Will the Physician Self-Referral Controversy Ever End?

The federal government has supported regulations to stem physician self referral for nearly 30 years, but a new GAO report finds the volume of services for physicians who self refer grew at a slower rate than those who were not self-referring. What the finding means for the future of Stark law and government efforts to intercede in physician ownership. Plus, why physicians can’t wholly own hospitals, but must own ACOs.
What the GAO report foundA new Government Accountability Office report examining the impact of physician self referral for physical therapy services found expenditures for physical therapy services that were not self-referred by physicians grew at a faster rate than physical therapy services that were self-referred from 2004 to 2010. Self-referring providers referred more patients to physical therapy than non-self-referring providers, but the self-referring providers referred fewer physical therapy services per beneficiary. Additionally the study found orthopedic surgeons are less likely to refer patients to physical therapy when they have a financial stake in the services.
The somewhat under-the-radar report has many scratching their heads, while others are saying ‘I told you so.’ Could it be that physicians really aren’t driven by profit alone?Why are there laws against self referral?The concept of physician self referral (when a physician refers a patient to an ancillary service he or she has an ownership interesting in — imaging, labs, ambulatory surgery centers are examples) has been a hot-button since the late 1980s when then Rep. Pete Stark (D-Calif.) helped pass legislation to prohibit physician self-referrals for clinical laboratory services (Stark I), under President George H.W. Bush. Then, in the mid-1990s under President Bill Clinton, the Health Insurance Portability and Accountability Act expanded self-referral regulations to additional “designated health services” thought to be particularly susceptible to overutilization as a result of physician self-interest (Stark II). Examples of these services include physician therapy, radiology and imaging services, to name but a few. The law included some exceptions but did reduce the ability of physicians to own healthcare service providers which they might commonly refer patients to.Do physician overutilize when they have a financial interest?That of course is a difficult question to answer, and studies on the topic provide mixed findings, making conclusions difficult. While the most recent GAO report would suggest self-referral wouldn’t lead to unnecessary care and higher healthcare costs, many other studies on the topic have found higher utilization rates among self referrers. A 2013 GAO report, for example, found self-referred pathology services grew at a faster rate than non-self-referred services from 2004 to 2010. According to this GAO report, “the financial incentives for self-referring providers were likely a major factor driving the increase in referrals.”Studies of imaging utilization have similar findings. For example, this study looked at the use of lumbar spine MRIs by orthopedic surgeons who had a financial interest in MRI services and those that did not, and found those with financial interest had a significantly higher rate of negative scans, which may suggest the test had been overutilized. And, a meta-analysis of self-referred imaging found self-referrers referred patient for imaging tests at a rate of 2.48 to 1, compared to their non self-referring counterparts. So, does physician ownership lead to unnecessary testing and overutilization?
It’s difficult to know for sure. Perhaps pathology, imaging and physical therapy are fundamentally differently; indeed they are, at least in my mind. From a patient’s perspective, an imaging or pathology test (which involves a single trip to an imaging center or doctor’s office) is less convenient than not having one at all, but more convenient than spending hours a week for multiple weeks undergoing physical therapy. Self referral is such a complicated issue to try to regulate because most physicians aren’t bad actors. There may be a few here and there, but the large majority of ‘first do no harm’ physicians don’t want to their patients to undergo unnecessary testing or procedures. Yet, many studies do find higher rates of utilization; why is this so?