Imaging Self-Referrals Could Raise Costs, Hurt Patients, Report Says

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Physicians with a financial stake in ordering imaging tests, such as MRIs or CT scans, issued 400,000 more referrals for such tests in 2010, amounting to $109 million in additional referral costs for Medicare beneficiaries, according to a Government Accountability Office report released Wednesday, The Hill's "Healthwatch" reports.

Such practices waste money and potentially put patients at risk, GAO said (Baker, "Healthwatch," The Hill, 10/31).

Details of Report

For the report, GAO analysts examined Medicare Part B claims data for MRI and CT scan services from 2004 through 2010. Analysts used taxpayer identification numbers to determine whether physicians that ordered the imaging tests had a financial relationship with the provider of the tests.

The report found the number of MRI services increased by more than 80% among physicians who self-referred, while non-self-referred services increased by 12% during the same period. Meanwhile, self-referred MRI costs increased by 55%, from $239 million in 2004 to $370 million in 2010. Non-self-referred MRI costs dropped by more than 8%, from nearly $1.34 billion in 2004 to about $1.23 billion in 2010.

Over the study period, expenses for self-referred CT services grew by 67%, from $204 million in 2004 to $340 million in 2010, while non-self-referred CT services rose by 5%, from $609 million in 2004 to $642 million in 2010 (Robeznieks, Modern Healthcare, 10/31).

In addition to the extra costs, the report noted, "To the extent these referrals were unnecessary, they pose unacceptable risks for beneficiaries," particularly in the case of CT scans, which require high doses of radiation that has been linked to an elevated risk for cancer (Reichard, CQ HealthBeat, 10/31).

GAO Recommendations

GAO offered several recommendations to address the problem, such as:

  • Requiring providers to specify on their claims that they are self-referring;
  • Directing CMS to develop and implement a payment-reduction policy for self-referred services; and
  • Requiring CMS to implement an approach that determines whether self-referred imaging services are appropriate for specific cases (Modern Healthcare, 10/31).

Lawmakers React to Report

Several lawmakers on Wednesday, many of whom are Democrats, used the GAO report as evidence that the practice of self-referrals should be curbed or stopped, CQ HealthBeat reports (CQ HealthBeat, 10/31).

The report was requested by Senate Finance Committee Chair Max Baucus (D-Mont.), Sen. Chuck Grassley (R-Iowa) and Reps. Henry Waxman (D-Calif.), Pete Stark (D-Calif.) and Sander Levin (D-Mich.).

In a joint news release, Baucus called the findings "eye opening" (Modern Healthcare, 10/31). "Providers' bottom lines shouldn't be getting in the way of their patients' care and best interests," he said ("Healthwatch," The Hill, 10/31).

Grassley, ranking member of the Senate Judiciary Committee, added, "Medicare payment policy shouldn't incentivize unnecessary tests that drive up costs" and put patients at risk, but he acknowledged that the "challenge is to develop a payment system that safeguards beneficiary access to services while preventing self-referrals by physicians who abuse the system" (Modern Healthcare, 10/31).

Frank Apgar
The AMA and the CMA need to step forward and push for legislation to stop self referrals of advanced imaging. The overutilization of CT imaging given the attendant risk of future cancers is especially troubling. The CMA may accept my membership resignation if it fails to do this.
Rob Tookoian
#1, Referring physicians (and their immediate family members) are prohibited from owning imaging centers and have been for a couple of decades. The issue here is an exception to this rule called the "In House Ancillary Exception." This allows referring physicians to own the equipment as long as it is located at their office. The concept is that this can benefit the patient by being more convenient. Of course, other than x-ray, the convenience is lost as it is pretty rare for a patient to walk right into the imaging suite when the physician-owner decides that a procedure is necessary. Prior to this study, rather than really evaluate overutilization and cost, to combat the increasing use of imaging, CMS and other payors just keep lowering payments to all providers. This is really only affects the non-self-referring providers. Those who do self-refer can simply refer more patients for imaging procedures. In short, it is about time.
Scott Zettlemoyer
My personal experience: This detected my stage 1 lung cancer. 2 years later - all good. So yes it raised immediate costs - but certainly did not hurt me. It saved my life! And, did the early detectin raise or lower the total cost associated with the long-term treatment of my lung cancer?
Tom Johnson
Beyond good medicine and best practices, which are the provence of most physicians, there is the specter of malpractice, cost unawareness and greed. To be sure, many tests are ordered by doctors just to "cover themselves". This has been well-documented. That said, one of the failings of "Obama Care" is that it did not fully address this issue. One can hardly blame physicians for ordering unnecessary or excessive tests in our litigious environment. Second, most doctors don't know what tests cost and the patient is often insulated from the cost so they don't ask. Third (the subject of this study) is greed. This has been handled in the pharmacy arena, in California, by prohibiting ownership of a pharmacy by a physician. This could be done with imaging centers or other procedural based facilities as well. In other words, where direct referral is possible, ownership would be prohibited. The political will to do that, however, will be hard to come by.

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