GAO: CMS Should Keep Closer Eye on Physicians' Self-Referrals

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Self-referred anatomic pathology services grew at a faster rate than non-self-referred services from 2004 to 2010, according to a report from the Government Accountability Office.
Self-referral occurs when providers refer patients for services delivered by entities, such as themselves or a group practice, with which the providers or an immediate family member has a financial relationship.

Federal law generally prohibits these types of referrals under Medicare, but there are exceptions for certain services and arrangements, such as anatomic pathology services. These involve pathologists preparing, examining and diagnosing tissue samples and other specimens.

The GAO conducted this study in response to questions about the role of self-referral in growing Medicare Part B expenditures. From 2004 through 2010, the GAO found the number of self-referred anatomic pathology services more than doubled from 1.06 million to 2.26 million. Non-self-referred services grew at about 38 percent, however.

The GAO's examination of all providers that referred an anatomic pathology service in 2010 showed self-referring providers referred more services on average than non-self referring providers. "These analyses suggest that financial incentives for self-referring providers were likely a major factor driving the increase in referrals," according to the report.

The GAO also found that self-referred anatomic pathology services in 2010 cost Medicare roughly $69 million. The agency recommended that CMS identify self-referred anatomic pathology services and address their higher use, as avoiding unnecessary self-referrals could result in savings to Medicare.

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