Self-referral price tag tops $100M

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 - Fistful of Money / Finance

In 2010, providers who self-referred likely made 400,000 more referrals for advanced imaging services than they would have had they not been self-referring, with the extra referrals costing Medicare approximately $109 million, according to a report from the Government Accountability Office (GAO).

“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,” read a statement issued by the GAO.

The report outlined that from 2004 through 2010, the number of advanced imaging services increased faster among those that were self-referred. During this period, the number of self-referred MRI services increased by more than 80 percent, compared with a 12 percent increase of non-self-referred MRI services, according to the GAO.  

Looking at the impact on costs, self-referred MRI and CT expenditures increased 55 percent and 67 percent, respectively, between 2004 and 2010, according to the report. At the same time, non-self-referred MRI service expenditures fell 8 percent, while non-self-referred CT services grew 5 percent.

The analysis also showed that providers’ referrals of MRI and CT services increased substantially the year after they began to self-refer or joined a group practice that already self-referred. “Providers that began self-referring in 2009--referred to as switchers--increased MRI and CT referrals on average by about 67 percent in 2010 compared to 2008.”

For example, the yearly average number of MRI referrals made by “switchers” increased from 25.1 in 2008 to 42.0 in 2010, while the average number of referrals for non-self-referrers and even those that had remained self-referrers declined, according to the GAO statement. “This comparison suggests that the increase in the average number of referrals for switchers was not due to a general increase in the use of imaging services among all providers.”

The GAO made three recommendations to the Centers for Medicare & Medicaid Services (CMS) designed to help the organization identify self-referrals and address increases in these services:

  • CMS should require providers to indicate whether the advanced imaging services for which a provider bills Medicare are self-referred or not and insert a “self-referral flag” on the Medicare Part B claims form.
  • CMS should determine and implement a payment reduction for self-referred advanced imaging services.
  • CMS should determine and implement an approach to ensure appropriateness of advanced imaging services referred by self-referring providers.

Two professional associations, the Medical Imaging & Technology Alliance (MITA) and the American Medical Group Association (AMGA), issued statements questioning the report’s conclusions and urged policymakers not to interfere with current care models.

“Efforts to limit physicians would threaten patient access to healthcare providers and technologies while obstructing coordinated care models that have been proven to lower costs and improve care,” said Gail Rodriguez, executive director of MITA. “As an alternative to picking winners and losers among providers, policymakers should incentivize the use of physician-developed appropriateness criteria to inform decisions between patients and their doctors.”

Donald W. Fisher, PhD, AMGA's president and CEO, said the GAO report doesn’t recognize the value of integrated systems of care and multispecialty medical groups. “At a time when the federal government is providing incentives for healthcare providers to integrate care delivery, such as in the Medicare Shared Savings Program, I would strongly urge federal policymakers to not rush to judgment based on a single report.  Patients deserve to have access to coordinated care which is most effectively delivered by multispecialty medical groups and other organized systems of care,” read Fisher’s statement.

In contrast, the Alliance for Integrity in Medicine applauded the GAO and wrote that the findings substanitiated the organization's concerns about the in-office ancillary service (IOAS) exception to the self-referral law. The organization urged Congress to consider the report and enact legislation to remove advanced diagnostic imaging, anatomic pathology, radiation therapy and physical therapy from the IOAS exception.