Federal legislation seeks to outlaw in-office self-referral

July 10, 2009

Proposed legislation would close a loophole exemption in the federal ban against imaging self-referral that has been implicated in the rapid rise of imaging costs and utilization.

Proposed legislation would close a loophole exemption in the federal ban against imaging self-referral that has been implicated in the rapid rise of imaging costs and utilization.

On July 2, Rep. Jackie Speier (D-CA) introduced HR 2962, the Integrity in Medicare Advanced Diagnostic Imaging Act of 2009. It would eliminate the in-office ancillary exemption to the federal Stark Law prohibition against self-referral. The exemption allows physicians to refer patients for imaging on equipment they own and operate in their medical offices.

Self-referral opponents applauded the proposal, though Washington insiders, including Jean M. Mitchell, Ph.D., a professor of public policy at Georgetown University, questioned its chances for passage. The bill will face strong opposition from orthopedic surgeons, neurosurgeons, and cardiologists. They argue that in-house imaging is convenient for their patients and leads to faster diagnoses and higher imaging quality.

"They have a lot of power in Congress," Mitchell said.

Radiologists have been on the forefront of research efforts to measure the economic impact of imaging self-referral since the late 1980s.

Dr. David Levin, radiology chair emeritus at Thomas Jefferson University Hospital in Philadelphia, argues that in-office self-referral practices are morally wrong and a financial drain on the healthcare system. It potentially harms every physician except those directly engaged in in-office services, he said.

"Doctors are getting screwed by their colleagues who go ahead, buy these machines, and put them in their offices," Levin told Diagnostic Imaging. "As the cost of imaging continues to go up, there is going to be more pressure to reduce payments for other services, like evaluation and management, and surgery, and for other testing, like endoscopy."

Findings from several studies underscore a trend toward higher utilization of advanced medical imaging when physicians have a financial incentive to order studies. In a June 16 report to Congress, the Medicare Payment Advisory Commission presented evidence indicating that physicians with a financial stake in imaging equipment are far more likely to refer patients to use it than physicians without ownership interests. It also found that in-office self-referrers generate higher costs than physicians who lack a financial incentive to refer.

Self-referral has driven unnecessary utilization growth wherever it has been allowed to exist, Levin said. It has helped turn public opinion against medical imaging generally and encouraged policy-makers, including the Obama White House, to recommend radiology reimbursement rate cuts.

As a consequence, imagers are not surprised when lawmakers introduce legislation that harms radiology, Levin said. He sees this bill's possible passage as a positive counterweight to other proposals on Capitol Hill that would be notably negative for radiologists.

"If this bill were to pass, and if other cuts take place as well, it would kind of balance things out," Levin said.