GAO sounds alarm on self-referred Medicare biopsy rates

Dermatology, gastroenterology and urology organizations defend the services as medically necessary, but the report seeks tougher controls to prevent inappropriate use of anatomic pathology.

By Charles Fiegl amednews staff — Posted July 29, 2013

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An analysis of Medicare data found self-referred biopsy services had doubled since 2004, but specialists said the federal auditors overlooked practice consolidation and quality gains.

Consolidation of physician practices due to specialists joining larger medical groups may be driving higher rates of self-referred pathology services, the organizations said after the June 24 Government Accountability Office report concluded the rapid growth had occurred. The GAO has called on federal health officials to monitor billing of the services more closely, but the agency overseeing Medicare said it already has taken steps to remove incentives that might lead to some inappropriate utilization.

Medicare self-referred anatomic pathology services more than doubled to 2.3 million in 2010 from 1.1 million in 2004, the GAO reported. Non-self-referred services grew at a slower rate to 7.8 million from 5.6 million during that period. Dermatology, gastroenterology and urology had accounted for 90% of self-referred anatomic pathology services related to tissue samples collected during biopsies in 2010.

Auditors isolated billing patterns of physicians who first began referring these services to labs within their own practices. So-called switchers in 2009 had increases in anatomic pathology services ranging from 14% to 58.5% when analysts compared their Medicare billing in 2008 and 2010.

“These analyses suggest that financial incentives for self-referring providers were likely a major factor driving the increase in referrals,” the GAO stated.

Federal officials estimated that additional referrals for 918,000 services cost Medicare $69 million in 2010. That represents 5.7% of the 16.2 million anatomic pathology services — worth a total of about $1.3 billion — provided in physician offices, hospitals and other facilities.

The Centers for Medicare & Medicaid Services cut payment for anatomic pathology services in 2013 after examining pay for high-volume services. “As we have reduced payment for this service by approximately 30%, we have significantly reduced the financial incentives associated with self-referral for these procedures,” wrote Jim Esquea, Health and Human Services assistant secretary for legislation, in a May 16 memo to the GAO.

Assertion “wrong and offensive”

Some specialty societies representing physicians sharply criticized the report, questioning the methodology used to draw the conclusions and noting that use of biopsies in certain cases has been found to improve quality of care.

“The GAO's assertion that urologists and other specialists are utilizing ancillary services for financial gain is both fundamentally wrong and offensive,” wrote David Penson, MD, health policy chair of the American Urology Assn., and Deepak Kapoor, MD, president of the Large Urology Group Practice Assn., in a statement. “To label an entire profession by proposing that urologists are performing unnecessary or inappropriate biopsies to boost their bottom lines not only disparage urologists, but does a great disservice to patients.”

The American Gastroenterological Assn. noted that incidence of and mortality from colorectal cancer dropped during the GAO study period, in part because of a focus on colonoscopy and adenoma detection rates that led to more biopsies. In recent years, small gastroenterology practices have formed larger groups, which have in-house pathology labs that can offer faster biopsy results.

The American Academy of Dermatology Assn. also took issue with the report. “Recognizing the value that integration of care provides to our patients, the AADA also believes it is important to preserve the ability of dermatologists to read their own pathology slides consistent with their training and will work to ensure that right is exercised appropriately,” said Lisa Garner, MD, the association's vice president.

The College of American Pathologists agreed with the report's findings but not its advice on how to address them. The GAO recommended that CMS require physicians to report anatomic pathology services that are self-referred and determine appropriateness of self-referred biopsies. CMS also did not concur with the watchdog agency's recommendations.

The pathologists' college has argued for closing an exemption in the physician self-referral law, known as the Stark Law, which allows physicians to order and perform their own biopsies, said Gene Herbek, MD, CAP's president-elect. “We call on Congress to act on behalf of patients and their constituents and pass legislation to close this loophole.”

Lawmakers also reacted to the report by urging their colleagues to act.

“Abuse of these arrangements could impose unnecessary costs on taxpayers and beneficiaries, while exposing patients to potential complications from unnecessary procedures,” said Rep. Sander Levin (D, Mich.). “Preserving the integrity of the program requires Medicare's resources to be used wisely, with an accurate payment system based on patient needs and not provider profits.”

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How much pathology is self-referred?

More than 90% of anatomic pathology services that physicians refer to their own practices are ordered by dermatologists, urologists and gastroenterologists, according to a June Government Accountability Office report. Dermatologists alone are responsible for nearly 60% of the self-referral, a practice that has been growing in popularity.

Specialty % of services self-referred
2004 2010
Dermatology 24.0% 29.3%
Urology 13.9% 32.5%
Gastroenterology 6.6% 20.9%

Source: “Action Needed to Address Higher Use of Anatomic Pathology Services by Providers Who Self-Refer,” Government Accountability Office, June (link)

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