 5% error rate each workday in a typical radiology practice, but some academic research has found mistakes on advanced images such as CT scans and MRIs can reach up to 30% of diagnoses. Although not every mistake affects patient care, with millions of CT scans and MRIs done each year in the United States, such mistakes can have a significant impact.

“There’s no question that there are a lot of errors that occur,” said Dr. Vijay Rao, chairwoman of radiology at the Thomas Jefferson University Hospital in Philadelphia.

Errors at imaging centers can happen for many reasons, including the radiologist not devoting enough time to reading each image, Rao said. The average radiologist typically has only seconds to read each image, she said. “It’s just a lot of data that crosses your eye and there is human fatigue, interruptions, and errors are bound to happen,” she added.

Other pitfalls: the technician not positioning the patient correctly in the imaging machine or a radiologist not having sufficient expertise or experience, Rao said.

Employers and insurers typically do little to help patients identify which radiology practices provide the most accurate results. Instead, employers have been focused on the cost of imaging tests. Some employers or insurers require plan members to use free-standing outpatient centers rather than those based in hospitals, which tend to be more expensive.

Woods said Walmart found that deficiencies and variation in imaging services affected employees nationwide. “Unfortunately, it is all over the country. It’s everywhere,” she said.

Walmart’s new imaging strategy is aligned with its efforts over the past decade to direct employees to select hospitals for high-cost health procedures. Since 2013, Walmart has been sending workers and their dependents to select hospitals across the country where it believes they can get better results for spine surgery, heart surgery, joint replacement, weight loss surgery, transplants and certain cancers.

As part of its “Centers of Excellence” program, the Bentonville, Ark.-based retail giant picks up the tab for the surgeries and all related travel expenses for patients on the company’s health insurance plan, including a caregiver.

Sampling Imaging Centers’ Work

Covera has collected information on thousands of hospital-based and outpatient imaging facilities starting with its previous business work in the workers’ compensation field.

“Our primary interest is understanding which radiologist or radiology practices are achieving the highest level of diagnostic accuracy for their patients,” said Dan Elgort, Covera’s chief data science officer.

Covera has independent radiologists evaluate a sampling of patient care data on imaging centers to determine facilities’ error rates. It uses statistical modeling along with information on each center’s equipment, physicians and use of industry-accepted patient protocols to determine the facilities’ rates of accuracy.

Covera expects to have about 1,500 imaging centers in the program by year’s end, said CEO Ron Vianu.

There are about 4,000 outpatient imaging centers in the United States, not counting thousands of hospital-based facilities, he estimated.

As a condition for participating in the program, each of the imaging centers has agreed to routinely send a sampling of their patients’ images and reports to Covera.

Vianu said studies have shown that radiologists frequently offer different diagnoses based on the same image taken during an MRI or CT scan. Among explanations are that some radiologists are better at analyzing certain types of images — like those of the brain or bones — and sometimes radiologists read images from exams they have less experience with, he said.

Vianu noted that most consumers give little thought to where to get an MRI or CT scan, and usually go where their doctors send them, the closest facility or, increasingly, the one that offers the lowest price. “Most people think of diagnostic imaging as a commodity, and that’s a mistake,” he said.

Rao applauded the effort by Walmart and Covera to identify imaging facilities likely to provide the most accurate reports. “I am sure centers that are worried about their quality will not be happy, but most quality operations would welcome something like this,” she said.

Few Guides For Consumers

Consumers have little way to distinguish the quality of care from one imaging center to the next. The American College of Radiology has an accreditation program but does not evaluate diagnostic quality.

“We would love to have more robust … measurements” about the outcomes of patient care than what is currently available, said Dr. Geraldine McGinty, chair of the college’s board of chancellors.

Facilities typically conduct peer reviews of their radiologists’ patient reports, but there is no public reporting of such results, she said.

Covera officials said they have worked with Walmart for nearly two years to demonstrate they could improve the quality of diagnostic care its employees receive. Part of the process has included reviewing a sample of Walmart employees’ health records to see where changes in imaging services could have caught potential problems.

Covera said the centers in its network were chosen based on quality and price was not a factor.

In an effort to curtail unnecessary tests, Walmart, like many large employers and insurers, requires its insured members to get authorization before getting CT scans and MRIs.

“Walmart is on the leading edge of focusing on quality of diagnostic imaging,” said Suzanne Delbanco, executive director of the Catalyst for Payment Reform, an employer-led health care think tank and advocacy group.

But Mark Stolper, executive vice president of Los Angeles-based RadNet, which owns 335 imaging centers nationally, questions how Covera has enough data to compare facilities. “This would be the first time,” he said, “I have seen or heard of a company trying to narrow a network of imaging centers that is based on quality instead of price.”

Woods said that even though the new imaging strategy is not based on financial concerns, it could pay dividends down the road.

“It’s been demonstrated time and time again that high quality ends up being more economical in the long run because inappropriate care is avoided, and patients do better,” she said.

[Clarification: This story was updated on May 15 at 10:50 a.m. ET to make clear that Dr. Geraldine McGinty’s comments were about measuring outcomes of patient care.]