Medicare:

Higher Use of Advanced Imaging Services by Providers Who Self-Refer Costing Medicare Millions

GAO-12-966: Published: Sep 28, 2012. Publicly Released: Oct 31, 2012.

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What GAO Found

From 2004 through 2010, the number of self-referred and non-self-referred advanced imaging services--magnetic resonance imaging (MRI) and computed tomography (CT) services--both increased, with the larger increase among self-referred services. For example, the number of self-referred MRI services increased over this period by more than 80 percent, compared with an increase of 12 percent for non-self-referred MRI services. Likewise, the growth rate of expenditures for self-referred MRI and CT services was also higher than for non-self-referred MRI and CT services.

GAO's analysis showed that providers' referrals of MRI and CT services substantially increased the year after they began to self-refer--that is, they purchased or leased imaging equipment, or joined a group practice that already self-referred. Providers that began self-referring in 2009--referred to as switchers--increased MRI and CT referrals on average by about 67 percent in 2010 compared to 2008. In the case of MRIs, the average number of referrals switchers made increased from 25.1 in 2008 to 42.0 in 2010. In contrast, the average number of referrals made by providers who remained self-referrers or non-self-referrers declined during this period. This comparison suggests that the increase in the average number of referrals for switchers was not due to a general increase in the use of imaging services among all providers. GAO's examination of all providers that referred an MRI or CT service in 2010 showed that self-referring providers referred about two times as many of these services as providers who did not self-refer. Differences persisted after accounting for practice size, specialty, geography, or patient characteristics. These two analyses suggest that financial incentives for self-referring providers were likely a major factor driving the increase in referrals.

GAO estimates that in 2010, providers who self-referred likely made 400,000 more referrals for advanced imaging services than they would have if they were not self-referring. These additional referrals cost Medicare about $109 million. To the extent that these additional referrals were unnecessary, they pose unacceptable risks for beneficiaries, particularly in the case of CT services, which involve the use of ionizing radiation that has been linked to an increased risk of developing cancer.

Why GAO Did This Study

Medicare Part B expenditures--which include payment for advanced imaging services--are expected to continue growing at an unsustainable rate. Questions have been raised about self-referral's role in this growth. Self-referral occurs when a provider refers patients to entities in which the provider or the provider's family members have a financial interest. GAO was asked to examine the prevalence of advanced imaging self-referral and its effect on Medicare spending. This report examines (1) trends in the number of and expenditures for self-referred and non-self-referred advanced imaging services, (2) how provision of these services differs among providers on the basis of whether they self-refer, and (3) implications of self-referral for Medicare spending. GAO analyzed Medicare Part B claims data from 2004 through 2010 and interviewed officials from the Centers for Medicare & Medicaid Services (CMS) and other stakeholders. Because Medicare claims lack an indicator identifying self-referred services, GAO developed a claims-based methodology to identify self-referred services and expenditures and to characterize providers as self-referring or not.

What GAO Recommends

GAO recommends that CMS improve its ability to identify self-referral of advanced imaging services and address increases in these services. The Department of Health and Human Services, which oversees CMS, stated it would consider one recommendation, but did not concur with the others. GAO maintains CMS should monitor these self-referred services and ensure they are appropriate.

For more information, contact James C. Cosgrove at (202) 512-7114 or cosgrovej@gao.gov.

Recommendations for Executive Action

  1. Status: Open

    Comments: In September 2012, we recommended that the Administrator of the Centers for Medicare & Medicaid Services (CMS) insert a self-referral flag on its Medicare Part B claims form and require providers to indicate whether the advanced imaging services for which a provider bills Medicare are self-referred or not. HHS did not concur with this recommendation, stating that CMS believes a new checkbox on the claim form identifying self-referral would be complex to administer, providers may not characterize referrals accurately, and that other payment reforms would better address overutilization. We continue to believe that including an indicator or flag on the claims would likely be the easiest and most cost-effective approach to improve CMS?s ability to identify self-referred advanced imaging services.

    Recommendation: In order to improve CMS's ability to identify self-referred advanced imaging services and help CMS address the increases in these services, the Administrator of CMS should insert a self-referral flag on its Medicare Part B claims form and require providers to indicate whether the advanced imaging services for which a provider bills Medicare are self-referred or not.

    Agency Affected: Department of Health and Human Services: Centers for Medicare and Medicaid Services

  2. Status: Open

    Comments: In September 2012, we recommended that the Administrator of CMS determine and implement a payment reduction for self-referred advanced imaging services to recognize efficiencies when the same provider refers and performs a service. HHS did not concur with our response and CMS has not taken actions relevant to this recommendation. HHS noted it believes CMS?s multiple procedure payment reduction policy for advanced imaging already captures efficiencies inherent in providing multiple advanced imaging services by the same physician or group practice in the same session whether or not they are self-referred. It also noted that CMS does not believe such a payment reduction would be effective. Finally, it noted that CMS expressed doubt whether it has the authority to implement such a payment reduction as it would make a different payment for a single service based on whether a physician has a financial interest in the service being referred and ordered. We continue to believe that CMS should determine and implement such a payment reduction.

    Recommendation: In order to improve CMS's ability to identify self-referred advanced imaging services and help CMS address the increases in these services, the Administrator of CMS should determine and implement a payment reduction for self-referred advanced imaging services to recognize efficiencies when the same provider refers and performs a service.

    Agency Affected: Department of Health and Human Services: Centers for Medicare and Medicaid Services

  3. Status: Open

    Comments: In September 2012, we recommended that the Administrator of the Centers for Medicare & Medicaid Services (CMS) implement an approach to ensure the appropriateness of advanced imaging services performed by self-referring providers. In a previous response, HHS mentioned the Protecting Access to Medicare Act of 2014, by which the Secretary of the Department of Health and Human Services (HHS) has the authority to establish a program to promote the use of appropriate use criteria for advanced imaging services. The Secretary also has the authority to identify providers with low adherence to appropriate ordering and manage the advanced imaging services they order through prior authorization. Although the Secretary has not established criteria for this program and does not plan to do so until summer 2016, CMS published key definitions and proposed processes to implement this program in its 2016 proposed rule to the Medicare Physician Fee Schedule. The goal of the appropriate use criteria program is to identify providers with patterns of inappropriate ordering and is not intended to identify or focus on providers who self-refer. We continue to believe that CMS should implement an approach to ensure the appropriateness of advanced imaging services referred by self-referring providers.

    Recommendation: In order to improve CMS's ability to identify self-referred advanced imaging services and help CMS address the increases in these services, the Administrator of CMS should determine and implement an approach to ensure the appropriateness of advanced imaging services referred by self-referring providers.

    Agency Affected: Department of Health and Human Services: Centers for Medicare and Medicaid Services

 

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