Depending on whom you talk to, legislation introduced in early August to close the in-office ancillary services exception (IOAS) to the Stark law is either a long overdue fix to a lingering problem or an attack on efforts by physician specialists to improve patient care. The bill, Promoting Integrity in Medicare Act of 2013 (H.R. 2914), would exclude anatomic pathology (AP), advanced diagnostic imaging, physical therapy, and radiation services from the IOAS exception to the law prohibiting physician self-referrals. Physicians would still be able to self-refer simple laboratory tests, such as blood glucose, urinalyses, and strep tests that can be done during a patient’s office visit. The Alliance for Integrity in Medicare praised the bill, introduced by introduced by Rep. Jackie Speier (D-Calif.), saying it addresses the misapplication of the IOAS exception to the physician self-referral law and will improve patient care and coordination while preserving valuable Medicare resources. The College of American Pathologists (CAP) also applauded the measure, saying that there is clear evidence that self-referrals for AP services drive up Medicare costs. Speier’s bill, if enacted into law, would “prevent powerful interest groups from exploiting a loophole in the law that wastes billions of Medicare dollars and adds […]
Depending on whom you talk to, legislation introduced in early August to close the in-office ancillary services exception (IOAS) to the Stark law is either a long overdue fix to a lingering problem or an attack on efforts by physician specialists to improve patient care.
The bill, Promoting Integrity in Medicare Act of 2013 (H.R. 2914), would exclude anatomic pathology (AP), advanced diagnostic imaging, physical therapy, and radiation services from the IOAS exception to the law prohibiting physician self-referrals. Physicians would still be able to self-refer simple laboratory tests, such as blood glucose, urinalyses, and strep tests that can be done during a patient’s office visit.
The Alliance for Integrity in Medicare praised the bill, introduced by introduced by Rep. Jackie Speier (D-Calif.), saying it addresses the misapplication of the IOAS exception to the physician self-referral law and will improve patient care and coordination while preserving valuable Medicare resources.
The College of American Pathologists (CAP) also applauded the measure, saying that there is clear evidence that self-referrals for AP services drive up Medicare costs. Speier’s bill, if enacted into law, would “prevent powerful interest groups from exploiting a loophole in the law that wastes billions of Medicare dollars and adds no patient benefit.”
The Coalition for Patient Centered Imaging, however, argues that if enacted, this bill would limit access to lifesaving services for many patients and stifle new innovative reforms already under way to improve care delivery and quality improvement. In addition, it would raise the costs to Medicare beneficiaries and the Medicare program by driving patients to more costly facilities, thereby requiring additional expenditures. The coalition represents a number of physician specialty groups, including the American Association of Clinical Urologists, the American Academy of Dermatology Association, and the American Association of Orthopaedic Surgeons.
Recent reports from the Government Accountability Office (GAO), the Health and Human Services Office of Inspector General, and peer-reviewed studies have criticized the self-referral loophole, charging that such referrals drive up utilization and Medicare costs. However, the Centers for Medicare and Medicaid Services has been reluctant to close the loophole, saying it has addressed overutilization by cutting payment for some pathology services.
President Obama’s 2014 proposed budget included a provision to close the IOAS exception for radiation oncology, advanced imaging, and physical therapy, projecting that it would reduce the federal deficit by $6.05 billion between 2014-2023. AP was not included in that proposal. However, a report issued July 16 by the GAO estimated that in 2010, providers who self-referred AP services cost Medicare about $69 million. By removing all of the services listed above from the exception, the government stands to save almost $7 billion over a 10-year period.
While pathology groups believe that physicians who set up pathology labs and self-refer services are driving up utilization and cost with no clear benefit to the patient, others argue these in-office labs are actually providing better care.
Joseph Plandowski, co-owner of In-Office Pathology, a group formed to help physicians set up their own pathology labs, notes that the GAO report found urologists with their own in-office labs submitted an average of 12.5 cores for prostate biopsies while those without in-office labs were submitting an average of 8.5 cores per biopsy. According to Plandowski, the standard of care as determined by the National Comprehensive Cancer Network is 12 cores per prostate biopsy. Physicians who take fewer than 12 cores could actually be guilty of malpractice, argues Plandowski in a letter to GAO and an e-mail to G2 Intelligence.
However, Jen Madsen, senior director of economic and regulatory affairs for the College of American Pathologists, notes that there is an important distinction between the number of specimen cores take during a prostate biopsy and the number of specimen jars containing a core that are billed to Medicare. She acknowledges that 12 cores is the guideline. However, Medicare pays a rate per jar, so a physician could put 12 specimens in 12 jars and bill 12 times, or (in theory) put all 12 in one jar and bill once.
“The average, 8.5, is the average number of jars that get used by physicians who do not self-refer,” she explains. “Easy to see how you could fit 12 cores in eight jars, right? That’s not malpractice, that’s efficient use of health care resources and a conservative billing of the Medicare program.”
The Takeaway: Pathology and physician specialty groups continue to disagree about whether self-referral of AP services drives up Medicare utilization, but Speier’s bill, if enacted, will end the practice once and for all. The subsequent savings could be used to pay for physician payment reform.
