Jump in Self Referrals Likely Driven by Financial Incentives, GAO Says
The number of self-referred pathology services -- and subsequent Medicare spending on them -- increased at a faster rate than non-self-referred pathology services from 2004 to 2010, suggesting that the financial incentives behind self-referrals might be driving the increase, according to a report from the Government Accountability Office, Modern Healthcare reports.
GAO Report Findings, Recommendations
The report -- commissioned by Reps. Sandy Levin (R-Mich.) and Henry Waxman (D-Calif.) and Sens. Max Baucus (D-Mont.) and Chuck Grassley (R-Iowa) -- determined that Medicare could have saved $69 million on pathology services in 2010 if self-referring physicians had referred the same number of procedures as non-self-referring physicians (Lee, Modern Healthcare, 7/15).
The report also found that:
- Dermatology, gastroenterology and urology accounted for 90% of self-referred pathology services in 2010; and
- Referrals by "switchers" -- physicians who began self-referring in 2009 -- increased on average by 14% to 58.5% between 2008 and 2010.
Meanwhile, referrals for biopsies by providers who continued to self-refer or who had never self-referred increased at a much lower rate, indicating that the switchers' increase in referrals was not caused by a general increase in the use of pathology services among all providers.
GAO concluded that "financial incentives for self-referring providers were likely a major factor driving the increase in referrals" (CQ HealthBeat, 7/15). The agency added that the increase raised concerns because biopsies "can result in serious complications for Medicare beneficiaries" and only increased "the year after [providers] began to self-refer."
The report recommended that CMS:
- Require providers of pathology services to flag when treatment was self-referred;
- Develop a policy to ensure that biopsies performed by self-referred physicians are appropriate; and
- Implement a new payment model for pathology services to limit financial incentives.
HHS rejected the first two suggestions, indicating in a letter that neither strategy would have a significant effect on the problem (Modern Healthcare, 7/15).
Lawmakers Criticize Self-Referring Physicians
In response to the findings, Baucus in a statement said, "This is yet another example of why we need to move toward a health care system that pays for care based on value, not volume." He added that the issue was not "just about waste in health care," but also about patients "being subjected to unnecessary tests and procedures."
Grassley agreed, arguing that "federal policy should drive doctors to make decisions based on quality of care, not financial relationships" (CQ HealthBeat, 7/15).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.