In the short run, the Centers for Medicare and Medicaid Services' (CMS) decision to decline coverage for "virtual" colonoscopies will have little financial impact on Minnesota companies such as Vital Images Inc., said Ernest Andberg, an analyst with Feltl & Co.

Minnetonka-based Vital Images makes software that analyzes images from CT scans.

However, the federal agency's decision is fraught with political and economic consequences as the agency seeks to rein in health care spending, Andberg said. CMS has taken an especially tough position on 3D radiology, a booming industry with questionable medical and cost benefits.

"CMS wants to slow it down," Andberg said. "This is one more step there."

Expert say the CMS decision on virtual colonoscopies is only the first step in what will likely be a fierce debate over what medical technologies the government chooses to cover and how it makes such decisions. Faced with ballooning health care costs and a recession, Medicare will start to run out of money in 2017, two years ahead of earlier projections. The government released its latest Medicare forecast on Tuesday, the same day CMS issued its ruling on virtual colonoscopies.

President Obama's efforts to reform health care, which he hopes to pass this year, center on so-called evidence-based medicine, the idea that government will only cover medical technologies with clear and convincing evidence that treatments work.

CMS's decision on virtual colonoscopies "is a real bellwether of things to come," said Gary Schwitzer, a health journalism professor at the University of Minnesota and publisher of HealthNewsReview.org. "What are we willing to pay for? This is a really big story to me. You can feel the industry special interests gearing for battle. Are we going to base our spending decisions on special interests or (scientific) evidence?"

Supporters tout virtual colonoscopies, in which a CT scanner tries to detect cancer by producing a detailed 3-D image of the colon, as an effective, less-invasive alternative to the traditional method of snaking a camera through the large intestine. Some say CT scans might lessen patient fears and encourage more to get tested.

But in its ruling, CMS said "there is insufficient evidence ... to conclude that screening CT colonography improves health benefits for ... average-risk Medicare (age 65 and older) beneficiaries. While it is a promising technology, many questions on the use of CT colonography need to be answered with well designed clinical studies."

While not unexpected, the decision angered several medical industry groups.

"Make no mistake, if let stand, this CMS decision ... will cost lives," said James Thrall, chair of the American College of Radiology Board of Chancellors.

Firms downplayed the ruling.

Virtual Radiologic Corp. of Eden Prairie, Minn., which contracts with U.S. radiologists to interpret and analyze imaging data from CT scanners and MRI machines, noted it performed fewer than 500 of virtual colonoscopy studies in 2008 -- out of 2.2 million studies total.

And while Vital Images enthusiastically embraced virtual colonoscopies just two years ago, the company today is focused more on heart-related CT scans, Andberg said.

"While we disagree with the CMS position, the decision does not have a significant impact on Vital Images," the company said. "Vital Images provides a wide range of clinical and disease-specific applications well beyond just CT colonoscopy, including cardiac, lung, vascular, brain and other applications, to improve patient care and reduce overall health care costs."

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