Physician Self-Referrals for Imaging Cost Medicare $109M in 2010

A federal study estimates that financial incentives tied to physicians' self-referrals for advanced imaging services cost Medicare an additional $109 million in 2010.

The Government Accountability Office report, Higher Use of Advanced Imaging Services by Providers Who Self-Refer Costing Medicare Millions, examined MRI and CT services from 2004–2010. It found that the use of MRI services increased by more than 80% when physicians self-referred compared to a 12% increase for non-self-referred MRIs.

For CT services, utilization "more than doubled" with self-referrals, while non-self-referred CTs increased about 30%, the study found.

With the findings, GAO estimated that providers who self-referred ordered about 400,000 more advanced imaging services than they would have if they weren't self-referring, which cost Medicare an additional $109 million in 2010.

"To the extent that these additional referrals were unnecessary, they pose unacceptable risks for beneficiaries, particularly in the case of CT services, which involve the use of ionizing radiation that has been linked to an increased risk of developing cancer," GAO said.

The report got little notice in the media when it was released in the week before the election. However, House and Senate leaders from both parties said in a joint media release that self-referral abuses have to be addressed.

"The results of this report are eye opening," said Sen. Max Baucus, (D-MT), chairman of the Senate Finance Committee. "Self-referrals offer an incentive for providers to order more tests than they would otherwise.  It's clear they are driving up costs.  Providers' bottom lines shouldn't be getting in the way of their patients' care and best interests."

Sen. Chuck Grassley, (R-IA), the ranking member of the Senate Finance Committee, added that "Medicare payment policy shouldn't incentivize unnecessary tests that drive up costs and even jeopardize the well-being of patients."

"The challenge is to develop a payment system that safeguards beneficiary access to services while preventing self-referrals by physicians who abuse the system," Grassley said.

Rep. Pete Stark, D-CA, ranking Democrat on the House Ways and Means Health Subcommittee, said the report "should serve as a wakeup call to Congress that this is an arena where we can't afford to sit idly by and allow providers to continue these practices."

"It's costing taxpayers millions of dollars, increasing costs on beneficiaries, and exposing patients to radiation that has real health consequences.  Once again, we're seeing how money drives behavior," Stark said.

Amy Nordeng, senior counsel in government affairs for the Medical Group Management Association, told HealthLeaders Media there is nothing in the GAO report that would indicate that the increased advanced imaging is inappropriate.

"It might very well be the case that the people who recognize the benefits of advanced imaging decided it just makes more sense to coordinate the care of their patients by having that imaging equipment in their own office or within their group practice," Nordeng says.

"We believe medical group practices are an excellent way for doctors to work together to provide comprehensive coordinated care to their patients. When you have a situation where a primary care physician, a cardiologist and a radiologist form a group practice and have imaging equipment in their practice, it doesn't make sense to say ‘we don't want you to use that imaging' or ‘we are concerned about the use of that imaging.'"

Nordeng says she cannot dispute the methodology of the GAO study. However, she notes that it ends at 2010, when the Centers for Medicare and Medicaid Services began working with providers to recognize efficiencies with multiple procedure payment reductions. In addition, she says the Affordable Care Act has since "locked in place a 75% equipment utilization assumption so reimbursement for all of these services is going down."

"Growth in these services is below the overall Medicare growth. So, while that time period may have reflected certain volume of imaging I don't think that volume will be consistent going forward," she says.

In addition, Nordeng predicts that many of the utilization issues cited in the GAO study will likely disappear as new payment and coordinated care models are rolled out.

"When folks have looked at this issue, they have noted that healthcare is transforming. As we move toward more accountable care-type organizations there will be incentives built into those arrangements to be efficient in the use of imaging," Nordeng says. "So in that sense as the market transforms and the policies transform this will be a non-issue."

"Everyone is interested in coordinated care to the benefit of the patient. To the extent that the payment moves away from fee-for-service, this will not be as big of an issue going forward. If you were to even take that same analysis that GAO did and look at 2011 and 2012 the numbers would be different."

In the meantime, Nordeng says MGMA will continue to advocate for the in-office ancillary services exemption, which provides accountability and review structures that exempt physicians from Stark Law rules against self-referrals. "We believe it provides huge benefits to patients and providers," she says.