Self-referral boosts Medicare imaging costs: GAO

It's estimated that in 2010, providers who self-referred patients for advanced imaging made about 400,000 more referrals than they would have had they not had a financial interest in the imaging equipment and that these referrals cost the Medicare system an additional $109 million, according to a new Government Accountability Office report.

In 2010, some 6.8 million magnetic resonance imaging and computed tomography services for Medicare beneficiaries were conducted in a physician office or independent diagnostic testing facility, according to the report, and this accounted for about 23% of all such services delivered to Medicare fee-for-service beneficiaries. The GAO studied Medicare Part B claims for MRI and CT services from noninstitutional providers from 2004 through 2010 and used taxpayer identification numbers to determine whether there was a financial relationship with the provider who performed the MRI or CT service. It also identified a group of providers who began to self refer in 2009.

Among the GAO's findings were that the number of MRI services increased by more than 80% among self-referrers during the study period, compared with a 12% increase for non-self-referred services. Also, for those who began self-referring in 2009, the average number of referrals for MRIs and CTs in 2010 increased by 67% from their 2008 total.

According to the report, self-referred MRI expenditures increased 55% to $370 million in 2010 from about $239 million in 2004, while non-self-referred MRI expenditures dropped by more the 8% to almost $1.23 billion in 2010 from almost $1.34 billion in 2004. At the same time, expenditures for self-referred CT services increased 67% to $340 million in 2010 from $204 million in 2004. In comparison, non-self-referred CT services grew 5% to $642 million in 2010 from $609 million in 2004.

The report was requested by Sens. Max Baucus (D-Mont.) and Chuck Grassley (R-Iowa) and Democratic Reps. Henry Waxman and Pete Stark of California and Sander Levin of Michigan. In a joint news release, Baucus called the findings “eye opening,” while Grassley noted that “Medicare payment policy shouldn't incentivize unnecessary tests that drive up costs” and possibly jeopardize patients. “The challenge is to develop a payment system that safeguards beneficiary access to services while preventing self-referrals by physicians who abuse the system,” added Grassley, the ranking Republican on the Senate Judiciary Committee.

Stark said the report indicates the need for action.

“It should serve as a wakeup call to Congress that this is an arena where we can't afford to sit idly by and allow providers to continue these practices,” said Stark, the ranking Democrat on the House health subcommittee. “Once again, we're seeing how money drives behavior. We need to step in to stop these abusive self-referral arrangements now.”

The GAO's recommendations included requiring providers to indicate on their claims form if they are self-referring, that the CMS determine and implement a payment reduction for self-referred services, and that the CMS should implement an approach that determines the appropriateness of self-referred imaging services.

In the report, it was noted that the HHS would consider implementing an approach to determine the appropriateness of a self-referred service, but did not concur with the other recommendations. In an e-mailed news release responding to the report, the American Association of Orthopaedic Surgeons said that in-office imaging services lead to better patient adherence to treatment plans and to improved outcomes and that “any restriction on this convenience would threaten the quality of care being delivered.”