New Study On Self-Referral Labs: More Tests, Higher Costs, Fewer Cancer Detections

 CAP Urges Immediate Action to Close In-office Loophole in Federal Law

NORTHFIELD, Ill. — A new study by researchers at Georgetown University reveals that the practice of ordering tests from pathology labs in which treating physicians have a financial stake resulted in increased utilization, higher Medicare spending, and lower rates of cancer detection.

The independent study was published today in Health Affairs and led by noted health economist Jean M. Mitchell, Ph.D. The researchers compared Medicare billings and prostate cancer detection rates over a three-year period by self-referring practices (i.e., those with a financial interest in the pathology lab doing the tests) with other urology groups.

Its two key findings were:

  • On average, self-referring urologists billed Medicare for 72 percent more anatomic pathology specimens than physicians who did not benefit financially from ordering more tests.
  • The prostate cancer detection rate per biopsy episode was significantly higher for men who had the biopsy performed by non self-referring urologists.

The study concluded that, “self-referral of prostate surgical pathology leads to increased utilization and higher Medicare spending but lower cancer detection rates. The findings support eliminating the exception that permits physicians to self-refer to in-office pathology laboratories. Both government and commercial insurers could reduce health care spending substantially by adopting measures to restrict self-referral.”

The College of American Pathologists (CAP), one of the funding organizations for the study, has long been the leading advocate for removing the anatomic pathology services in-office exception to the Stark self-referral law. It believes that closing the loophole could save Medicare hundreds of millions each year wasted on unnecessary lab tests.

“The implications of Dr. Mitchell’s study are clear,” said Stanley J. Robboy MD, FCAP, CAP’s President. “Self-referral has created an incentive to spend millions and millions of dollars without any data showing that this practice benefits patients.”

For example, the study cites Laboratory Economics magazine estimates that urology practices generate $300 million in pathology revenue each year.

“With a scarcity of health resources, we simply cannot allow financial self-interest to affect decisions on patient care,” said CAP Governor, Bruce Williams, MD, FCAP, from Delta Pathology Group LLC in Shreveport, Louisiana. “We should heed the results and get back to work on closing this multi-million dollar loophole.”

CAP emphasized that neither the College nor the study questions the standard of care provided by treating physicians. The issue is referral behaviors as they relate to financial arrangements and reimbursement.

The College of American Pathologists is not-for-profit medical society whose members are board certified physicians. The College, which provides lab accreditation and improvement services to pathology laboratories in the US and around the world, helped fund the Georgetown/Mitchell study to examine the effects of self-referral on the use of surgical pathology services and to fill a knowledge gap on the subject of self-referral behaviors.

About CAP
The College of American Pathologists (CAP), celebrating 50 years as the gold standard in laboratory accreditation, is a medical society serving more than 18,000 physician members and the global laboratory community. It is the world’s largest association composed exclusively of board-certified pathologists and is the worldwide leader in laboratory quality assurance. The College advocates accountable, high-quality, and cost-effective patient care.

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