Kusserow’s Corner: GAO Report Reveals Doctors Self-Referring Patients for Financial Gain

On July 15, 2013, the Senate Finance Committee, Senate Judiciary Committee, House Ways and Means Committee and House Energy and Commerce Committee revealed a dramatic increase in the rates of doctors ordering anatomic pathology tests and procedures when they stand to make financial gains. They referred to the Government Accountability Office (GAO) report issued June 24, 2013 that estimated that in 2010 alone, the increase resulted in $69 million charged to Medicare and 918,000 treatments that would not have occurred had these physicians been referring patients at the same rates as physicians who do not stand to benefit financially from the referral. Self-referred anatomic pathology services increased at a faster rate than non-self-referred services from 2004 to 2010 and more than doubled, growing from 1.06 million services to about 2.26 million services. In contrast, the noted non-self-referred services grew about 38 percent, from about 5.64 million services to about 7.77 million services. Similarly, the growth rate of expenditures for self-referred anatomic pathology services was higher than for non-self-referred services. Three provider specialties–dermatology, gastroenterology, and urology–accounted for 90 percent of referrals for self-referred anatomic pathology services in 2010.

GAO was requested by Congress to examine the prevalence of anatomic pathology self-referral and its effect on Medicare spending. A self-referral is the practice of a physician ordering tests on a patient that are performed by either the referring physician himself or another physician or facility from whom he has a financial interest. The report examines (1) trends in the number of and expenditures for self-referred and non-self-referred anatomic pathology services, (2) how provision of these services may differ on the basis of whether providers self-refer, and (3) implications of self-referral for Medicare spending. GAO analyzed Medicare Part B claims data from 2004 through 2010 and interviewed officials from the Centers for Medicare & Medicaid Services (CMS) and other stakeholders. GAO developed a claims-based approach to identify self-referred services because Medicare claims lack such an indicator.

This report was the second in a series of GAO reports examining the rise of self-referrals. The first released dated Sept 2012, investigated the growth of self-referral in magnetic resonance imaging (MRI) and computed tomography (CT) services over the same 2004-2010 time span. It found a similarly dramatic increase in imaging services ordered by physicians who self-refer compared to those who do not.

The report recommended that CMS require providers of pathology services to flag when treatment was self-referred and develop a policy to ensure that biopsies performed by self-referred physicians are appropriate. In addition they recommended that CMS implement a new payment model for pathology services to limit financial incentives. HHS rejected the first two suggestions, indicating in a letter that neither strategy would have a significant effect on the problem.

It is important to put the findings of these GAO reports in relation to the DOJ, OIG, and CMS Anti-Kickback Statute and Stark Law investigations. Self-referrals in context of these laws continue to be their highest enforcement priority. The vast majority of cases settled with the Federal government involve these issue areas. If you check the OIG website on Corporate Integrity Agreements (CIAs), most involve physician relationshiops. It is likely that these GAO reports and Congressional interest will only heighten enforcement initiatives.


Richard P. Kusserow served as DHHS Inspector General for 11 years.  He currently is CEO of Strategic Management Services, LLC (SM), a firm that has assisted more than 3,000 organizations and entities with compliance related matters.  The SM sister company, CRC, provides a wide range of compliance tools including sanction-screening.

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Copyright © 2013 Strategic Management Services, LLC.  Published with permission.