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

On October 31, 2012, the United States Government Accountability Office (GAO) released a study detailing the results of a six-year analysis they had conducted regarding self-referral practices of physicians and group practices that own/lease/operate magnetic resonance imaging (MRI) and computed tomography (CT) services.

Self-referrals for MRI/CT services are often excepted from the reach of the Federal Stark Law through the “In-Office Ancillary Services Exception”. The “In-Office Ancillary Services Exception” was already amended by the Protection and Affordable Care Act (PPACA) in a manner that made it more burdensome physicians to utilize the exception for self-referring advanced imaging services. Unsurprisingly, the report’s findings are primarily negative for physicians who utilize the “In-Office Ancillary Services Exception” to self-refer for MRI/CT services. Also unsurprising is that the lawmakers who originally requested the report are already using it to argue that the practice of self-referrals should be curbed or stopped. Note that the release of this study comes shortly after the release of the OIG’s Fiscal Year 2013 Work Plan, which also scrutinizes Part B imaging services, as well as the medical necessity of certain diagnostic radiology services (of which we are writing about further in our blog and other publications).
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.). The GAO found that between 2004 and 2010, the utilization/number of self-referred and non-self-referred MRI and CT imaging services both increased. The non-self-referred services increased over this period by 12%. The self-referred services, however, increased by more than 80%, with a corresponding increase in expenditures. Further, the GAO’s analysis shows that providers’ referrals of MRI and CT services substantially increased the year after they began to self-refer, and that self-referring practitioners utilized imaging services at approximately twice the rate as providers who did not self-refer. The GAO attributes the difference in referral practices to financial incentives for self-referring providers, as opposed to an evolution in practice standard of care, heightened patient-care service, rapid diagnoses, improved care coordination, or convenient access for patients.

The GAO also notes that, in addition to direct costs associated with increased usage of MRI/CT services, there may be additional indirect costs associated with the increased usage. In particular, the GAO believes that increased usage of imaging services may reveal abnormalities that have no clinical relevance or result in unnecessary surgeries. The GAO strongly implies that it believes that the increase in MRI/CT services was unnecessary, though in a footnote they note that an increased use of advanced imaging may also partially offset some of the direct imaging costs if increased usage leads to the early detection of disease which results in less-invasive and less-costly treatments.

The GAO sent draft versions of its report to CMS/HHS for comment and discussion. The GAO makes three recommendations, two of which CMS preliminarily disagreed with:

1. HHS/CMS did not concur with the following GAO recommendations:
a. The GAO would like CMS to insert a self-referral flag on its Medicare Part B claims form and require providers to indicate whether the advanced imaging services for which a provider bills Medicare are self-referred or not; and
b. The GAO would like CMS to implement a payment reduction for self-referred advanced imaging services.

2. HHS/CMS concurred with the following GAO recommendation, stating that it would further evaluate options for implementing it:
a. The GAO would like CMS to implement an approach or mechanism to ensure the appropriateness/medical necessity of advanced imaging services referred by self-referring providers.

The GAO, at some length, details its disagreement with CMS as to the first two recommendations, and lays out a case for why CMS should implement all three recommendations. The GAO is now sending copies of its finalized report to the Secretary of HHS, interested congressional committees, and others.

Note that the release of this GAO study comes shortly after the release of the OIG’s Fiscal Year 2013 Work Plan, which scrutinizes Part B imaging services, as well as the medical necessity of certain diagnostic radiology services (of which we are writing about further in our blog and other publications).

Providers should stay alert for further legal developments related to self-referral of imaging services, and should review their structures to ensure compliance with the Stark Law. The GAO’s report can be accessed at: http://www.gao.gov/assets/650/648988.pdf.

For more information, please contact Adrienne Dresevic, Esq. or Clinton Mikel, Esq. at (248) 996-8510 or visit The HLP website.