Sec. 2. Findings; purposes
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Congress finds the following: Recent studies by the Government Accountability Office
(GAO)examining self-referral practices in advanced diagnostic imaging and anatomic pathology determined that financial incentives were the most likely cause of increases in self-referrals. For advanced diagnostic imaging, GAO stated that “providers who self-referred made 400,000 more referrals for advanced imaging services than they would have if they were not self-referring”, at a cost of “more than $100 million” in 2010. For anatomic pathology, GAO found that “self-referring providers likely referred over 918,000 more anatomic pathology services” than they would have if they were not self-referring, costing Medicare approximately $69 million more in 2010 than if self-referral was not permitted. Noting the rapid growth of services covered by the in-office ancillary services
(IOAS)exception and evidence that these services are sometimes furnished inappropriately by referring physicians, the Medicare Payment Advisory Commission (MedPAC) stated that physician self-referral of ancillary services creates incentives to increase volume under Medicare’s current fee-for-service payment systems and the rapid volume growth contributes to Medicare’s rising financial burden on taxpayers and beneficiaries. According to the Centers for Medicare & Medicaid Services, a key rationale for the IOAS exception was to permit physicians to provide ancillary services in their offices to better inform diagnosis and treatment decisions at the time of the patient’s initial office visit. It is necessary, therefore, to distinguish between services and procedures that were intended to be covered by the IOAS exception, such as routine clinical laboratory services or simple x-rays that are provided during the patient’s initial office visit, and other health care services which were clearly not envisioned to be covered by that exception because they cannot be performed during the patient's initial office visit. According to a 2010 Health Affairs study, less than 10 percent of CT, MRI, and Nuclear Medicine scans take place on the same day as the initial patient office visit. According to a 2012 Health Affairs study, urologists’ self-referrals for anatomic pathology services of biopsy specimens is linked to increased use and volume billed along with a lower detection of prostate cancer. According to an October 2011 Laboratory Economics report, there has been an increase in the number of anatomic pathology specimen units billed to the Medicare part B program from 2006 through 2010, specifically for CPT Code 88305, and the rate of increase billed by physician offices for this service is accelerating at a far greater pace than the rest of the provider segments. According to a 2013 American Academy of Dermatology Pathology Billing paper, arrangements involving the split of the technical and professional components of anatomic pathology services among different providers may endanger patient safety and undermine quality of care. In November 2012, Bloomberg News released an investigative report that scrutinized ordeals faced by California prostate cancer patients treated by a urology clinic that owns radiation therapy equipment. The report found that physician self-referral resulted in a detrimental impact on patient care and drove up health care costs in the Medicare program. The Wall Street Journal, the Washington Post, and the Baltimore Sun have also published investigations showing that urology groups owning radiation therapy machines have utilization rates that rise quickly and are well above national norms for radiation therapy treatment of prostate cancer. According to a 2010 MedPAC report, only 3 percent of outpatient physical therapy services were provided on the same day as an office visit, only 9 percent within 7 days of an office visit, and only 14 percent within 14 days of an office visit. These services are not integral to the physician’s initial diagnosis and do not improve patient convenience because patients must return for physical therapy treatments. Those services intended to be covered under the IOAS exception are not affected by this legislation. The exception to the ownership or investment prohibition for rural providers in the Stark rule is not affected by this legislation. The purposes of this Act are the following: Maintain the in-office ancillary services exception and preserve its original intent by removing certain complex services from the exception—specifically, advanced imaging, anatomic pathology, radiation therapy, and physical therapy. Protect patients from misaligned provider financial incentives. Protect Medicare resources by saving billions of dollars. Accomplish the purposes described in paragraphs (1), (2), and
(3)in a manner that does not alter the existing exception to the ownership or investment prohibition for rural providers.