The federal government has supported regulations to stem physician self referral for nearly 30 years, but a new GAO report finds the volume of services for physicians who self refer grew at a slower rate than those who were not self-referring. What the finding means for the future of Stark law and government efforts to intercede in physician ownership. Plus, why physicians can't wholly own hospitals, but must own ACOs.
What the GAO report found
A new Government Accountability Office report examining the impact of physician self referral for physical therapy services found expenditures for physical therapy services that were not self-referred by physicians grew at a faster rate than physical therapy services that were self-referred from 2004 to 2010.
Self-referring providers referred more patients to physical therapy than non-self-referring providers, but the self-referring providers referred fewer physical therapy services per beneficiary. Additionally the study found orthopedic surgeons are less likely to refer patients to physical therapy when they have a financial stake in the services.
The somewhat under-the-radar report has many scratching their heads, while others are saying 'I told you so.' Could it be that physicians really aren't driven by profit alone?
Why are there laws against self referral?
The concept of physician self referral (when a physician refers a patient to an ancillary service he or she has an ownership interesting in — imaging, labs, ambulatory surgery centers are examples) has been a hot-button since the late 1980s when then Rep. Pete Stark (D-Calif.) helped pass legislation to prohibit physician self-referrals for clinical laboratory services (Stark I), under President George H.W. Bush.
Then, in the mid-1990s under President Bill Clinton, the Health Insurance Portability and Accountability Act expanded self-referral regulations to additional "designated health services" thought to be particularly susceptible to overutilization as a result of physician self-interest (Stark II). Examples of these services include physician therapy, radiology and imaging services, to name but a few. The law included some exceptions but did reduce the ability of physicians to own healthcare service providers which they might commonly refer patients to.
Do physician overutilize when they have a financial interest?
That of course is a difficult question to answer, and studies on the topic provide mixed findings, making conclusions difficult. While the most recent GAO report would suggest self-referral wouldn't lead to unnecessary care and higher healthcare costs, many other studies on the topic have found higher utilization rates among self referrers. A 2013 GAO report, for example, found self-referred pathology services grew at a faster rate than non-self-referred services from 2004 to 2010. According to this GAO report, "the financial incentives for self-referring providers were likely a major factor driving the increase in referrals."
Studies of imaging utilization have similar findings. For example, this study looked at the use of lumbar spine MRIs by orthopedic surgeons who had a financial interest in MRI services and those that did not, and found those with financial interest had a significantly higher rate of negative scans, which may suggest the test had been overutilized. And, a meta-analysis of self-referred imaging found self-referrers referred patient for imaging tests at a rate of 2.48 to 1, compared to their non self-referring counterparts.
So, does physician ownership lead to unnecessary testing and overutilization?
It's difficult to know for sure. Perhaps pathology, imaging and physical therapy are fundamentally differently; indeed they are, at least in my mind. From a patient's perspective, an imaging or pathology test (which involves a single trip to an imaging center or doctor's office) is less convenient than not having one at all, but more convenient than spending hours a week for multiple weeks undergoing physical therapy.
Self referral is such a complicated issue to try to regulate because most physicians aren't bad actors. There may be a few here and there, but the large majority of 'first do no harm' physicians don't want to their patients to undergo unnecessary testing or procedures. Yet, many studies do find higher rates of utilization; why is this so?
Do physicians subconsciously refer more because of their inherent self interest? Do they refer more because they consciously or subconsciously recognized a trip next door to their imaging center wasn't a huge inconvenience for the patient, compared to asking them to run across town several days later?
Cost savings for inconvenient care?
With mixed findings on the impact of physician self referral, some may wonder why the government continues to involve itself in regulating it. The answer, of course, is that any potential contributor of overutilization is a target for those doing anything they can to rein in the growing costs of the Medicare program.
President Obama's proposed fiscal year 2015 would scale back the Stark exception for in-office ancillary services, including the self-referral of advanced diagnostic imaging, radiation oncology and therapy services. Also, beginning in 2015, it would prohibit self-referrals for advanced imaging, radiation therapy and anatomic pathology and physical therapy.
Politically, reigning in "greedy" physicians is an easier sell than (gasp) raising the enrollment age or increasing beneficiary costs. Yet, a removal of the exception would mean much less convenient care for patients. An oncology group couldn't refer patients to its own radiation oncology center, and an orthopedic group couldn't perform MRIs, if Stark is enacted in its strictest sense.
In March, 30 medical organizations sent a letter to the Senate Finance Committee urging it not to eliminate Stark Law exceptions. "Ancillary services are essential tools used on a daily basis by practices seeking to provide comprehensive patient-centered services," and if the administration's proposal were accepted it would "force patients to receive ancillary services in a new and unfamiliar setting, increase inefficiencies, present significant barriers to appropriate screenings and treatments and make healthcare both less accessible and less affordable," according to the organizations.
The removal of Stark exceptions in Obama's budget shows just how closely the administration is looking at self-referral issues, but the likelihood of a President's budget passing without significant rewrites is nil. Like so many within the industry, I'll be closely watching the budget making process to see just how much, if at all, Stark is affected.
The bigger picture
All of this discussion, though, leads me to a bigger question: Why can't the government make up its mind on physician self referral? The administration wants to limit physician ownership in some instances but promotes it in others. Take the Patient Protection and Affordable Care Act, which included restrictions for physician-owned hospitals, under the assumption that physicians owning hospitals could lead to unnecessary hospitalizations. Yet, the same law established Medicare accountable care organizations and requires 75-percent physician ownership in these models. Yes, ACOs are based on the premise of shared savings (which theoretically would provide a counter-measure to self-interest surrounding profits), so that's one difference. But, the reasoning behind limiting ownership in hospitals but requiring it ACOs seems sketchy at best.
I'm not a physician, but I am a patient, and while I understand there is some chance my self-referring doctor may be sending me for unnecessary testing because of an ownership interest, I value the convenience of receiving convenient service. I also trust my physician. I've also selected stayed with my primary care and specialty providers over the years because of the relationships we've developed. I trust them to direct my care in all situations, including those where they may be consciously or subconsciously swayed by making a small profit off of my care. While it's not an ideal scenario, I sort of like the idea of my trusted physician operating a service as opposed to someone or some corporate entity I don't know. I can appreciate the government's efforts to protect its spending (it's our tax dollars it's protecting after all), but, I have to side with the 30 medical societies: the alternative just doesn't seem very patient-centered to me.