ACLA Applauds GAO Report Finding Financial Incentives Drive Anatomical Pathology Self-Referral Practices in Medicare

Washington, DC – The American Clinical Laboratory Association (ACLA) applauds the release of the new Government Accountability Office (GAO) Report to Congress, examining self-referral practices within Medicare for anatomic pathology services. Entitled “Action Needed to Address Higher Use of Anatomic Pathology Services by Providers Who Self-Refer (GAO-12-455),” this study investigated the impact of self-referral on anatomic pathology services, which play a critical role in the diagnosis of many conditions through the study of cells, among other biological samples. Clinical laboratories commonly provide anatomic pathology services.

GAO found that in 2010 alone, an estimated 918,000 additional anatomic pathology referrals were made by self-referring providers, resulting in approximately $69 million in additional Medicare expenditures than would have been made if self-referral was not permitted. Indeed, the increased number of referrals by self-referring clinicians could not be attributed to variances in “diagnosis, patient health status, other patient characteristics, or geography.” As a result, GAO concluded “that financial incentives for self-referring providers were likely a major factor driving the increase in anatomic pathology referrals.”

ACLA has had longstanding, serious concerns about physician self-referrals in anatomic pathology and has sought to curtail this practice through the narrowing of the in–office ancillary services exception (IOAS) to the Stark law, along with other Alliance for Integrity in Medicare Coalition members.

“This study provides new evidence and is consistent with previous studies which found self-referral for anatomic pathology is linked to increased utilization,” said Alan Mertz, President of ACLA.

One previous study was published in the April 2012 edition of Health Affairs entitled, “Urologists’ Self-Referral For Pathology Of Biopsy Specimens Linked To Increased Use And Lower Prostate Cancer Detection” by Dr. Jean Mitchell, an economist and professor of public policy at Georgetown University.

According to the Mitchell study, for patients with suspected prostate cancer, self-referring urologists billed Medicare for 72% more specimens per prostate biopsy than did urologists who referred specimens to independent providers of pathology services. This result substantiates prior findings from the U.S. Department of Health and Human Services Inspector General in 2007.

“Given the mounting evidence, the time has come for Congress to take legislative action to remove anatomic pathology, advanced diagnostic imaging, radiation therapy, and physical therapy services from the IOAS exception. For too long, CMS has addressed utilization increases through untargeted and broad cuts to referral laboratories- which have no control over the volume of services ordered by physicians – rather than examining the core drivers of utilization. This reform would restrict self-referral in order to safeguard patient safety and health care quality as well as to allow for better control of our nation’s health care expenditures under Medicare,” said Mertz.
ACLA represents the nation’s leading clinical laboratories.

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