Facts about self-referrals through the IOAS exception

Click here to return to the IOAS Exception and Self-Referral page.

  • In 2010, self-referring providers likely referred nearly one million more unnecessary anatomic pathology services than non-self-referring providers, costing Medicare approximately $69 million, according to a GAO report.
    • Spending for self-referred anatomic pathology services was higher than for non-self-referred services (164% vs. 57%). Dermatology, gastroenterology and urology accounted for 90 percent of referrals for self-referred anatomic pathology services in 2010.
    • Referrals for anatomic pathology services by dermatologists, gastroenterologists and urologists substantially increased the year after they “switched” and began to self-refer. In comparison, anatomic pathology referrals for providers who continued to self-refer or never self-referred services during this period increased at a much lower rate.
    • The increase in anatomic pathology referrals for switchers was not due to a general increase in use of these services among all providers. Additionally, the findings were consistent after adjusting for differences in geography along with patient health status, age, gender and diagnosis. “Financial incentives for self-referring providers were likely a major factor driving the increase in referrals,” GAO said.
  • An April 2012 study published in Health Affairs had findings similar to those from GAO.
    • The study, performed by Dr. Jean Mitchell of Georgetown University, found that urologists involved in self-referral arrangements bill Medicare for 72% more specimen evaluations for patients with suspected prostate cancer than urologists who send specimens to independent providers of pathology services.
    • And despite the increased billing, the study found that self-referring urologists usually detect cancer at a much lower rate than do non-self-referring urologists.  The per-patient cancer detection rate for self-referring urologists in 2007, according to the study, was 12 percentage points lower than that for non-self-referring urologists.
  • Both the President’s FY 2014 and FY 2015 Budgets recommended closing the loophole, which could save the Medicare program at least $1.8 billion during the standard 10-year budget window, according to the Congressional Budget Office.
  • Several notable bipartisan groups agree with narrowing the exception, including the Bipartisan Policy Center, under the leadership of former Senate Majority Leaders Tom Daschle (D-SD) and Bill Frist (R-TN), and the Moment of Truth Project, headed by Erskine Bowles and former Senator Alan Simpson.