MedPAC issues broad critique of self-referred imaging; outlines steps to curb abuses

In a report bristling with documentation, the Medicare Payment Advisory Commission issued a broad-ranging critique of in-office self-referred imaging and outlined a series of steps to curb practices it said were contributing to the growth in imaging volume.

Steps that could help restrain in-office self-referral of imaging services include preauthorization, lower payment rates for high-volume self-referrers, excluding tests not provided during an office visit, and more bundled payments for services, MedPAC said in its report, released June 15.

Titled Report to the Congress: aligning incentives in Medicare, the MedPAC report focuses on how incentives in the Medicare program can be leveraged to promote quality of care and efficient use of resources. Chapter 8, 24 pages long with three pages of references, addresses the growth of ancillary services in physician offices, including imaging.

Underlying much of the ancillary services report was the conclusion, a position MedPAC has advanced before, that the in-office ancillary services exemption to Stark law bans on self-referral leads to higher volumes through greater capacity and financial incentives to order additional services.

The view was presented again in this report with new and updated data, including a pilot study finding that in six practices performing nuclear cardiology procedures, 14% of the procedures were inappropriate under guidelines issued by the American College of Cardiology Foundation and the American Society of Nuclear Cardiology. MedPAC also cited radiation dose concerns.

In addition, reviewing Medicare data from 2007 and 2008, the commission found that only about half of standard imaging studies (x-rays), about 25% of ultrasounds, and about 10% of advanced imaging (CT, MR, and nuclear medicine) procedures are performed on the same day as an office visit, undermining the idea that the in-office exemption is justified because of its convenience for patients. MedPAC acknowledged that scheduling issues, such as the need for fasting, could result in a delay in advanced imaging.

Thomas W. Greeson, a healthcare attorney with Reed Smith LLP, said the MedPAC report caps two years of work that have culminated in a fairly dramatic set of proposals to rein in self-referral. Most would need to be passed by Congress. It’s possible some could be enacted through regulation by CMS, but for political and legal reasons-they could be challenged in court-they probably would not be, he said.

Greeson said he expected a strong endorsement from the radiology community but also strong opposition from the AMA and other medical specialties that have come to rely on in-office imaging. In 2008, for example, cardiology derived approximately 38% of its Part B revenue from imaging, according to the MedPAC report. Imaging-based Part B revenues for the same year were approximately 23% in vascular surgery, 8% in orthopedic surgery, and 5% each in urology and internal medicine.

MedPAC characterized its report as preliminary and said it would further examine the strategies outlined with the goal of developing policy recommendations. Long-term solutions would involve developing payment systems that would reward providers for restraining growth while improving the quality of care. But because such solutions could take several years to develop, policymakers may want to consider interim approaches to address concerns raised by the growth of ancillary services, the commission said.

MedPAC divided its self-referral reform proposals into three basic categories:

• limiting the types of services or physician groups covered by the in-office exemption;

• developing payment tools to mitigate incentives to increase volume; and

• adopting a targeted prior-authorization program for advanced diagnostic imaging services.

Limiting the types of services of physician groups covered by the in-office exemption includes three strategies: exclude outpatient therapy and radiation therapy; limit the exemption to physician practices that are clinically integrated; and exclude from the exemption diagnostic tests that are not usually provided during an office visit.

One weakness of the clinical integration approach is that under the fee-for-service system, even integrated practices would have an incentive to boost volume, MedPAC said. On the positive side, it could encourage the development of integrated groups that would be positioned to succeed under a new payment model.

Development of payment tools that might mitigate incentives to increase imaging volume includes two strategies: reducing payment rates for diagnostic tests performed by self-referring physicians, and improving the accuracy of payments for ancillary services and creating payment bundles that include services provided during the same episode of care.

A bundled service, for example, might include a single payment that covers the cost of an office visit as well as all lab tests and x-rays provided during the visit.

The benefit of requiring self-referring physicians to participate in a prior-authorization program for advanced diagnostic imaging is that it would assure the appropriate use of advanced imaging by self-referring physicians who order many more studies than their peers. By the same token, it would avoid imposing a blanket approach on physicians performing advanced imaging services in their offices, MedPAC said. A drawback is that there are no independent studies that measure the impact of prior authorization using a control group.