GAO reports prompt call to action on physician self-referral

A series of reports by the Government Accountability Office (GAO) on the state of physician self-referrals demonstrates that self-referral has an “inescapable” effect on increasing Medicare spending and should be viewed as a “call to action," according to a commentary in January 12 issue of the Journal of the American Medical Association.

The four GAO reports covered self-referred services in the areas of advanced imaging, radiation therapy, anatomic pathology and physical therapy. In their commentary, Eli Adashi, MD, of the Warrant Alpert Medical School at Brown University, and Robert P. Kocher, MD, of the Schaeffer Center for Health Policy and Economics at the University of Southern California, Los Angeles, pointed out the when it came to advanced imaging the GAO audit found that the growth rate for self-referred services grew faster than non-self-referred services by a rate of 7:1 for MRI and 3.5:1 for CT.

“Observations on self-referrals of intensity-modulated radiation therapy (IMRT) services for the treatment of prostate cancer were particularly disconcerting,” the authors added. The utilization of self-referred IMRT services increased by as much as 356% during a period when the utilization of the non–self-referred IMRT services decreased by 5%.

All told, the four reports show that the excess number of self-referred services in the subject areas increased Medicare Part B expenditures by $300 million.

“Characterized as potentially unnecessary and occasionally harmful, physician self-referral has been repeatedly shown to increase the use of the services offered and the related attendant overall costs,” the authors wrote. “It is this latter reality that has thrust physician self-referral into the national health care debate in which ‘bending the cost curve’ remains an overriding imperative.”

The authors went on to note that while the Stark provisions were intended to prohibit physicians from referring certain services payable by Medicare or Medicaid to entities with which they have financial relationships, those provisions have been undercut by the promulgation of a number of exceptions, such as the In-Office Ancillary Service exception.

While the possibility of payment model revisions—such as the move from a fee-for volume environment to one embracing fee-for-value alternatives like accountable care organizations—should help address the physician self-referral problem, Adashi and Kocher believe that “the enormity of the transformation required suggests that this approach is unlikely to yield near-term relief for the self-referral challenge.”

Consequently, it appears that “meaningful and timely redress of physician self-referrals will require regulatory or legislative relief.” The authors wrote, concluding that Congress “should address the relative shortcomings of the well-meaning if ineffective Stark provisions and enact simpler enforceable ordinances in its stead. Failure to do so would constitute a costly opportunity missed.”