Regulatory Report: Gains Made in Campaign to Limit Self-referral

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Organized radiology has been devoted to the self-referral issue for more than a decade. Early literature that documented increased physician referral rates for diagnostic imaging when there is a financial incentive led to the Stark laws in the 1990s. Entrepreneurs, venture capitalists, and some medical specialties, however, have exploited opportunities either in the non-Medicare population or by taking advantage of safe harbors in the law, the largest of these being the in-office exemption. Despite frustrating moments, there are signs that legislators, regulators, and even insurers are finally taking notice. It is useful to take a look back at 2008, review what has transpired, and consider what we may anticipate for 2009. On the federal front, the ACR lobbying team was successful in getting significant provisions included in the Medicare Improvement for Patients and Providers Act (MIPPA), which averted the 10.5% physician-payment cut mandated by the Sustainable Growth Rate (SGR) rules. These provisions include mandatory accreditation for MRI, CT, PET, and nuclear medicine by 2012 (with private accrediting bodies being named by 2010) and the implementation of an appropriateness-criteria demonstration project to gather and analyze data at the point of ordering and the point of service. Many of the same conflict-of-interest arguments used against self-referral also are used in attempts to limit specialty hospitals. Significantly, provisions against specialty hospitals were included in three bills on Capitol Hill as a pay-for to fund other programs, including the SGR fix. Although not included in final legislation, the limits indicate that legislators clearly are aware of the conflict of interest. Sen Chuck Grassley (R–Iowa) introduced the Medicare Imaging Disclosure Sunshine Act of 2008 (S 3343), which would have required physicians to inform patients of their financial interests in an imaging facility and provide a written list of other facilities in the area. On the regulatory side, trying to follow the various proposed and final rules for CMS was particularly frustrating and confusing in 2008. CMS proposed that all imaging centers be subject to IDTF standards in the June review copy of the Medicare Fee Schedule. New IDTF regulations were introduced, which raised the bar for supervision and credentialing. The net result was considered to be a positive step for the anti–self-referral cause. Unfortunately for the self-referral cause, CMS elected to defer the IDTF changes until a later time in its 2009 Medicare Physician Fee Schedule Final Rule, released on November 1. CMS specifically cited provisions in MIPPA as the reason for the delay. The rule did finalize the anti-markup provision, however. Some experts believe that the provision’s effectiveness is significantly neutered by the IDTF deferral. In the rule, CMS also stated that self-referral was a significant factor in imaging utilization. CMS did make a number of revisions to the Stark laws that will affect certain commercial arrangements that have developed in recent years. Services addressed include under-arrangement agreements, percentage-based compensation, per-click leasing, and stand-in-the-shoes provisions. A more detailed summary is available from the ACR. The major obstacle to significant self-referral reform remains the Stark in-office ancillary services exemption. The ACR has argued that high-tech medical imaging, such as CT, MRI, and PET, should not be considered ancillary services. There is increasing evidence that CMS understands and may begin to support this approach. Any limitation to the in-office exemption would be a major win for the cause. Other Federal Agencies Several other federal agencies have also weighed in on self-referral. In June, the Government Accountability Office issued a report stating that Medicare spending on imaging services more than doubled between 2000 and 2006, to about $14 billion. In particular, it noted that advanced imaging, such as CT, MRI, and nuclear medicine, far outstripped other imaging services. The analysis cited self-referral as a major driver for the increased expenditures. While the proportion of physicians who self-refer has grown rapidly, more than doubling from 2000 to 2006 (from 2.9 to 6.3 per 100 physicians), it is much higher for certain specialties, such as cardiology. Orthopedics and urology also saw significant increases. The GAO report also stated that geographic variability suggested that not all utilization was necessary or appropriate. In August, the OIG issued a solicited opinion regarding a potential venture between a group of urologists and radiations oncologists with a block-leasing arrangement for intensity-modulated radiation therapy services. In its opinion , the OIG concluded that the proposal could violate anti-kickback statutes. A joint opinion from the US Department of Justice and the Federal Trade Commission (submitted to the Illinois Task Force on Health Planning Reform) bodes ill for one