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

    Priority recommendation

    Comments: HHS did not concur with this recommendation, noting that CMS did not think this recommendation would be effective in addressing overutilization resulting from self-referral and that it would be complex to administer. We continue to believe that such a flag on Part B claims would likely be the easiest and most cost-effective way for CMS to identify self-referred advanced imaging services and monitor the behavior of those providers who self-refer these services even though the agency has no plans to take further action. As of October 2016, CMS has not provided any additional information about actions to address this recommendation.

    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

    Priority recommendation

    Comments: HHS did not concur with this recommendation, noting that CMS did not believe that a payment reduction would address overutilization that occurs as a result of self-referral and that the agency's multiple procedure payment reduction policy for advanced imaging already captures efficiencies inhering in providing multiple advanced imaging services by the same physician. Further, CMS officials stated that providers in self-referring arrangements could avoid this reduction by having one provider refer an advanced imaging service while having another perform the service. Finally, CMS questioned whether implementing our recommendation would violate the Medicare statute prohibiting paying a differential by physician specialty for the same service. Our recommendation, however, refers to specific self-referral arrangements in which the same provider refers and performs an imaging service, and therefore would not be addressed by CMS's multiple procedure payment reduction policy. As noted in our report, this payment reduction would affect about 10 percent of advanced imaging services referred by self-referring providers. In addition, while CMS raised questions about whether implementing our recommendation would violate Medicare's prohibition on paying a differential by physician specialty for the same service, the agency did not indicate how it would do so as of October 2016. We continue to believe that CMS should determine and implement a payment reduction to recognize efficiencies for advanced imaging services referred and performed by the same provider even though, as of October 2016, the agency has no plans to take further action.

    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

    Priority recommendation

    Comments: HHS noted that it would consider this recommendation. The Secretary of HHS has the authority to establish a program to promote the use of appropriate use criteria - criteria that are evidenced-based (to the extent feasible) and that assist professionals to make the most appropriate treatment decisions for a specified clinical condition - for advanced imaging services under the Protecting Access to Medicare Act of 2014. CMS has begun developing its appropriate use criteria program (e.g., in November 2015, CMS established criteria to identify Qualified Provider Led Entities that are responsible for developing appropriate use criteria and has since selected Qualified Provider Led Entities), but full implementation of the program will not occur until January 1, 2017. If it - and the subsequent prior authorization program that incorporates appropriate use criteria - are implemented broadly enough (i.e., they ensure the appropriateness of advanced imaging services by all physicians, including those who self-refer), we could close the recommendation.

    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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