House calls on GAO to study effect of self-referrals on Medicare spending

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The House Energy & Commerce Chair Henry Waxman, D-Calif., Ways & Means Committee Chair Sandy Levin, D-Mich., and Ways & Means Subcommittee on Health Chair Pete Stark, D-Calif., recently called on the Government Accountability Office (GAO) to perform a study regarding the effects of physician self-referral of advanced medical imaging and radiation therapy treatments on Medicare spending.

Specifically, the representatives are requesting that the GAO conduct a study on the prevalence, patterns and trends in physician self-referral for advanced imaging and radiation oncology services; Medicare spending on these physician self-referred services; and the extent to which self-referral may have led to increases in the provision of, and Medicare spending for, advanced imaging and radiation oncology services.

The March 2009 Medicare Payment Advisory Commission (MedPAC) report to Congress states that overall Medicare imaging utilization growth for 2006-2008 was 2 percent or less in the U.S., which was at or below the growth rate of other major physician services. However, the number of self-referred MRI and CT scans in the Medicare system as well as Medicare spending on self-referred MRI and CT grew at nearly double the rate of that performed by other providers, according to the report.

According to the American College of Radiology (ACR), government regulation needs to address financially driven self-referral, which may not be rectified by quality measures. “Congress and the regulatory agencies must do so by measures other than across-the-board reimbursement cuts, which only encourage more self-referral and restrict patient access to quality care by driving those who do not self-refer out of practice or forcing them to limit the number of Medicare patients they receive,” the college wrote.

The House committees’ letter also addressed the “‘in-office ancillary exception,’ which allows a physician under certain conditions, to provide imaging services, radiation therapy services and some other designated health services in his or her office.”

The ACR also noted that MRI, CT, PET and radiation therapy procedures are not ancillary services. The college recommended that the Centers for Medicare & Medicaid Services (CMS) should remove them from the “in-office ancillary exception” federal law which allows providers to directly profit financially from referring patients to scanners or radiation therapy equipment which they own.

The college also recommended that CMS should clamp down on leasing arrangements. Currently, non-radiologists can lease time in an imaging center and claim that the center is thus part of their practice. “By doing this, they can refer patients to be scanned in that center during the time they have leased,” which according to ACR, would create a “direct financial incentive to do more imaging which studies have shown significantly increases the number of scans performed.”

Click here to read the Congressional letter to the GAO.