MedPAC seeks to further stop in-office imaging incentives
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This month, the Medicare Payment Advisory Commission (MedPAC), in its report to Congress, outlined techniques that may help better forecast the payment system after it said that the law’s restrictions may lead to higher volume due to the push by physicians to gain greater financial incentives.
Currently the law prohibits physicians from referring patients to an imaging center or lab that they own; however, the in-office ancillary services (IOAS) exception allows physicians and practices to provide 'designated health services' (DHS) in office when certain criteria are met.
The Stark Law prohibits physicians from referring Medicare patients for DHS—such as imaging, hospital services, radiation therapy, home health, durable medical equipment (DME) and physical therapy—to entities with which they have a financial relationship, unless the relationship fits within an exception.
To adhere to the aforementioned provision, providers must meet the following criteria:
- Imaging or outpatient therapy must be supervised by either the referring physician or a physician or referring physician within the group practice;
- Services must occur within the building where the referring physicians provide services that are not DHS; and
- Services must be billed by the physician performing the service, a third-party billing company or a an entity owned by the supervising physician.
A 2008 report by the Government Accountability Office (GAO) found that imaging accounted for 38 percent of cardiology’s Part B revenue, 23 percent of vascular surgery’s, 12 percent of clinical lab tests, pathology services, outpatient therapy and radiation therapy revenue and 10 percent of the Part B revenue for internal medicine.
Because CMS has not proposed set rules regarding these exceptions, MedPAC has offered strategies about how these limits and payment systems could be upgraded and better adopted.
While physician investment in imaging equipment may improve patient convenience, it also has been shown to produce a higher volume of tests, the report showed. In fact, data from 2006 showed that 20 percent of physicians reported that they had increased the usage of in-office image testing and 27 percent expanded in-office testing and services.
Currently, practices are prohibited from compensating physicians that reflect DHS referrals, but can allocate profits from DHS to physicians in practice who use a per capita basis or that are based on revenue from services not affiliated with DHS.
As it stands now, the law requires physicians who provide MRI, CT or PET under the IOAS to inform patients that they may obtain services from another provider and they must provide patients a list of other area providers.
“We found that outpatient therapy is rarely provided on the same day as a related evaluation and management (E&M) or consultation office visit,” the report stated. MedPAC found after a review of Medicare claims data that these data showed that less than half of all ultrasound, lab tests and advanced imaging tests were performed on the same day as an office visit while almost half of imaging studies were performed on the same day as an office visit.
“In 2008, only 3 percent of outpatient therapy services were provided on the same day as an office visit, 9 percent within seven days after a visit, and 14 percent within 14 days after a visit,” according to MedPAC. Compared with ultrasound and standard imaging, advanced imaging services--MRI, CT or nuclear imaging tests--were less likely to be performed at the time of an office visit.
“When we separately examined imaging studies by specialty, we found that imaging services were more likely to be provided on the same day as a visit when they were performed by a non-radiologist than by a radiologist or an independent diagnostic testing facilities (IDTF),” MedPAC said.
The report offered three options to limit IOAS exceptions and the types of services and physicians group covered, including:
- Excluding outpatient therapy and radiation therapy from the exception;
- Limiting the exception to physician practices that are clinically integrated; and
- Excluding diagnostic tests that are not usually provided during and office visit.
While MedPAC said that payment changes have the potential to downgrade physician incentives and increase volume, the changes could include both reducing rates for diagnostic testing performed by self-referring physicians and improving payment accuracy.
“The preferred long-term approach to address self-referral is to develop payment systems that reward providers for constraining volume growth while improving the quality of care,” the report concluded.