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Physician Groups Divided on GAO Self-Referral Report

 |  By Margaret@example.com  
   July 29, 2013

Financial incentives for self-referring providers "were likely a major factor driving" an increase in referrals and millions of dollars in unnecessary Medicare costs, a Government Accounting Office report finds.

A Government Accounting Office report which finds that physician self-referrals for anatomic pathology services accounts for millions of dollars in unnecessary Medicare costs has some physician groups calling 'foul.' Others say the findings bolster an argument for legislative changes in federal law.

The GAO report, released two weeks ago, looks at the effects of physicians sending patients to facilities where a provider or family member has an economic interest. It focused on the use of anatomic pathology services between 2004 and 2010. The GAO conducted the study in response to questions about the role of self-referral in growing Medicare Part B expenditures, which include physician and other outpatient services.

Although the federal Ethics in Patient Referrals Act (also known as the Stark law) generally prohibits self-referrals under Medicare, exceptions are permitted for certain in-office ancillary services (IOAS), including anatomic pathology services. The idea is to allow the services to be offered during an office visit as a patient convenience.

Among the GAO report findings for anatomic pathology services:

  • The number of self-referred services more than doubled, from 1.1 million to 2.3 million, while non-self-referred services grew by about 38% from 5.6 million to 7.8 million.
  • Three provider specialties: dermatology (58%), gastroenterology (15%), and urology (16%), accounted for 90% of referrals for self-referred anatomic pathology services in 2010.
  • In 2010 alone the GAO found that unnecessary anatomic pathology services cost Medicare $69 million.

"These analyses suggest that financial incentives for self-referring providers were likely a major factor driving the increase in referrals," according to the report.

Deepak Kapoor, MD, president of the Large Urology Group Practice Association, which represents more than has 2,000 urologists nationwide, takes exception to the findings. "I disagree profoundly with both the methodology and the report conclusions," he said in a telephone interview.

Among Dr. Kapoor's concerns is the number of physicians performing self referrals. Kapoor says the GAO reports on utilization and expenditures without taking into account the number of physicians performing the self-referral services, which he contends contributes to the increased number of services performed.

He also says the LUPGA met with the GAO and provided peer review literature that showed that during the study period the clinical standards for performing prostate biopsies increased the suggested samples from six to 12. The report notes that self-referring urology providers referred 47% more anatomic pathology services per biopsy procedure than non-self-referring urology providers (12.5 vs. 8.5).

"You can't aggregate behavior during a change in clinical standards," states Kapoor. He adds that other studies have found that physicians with their own pathology labs adopted the new clinical standard faster than others, which he says accounts for the differential between self-referring and non-self-referring providers.

The College of American Pathologists (CAP), the American Clinical Laboratory Association, and the American College of Radiology, are among the physician associations that want Congress to take immediate action to end the self-referral of anatomic pathology services.

The GAO report provides "irrefutable evidence that physician self-referral… contributes to widespread abuses, increased medical costs and over utilization," Gene Herbek, MD, FCAP, and the president-elect of the 18,000-member College of American Pathologists, said in a press statement.

In an e-mail exchange, Richard Friedberg, MD PhD, member of the CAP board of governors, and chair of the CAP council on government and professional affairs, dismissed Dr. Kapoor's clinical standards argument. "It is the ownership arrangement that accounts for the increase. The GAO study, as well as the study published last year in Health Affairs looked at the influences on the number of biopsies billed, and both found that physicians with a financial interest in providing the services billed for more services."

The only way to prevent the financial conflict of interest, Friedberg says, is to "remove anatomic pathology services from the in-office ancillary services exception. CAP believes Congress should act immediately to end self-referral of anatomic pathology services."

Instead of a change to the law, the GAO recommends these steps for the Centers for Medicare & Medicaid Services:

  • Insert a self-referral flag on Medicare Part B claim forms and require providers to indicate if the claim is for self-referral services.
  • Develop and implement a process to ensure the appropriateness of biopsy procedures performed by self-referring providers.
  • Develop and implement a payment approach to limit the financial incentives associated with self referral.

Kapoor says it is notable that despite the GAO's contention that self-referring is a cost driver, "it didn't recommend that the law be changed."

The GAO report, the second in a series, was prepared at the request of the Senate Finance Committee, which is leading a bipartisan effort to identify the effects of physician self-referral on the Medicare budget.

The first GAO report, released in October 2012, focused on self-referral for magnetic resonance imaging and computed tomography services. In that report, the GAO estimated that Medicare spent approximately $109 million more in 2010 than it would have without self-referrals. Future reports, expected this year, will cover self-referral in radiation therapy service and physical therapy services.

While Sen. Max Baucus (D-MT), the committee chair, has expressed concern about the report findings, he has not yet endorsed a legislative remedy.

"A doctor's first concern should be their patients' health, not their own personal wealth," Sen. Baucus said in a press statement. "This is yet another example of why we need to move toward a healthcare system that pays for care based on value, not volume... we need to find ways to clamp down on these doctors and make sure patients are getting the tests that are necessary and right for them."

In the House, 17 members of the GOP doctor's caucus signed a letter in late June asking Rep. John Boehner (R-OH), the Speaker of the House, and Rep. Nancy Pelosi (D-CA), the Democratic leader, to reject any efforts to change the IOAS exemption.

"We would like to express our strong support for preserving in-office ancillary services," says the letter. "This provision permits physician practices to provide critical services…in an integrated and coordinated fashion…Integration of these medical services facilitates the development of coordinated clinical pathways, improves communication between specialists, offers better quality control of ancillary services, and enhances data collection?all of which can improve patient care."

For his part, President Barack Obama has included eliminating the IOAS exemption for radiation oncology, clinical laboratory services, and physical therapy in his FY 2014 budget with an estimated savings of $6 billion over 10 years. However, anatomic pathology remains an exemption.

Margaret Dick Tocknell is a reporter/editor with HealthLeaders Media.
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