The In-office Ancillary-services Exception: Time to Ground the Skyrocket?

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Some battles are destined to be fought over and over again. The fight to eliminate the IOASE is one such skirmish; it refuses to go away, after more than a decade of debate. Both sides are firmly entrenched, but the battle has been joined, in no small measure, by the federal government. The salvo from President Obama begins on page 40 of the 244-page 2014 budget: The Medicare Payment Advisory Commission “cautions that physician self-referral of ancillary services leads to a higher volume when combined with fee-for-service payments, a finding consistent with [Government Accountability Office (GAO)] . . . analysis. The budget encourages more appropriate use of ancillary services by only allowing providers who meet certain accountability standards to self-refer radiation therapy, therapy services, and advanced imaging services.”¹ According to the Office of Management and Budget, eliminating the exception could save $6.1 billion over the course of a decade.1 The president’s budget expands Stark laws to include not only diagnostic imaging, but also radiation oncology, clinical-laboratory services, and physical therapy—which (together) make up the $6.1 billion figure. Cynthia Moran, the ACR’s assistant executive director for Government Relations, Economics and Health Policy, says, “It did not include anatomic pathology, but that could be next. The more services they look at, the bigger the net becomes.” Likewise, the more services included in the calculation, the greater the savings. When the Congressional Budget Office carved out diagnostic imaging by itself, total savings tallied $1.8 billion over 10 years. Whichever way the services are parsed, the reality is that countless provisions in presidential budgets never see the light of day. Moran believes that the time finally is right, however, for the IOASE to end. “From the late 1990s to 2010, utilization of diagnostic imaging services went up like a skyrocket,” Moran says. “You saw a huge proliferation of in-office use by orthopedists, neurologists, urologists, and a whole slew of specialties—probably most in orthopedics and cardiology. So many studies show increasing volume in self-referral. You could attribute the increase in utilization to ownership.” Political Kryptonite The ACR has been trying to end the IOASE for the past 15 years, essentially sticking to the argument that utilization increases are at least partially driven by financial conflicts of interest. Despite the consistent lobbying, self-referral is “divisive political kryptonite,” Moran says, for a variety of reasons. “It is very difficult to tell physicians who make a significant financial commitment for their practices that they can’t offer that service,” she says. “There are many physician specialties in which income has been significantly improved due to the specialists’ ability to offer imaging services in their offices. For one specialty to point to other specialties and say that it can’t do something is always an uphill battle. Congress is loath to get in the middle of these battles. They call them turf battles for a reason.” For years, it has largely been “diagnostic radiology against the rest of the world, on self-referral,” Moran says, but she believes that the renewed interest in Stark self-referral laws is driven by other specialties that agree with the ACR position. “It’s only been in the past few years, but the radiation-oncology world is extremely concerned about the impact of self-referral and the delivery of therapeutic-radiation services,” she says. “Pathologists are very concerned, along with clinical laboratories and physical-therapy providers. It adds up to a broader cacophony about the concerns of inappropriate utilization due to self-referral.” According to Moran, the origins of the cacophony can be traced back to an ACR initiative from about two years ago. ACR officials requested that Congress ask the GAO to look into the effects of self-referral policy on Medicare reimbursement and utilization of Medicare services. Rep Pete Stark (D–CA)—at the time, the ranking member of the House Ways and Means Committee—made the formal request, along with Rep Henry Waxman (D–CA) of the Energy and Commerce Committee. When the study was finally published, it specifically zeroed in on diagnostic imaging. “I think the reason the administration finally decided to look at this was because the GAO came out with its investigation and attributed over $1 billion in savings just to the diagnostic-imaging