barrier to self-referral, however. They contended that state certificate-of-need (CON) laws undercut consumer choice, stifle innovation, and weaken market ability to contain health care costs. The agencies argued that the laws create artificial barriers of entry and stifle competition. The opinion also stated that the original reasons for CONs no longer apply, and that such laws may actually do more harm than good. State Actions At the state level, a number of initiatives were either launched or sustained. Of course, all eyes are on Maryland, awaiting the decision of the appellate court in a challenge to the constitutionality of the legislative ban on self-referral. In Arizona, we introduced legislation that would have imposed Stark regulations on all providers treating state-insured beneficiaries. During the political process, the bill morphed into inappropriate-utilization legislation, through negotiations with the state medical society. The legislation was stalled, in the 11th hour, through the influence of a cardiology lobbyist. Past efforts at self-referral legislation in Texas have been defeated by the Texas Medical Association. This year, the Texas Radiological Society participated in forming the Coalition for Ethical Imaging. The effort teams radiologists with other stakeholders to address escalating costs for high-end medical imaging. The focus areas of the coalition include utilization, accreditation, disclosure, and transparent billing. The coalition plans to take an active legislative role in 2009. In California, Assembly Bill 2794 [link to: was signed into law, requiring imaging facilities to bill patients directly for their services and effectively eliminating sham leasing arrangements. The California Radiological Society was able to work with cardiologists and orthopedic surgeons to craft this successful legislation. In Pennsylvania, Rep Phyllis Mundy testified to the Pennsylvania House Insurance Committee that the state should reconsider instituting a CON program in order to rein in skyrocketing health care costs. A bill that Mundy introduced would also ban physicians from self-referring patients for procedures at outpatient facilities in which they have financial interests. She says that this invariably leads to more procedures being done at the facilities. In Washington, a representative is launching a study to analyze the effect of self-referral on health care costs in the state. In September, the commissioner for the New York State Department of Health issued a statement urging providers to use appropriateness criteria and the ACR accreditation process in the use of CT. Rhode Island’s S 2475 requires full disclosure if a physician refers a patient for physical therapy to a facility owned by the physician or operated by employees of the physician. It became law without the governor’s signature in July. A bill to modify New Jersey’s self-referral ban did not make it into law. We’ll have to follow its progress, if any, next year. Several newspapers and magazines also published articles highlighting the conflicts and increased costs inherent in these issues. The list includes the Wall Street Journal, Los Angeles Times, and St Louis Dispatch. Payors Fall in Step Even payors appear to be getting on board. In a press release from MedSolutions, Franklin, Tenn, lease–purchase agreements between freestanding imaging centers and physician groups, along with self-referral, were highlighted as major contributors to escalating costs. The statement cited studies that indicate that physicians self-refer patients to owned equipment four times more often, compared with practices without in-office equipment ownership. The self-referral fight has consumed time, attention, and resources. There are, however, few issues that are as important to radiology. While the adoption of imaging and imaging-guided therapeutics in other medical specialties is inevitable, the economic and academic viability of radiology must be protected. Certainly, discussions with the AMA and with other specialists, such as cardiologists, orthopedists, and neurologists, have been careful. We walk a fine line between raising awareness and alienating our professional colleagues. The self-referral issue has been transformed from being perceived as a turf battle to a utilization/economic/patient-safety issue. A reasonable approach, moving forward, will be to maintain our federal and local dialogues (with emphasis on cost savings, appropriateness criteria, and utilization control) as government and industry turns their focus toward bringing additional citizens into the health care system. Organized radiology is well positioned to leverage those programs that we have already developed and implemented. Change presents opportunities. As the Congress and president of a new era debate health care, radiologists must remain aggressive and vigilant to ensure that our interests are represented. Stay tuned, stay involved, and support those organizations that are representing our profession in the midst of what promises to be a very interesting new year for US health care and radiology.