Physicians who currently perform pathology services, radiation therapy and services, advanced diagnostic imaging studies, and physical therapy services in their offices should be aware of a new bill that was introduced in August 2013: H.R. 2914, entitled the “Promoting Integrity in Medicare Act of 2013” (PIMA). The bill would majorly curtail the ability to offer several services in-office, and prohibit many common, currently legal arrangements.
At present, the federal physician self-referral statute, known as the Stark law (“Stark”), prohibits a physician from referring to entities in which they (or an immediate family member) have a financial interest for the performance of Designated Health Services (DHS) for which payment may be made by federal health care programs. Stark currently contains several exceptions, including the In-Office Ancillary Services (IOAS) exception, which allows physicians to refer patients for DHS (other than durable medical equipment and parenteral and enteral nutrients, equipment, and supplies) that are (i) furnished personally by the referring physician, or in the building of the referring physician or a building used by that physician’s group practice; and (ii) billed by the physician performing or supervising the service, by that physician’s group practice, or by an entity that is wholly owned by such physician or such group practice. The IOAS exception allows physicians to provide certain DHS in-office: clinical laboratory services; physical therapy, occupational therapy, and outpatient speech-language pathology services; radiology and certain other imaging services; and radiation therapy services and supplies.
PIMA was introduced August 1, 2013, with a goal “To prevent abusive billing of ancillary services to the Medicare program, and for other purposes,” and discusses studies by the Government Accountability Office (GAO), among others, which examined self-referral practices in advanced diagnostic imaging and anatomic pathology. Notably, GAO stated that for advanced diagnostic imaging, “providers who self-referred made 400,000 more referrals for advanced imaging services than they would have if they were not self-referring”, at a cost of “more than $100 million” in 2010. With respect to anatomic pathology, GAO found that “self-referring providers likely referred over 918,000 more anatomic pathology services” than they would have if they were not self-referring, costing Medicare approximately $69 million more in 2010. The key rationale for the IOAS exception, according to the Centers for Medicare and Medicaid Services, is to permit physicians to provide ancillary services at the time of the patient’s initial office visit, to better inform diagnosis and treatment decisions. Several studies were cited as stating that IOAS are rarely being performed on the date of the initial office visit, and that many IOAS cost Medicare money because of unnecessarily high utilization rates, with no improvement in patient outcomes or patient convenience.
PIMA’s proposed changes would, most notably:
- Amend the IOAS exception to Stark to exclude “specified non-ancillary services,” defined as “a service that the Secretary has determined is not usually provided and completed during an office visit to a physician’s office in which the service is determined to be necessary,” and specifically including: anatomic pathology services (including the technical or professional component of surgical pathology, cytopathology, hematology, blood banking, and pathology consultation and clinical laboratory interpretation services); radiation therapy services and supplies; advanced diagnostic imaging studies; and physical therapy services.
- Introduce specific, increased penalties for the newly specified non-ancillary services, with the civil money penalty for presenting a bill or claim for which payment should not be made being up to $25,000 for each such service (other Stark violations are capped at $15,000), and a circumvention scheme (such as a cross-referral arrangement) involving specified non-ancillary services being subject to a civil money penalty of up to $150,000 for such arrangement ($100,000 for other Stark violations).
Opponents of PIMA, including the American Medical Association, the American College of Surgeons, and the American Urology association, argue that it would create barriers to care coordination and integrated delivery, and drive up costs by forcing patients to obtain services at more costly facilities, such as hospitals, where the same procedures are reimbursed at higher rates. The Medicare Payment Advisory Commission, in its 2011 Report to the Congress, expressed concern that limiting the IOAS exception could have “unintended consequences, such as inhibiting the development of organizations that integrate and coordinate care within a physician practice,” and recognized the difficulty in creating a more limited exception that “distinguishes between group practices that improve quality and coordination and those that use additional services of marginal clinical value.” It concluded with a recommendation that the IOAS exception not be changed.
The bill, currently in its preliminary stages, is under review by the Congress Subcommittee on Health. The bill would become effective one year after passage, requiring physicians to discontinue IOAS referrals for the designated non-ancillary services by that time. While PIMA’s fate is yet undetermined, physicians should be aware of its significant potential impact if it is enacted, as well as the possibility that other similar reforms may be suggested in the future.
