Study gauges popularity of block leasing among California referring physicians

May 22, 2007

A Georgetown University researcher has established a link between block time and per-click leasing arrangements and physician self-referral for high-tech imaging billed to a large healthcare insurer in California.

A Georgetown University researcher has established a link between block time and per-click leasing arrangements and physician self-referral for high-tech imaging billed to a large healthcare insurer in California.

Professor of public policy Jean Mitchell, Ph.D., found that nonradiologists who practiced in groups with fewer than 100 physicians accounted for 33% of the providers who billed the insurer for MRI, 22% who billed for CT, and 17% who billed for PET in 2004. Her study was published April 17 in an online edition of Health Affairs.

Mitchell expected the data to show that referring physicians are involved in high-tech imaging despite federal and California laws that ostensibly prohibit self-referral. In-office and group-practice exemptions to the laws allow physicians to generate income from imaging performed on equipment within the physical confines of their offices and must be directly supervised by a staff physician.

But she was surprised by how many referring physicians billed for high-tech imaging performed outside their practices. Of 340 nonradiology groups that charged the insurer for MRI, 61% billed for MRI not performed in their offices. Of 210 nonradiology groups that billed for CT, 64% of the imaging was performed outside the group's office. And of 30 nonradiology groups that billed for PET, 30% billed for PET performed elsewhere.

These data may provide the first documented measure of the popularity of leasing arrangements between referring physicians and freestanding imaging services, Mitchell said.

As reported in the May issue of Diagnostic Imaging, (Scan time leases: referring clinicians mine for gold in radiology's backyard), block leases allow referring physicians to control blocks of imaging time from otherwise independently owned and operated imaging services. For a fee, they secure the right to schedule patients in specific slots for imaging and to bill for those scans. While block leases involve some financial risk, per-click leases allegedly assure profits for referring physicians by allowing them to lease time on the fly for patients lined up for imaging.

"They are billing the insurer, but they are not actually providing the service," Mitchell said.

Mitchell's analysis was based on a bill-by-bill evaluation of outpatient MR, CT, and PET procedures paid in 2004. The private payer, who was not identified, covered 5.8 million people, with about 2.7 million enrolled in its large employer-group preferring provider plan. Supported by a grant from the California HealthCare Foundation, Mitchell and assistants spent an average of two hours per scan collecting information about the provider who filed the global or technical bill.

While participation was prevalent among small and medium groups, it was rare among nonradiology group practices with more than 100 physicians. Large groups accounted for only 3.6% of the physicians who billed the insurer for MRI and 2.5% and 4.6%, respectively, of the physicians who billed for CT and PET. Large multispecialty groups, such as the Scripps Clinic in San Diego, tend to own imaging equipment, operate it onsite and self-refer internally among various physician specialists, she said.

"They fit the definition for why the in-office exception was created in the first place. They are not involved in these sham lease arrangements," she said.

Physicians associated with smaller groups use leasing to expand the scope of their services, Mitchell said.

"They are expanding their practices, in part, because their fees have been cut, so they are trying to make up for lost income, she said.

The study did not examine the clinical appropriateness of the scan, but previous research, including landmark studies conducted by Mitchell herself, have established a link between self-referral and high utilization. Utilization abuses uncovered in research conducted by Mitchell in Florida in the early1990s helped persuade Congress to establish a federal ban against referring-physician ownership of medical services.

To close loopholes, Mitchell recommends insurer policies that would prohibit nonradiologists from billing for imaging services globally.

"You would not be impinging on access because they (the referring physician) can still refer - but they just won't be allowed to bill," she said.

For more information from the Diagnostic Imaging archives:

Scan time leases: referring clinicians mine for gold in radiology's backyard

Assault on lease deals could bring their demise

CMS backs down on freestanding facility standards

Attorney general joins MRI kickback scheme case