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May 14, 2017

The Scourge of Self-Referrals

by Altamash Mir 

Throughout the years, Physicians have been under the obligation of prescribing the most suitable medication, the best form of therapies, the most appropriate diagnostic imaging etc etc. Patients have always trusted their primary care physicians to make the best decision for them. Physicians would get to know of any new successfully tried medicine by reading journals, attending seminars etc. With the advent of an aggressive Pharmaceutical industry, this started to change. Physicians no longer needed to step outside of their office to learn anything, as Pharmaceutical representatives (sales people) would instead come into their practices & wine and dine the physicians and their staffs and woo them into utilizing their brand of medicine for patients.

Patients have always trusted their primary care physicians to make the best decision for them

It all began with Pharmaceutical reps showing up at a Physician Practice giving out free samples of a new FDA approved medicine. The Physician would be told that if their utilization of a particular item were to exceed a certain number, they could qualify for a free “educational” 4 day cruise to Mexico, sponsored by the Pharmaceutical company. These incentives became more & more handsome. It came to a point where Physicians were referring particular brands of medications to their patients solely because of the incentives they were receiving from the Pharma companies. Primary care physicians would push their favorite (most incentivized) drugs, Orthopedic surgeons would liberally refer their neck sprain patients to the best MRI facility (which also owned the best restaurant in town and of course dinner was free for you and your guests) and unnecessarily conduct a Blood test and send it to your favorite Blood Lab, which also happened to host the best Christmas Party in town (on a cruise ship)! These parties routinely occurred where “random” individuals won handsome prizes such as vacation trips, electronics & gift certificates.

It didn’t take too long for the Feds to catch up with them and instill laws to prohibit such “educational incentives”. A set of laws commonly referred to as the “anti-kickback”, “anti-self-referral” or “Stark Laws” were introduced prohibiting Physicians from directly or indirectly benefiting from any product or service towards which they refer their patients to.

Like any set of laws, the Stark laws also had loopholes. The clever Health care Mafia devised plans to keep the “now addicted” referring Physicians pacified & fulfilled. These new techniques included a loophole where the referring physician would “rent out” time slots of equipment, physical space as well as qualified employees from Diagnostic facilities, blood labs and others. The Physician would then refer patients to this facility, and once the services have been provided, bill either one of the Technical or Professional component of the patients benefits.

Another example of the abuse that has been going on is the referring Physician providing such ancillary service themselves at their own facilities. Physicians taking advantage of this self-referral loophole would contest that the required services needed to have been provided to the patients immediately. This loophole was exploited immensely in the name of “urgent services”, although only a fraction of the services provided were of such urgent nature neither were they provided urgently.

Most ancillary services provided & billed by Physicians under the “urgency shelter” of the Stark Laws were neither urgently needed services, nor were the services provided immediately.

This has been continuing for decades. Physicians would refer countless patients to their own Physical Therapy Clinics (mostly not adequately staffed nor appropriately designed as per Federal regulations) and prohibit patients from going out to a properly setup & accredited facility for treatment. Similarly, Blood tests are conducted & results acquired from in-house labs which rarely undergo accreditation by any organization and billing is conducted under the Physician’s billing ID.

Services such as Diagnostic imaging used to be setup in huge facilities with very complicated systems which were difficult to operate and manage. As technology advanced, these equipment’s also shrunk in size to an extent that a small version of an MRI machine could fit inside of an average sized medical clinic. With such compact equipment, physicians could refer patients to “their own” facility for “urgently needed” services.

The United States Government Accountability Office as well as other leading research organizations reach the conclusion that such incentives & loopholes in which referring Physicians could benefit financially, leads to increased number of referrals. Alarms had been running aloud for at least a decade as the utilization of such ancillary services increased as well as the costs associated with them.

U.S. Representative Jackie Speier (D-CA14) from California & U.S. Representative Dina Titus from Nevada deserve immense applause as they jointly re-introduced legislation from 2013 H.R. 2066, The Promoting Integrity in Medicare Act (PIMA) aimed to prevent physicians in certain specialties from referring patients to ancillary medical services in which they have an ownership interest and are offered in their offices.

The current laws in place restrict physicians from referring Medicare patients for certain health care services in which they have a financial interest, but includes an “in-office ancillary services exception”. PIMA ensure that the original intent of the self-referral law is resurrected by prohibiting self-referral for four complex services: advanced imaging, anatomic pathology, radiation therapy and physical therapy, which are not typically performed at the time of the patient’s initial office visit.

Verbiage from the original bill introduced in 08/01/2013 by U.S. Representative Jackie Speier states that civil monetary penalties would be increased from a maximum of $15,000 to a maximum of $25,000 in the case of a bill or claim for such services whose presenter knows or should have known they are for a service for which payment may not be made. Also an increase on the civil monetary penalty from a maximum of $100,000 to a maximum of $150,000 for any circumventive arrangement or scheme which a physician or other entity enters into knowing (or should know) has a principal purpose of assuring referrals by the physician to a particular entity which, if the physician directly made referrals to such entity, would be in violation of SSA title XVIII.

This will ensure that incentives driving medical decisions are solely in the patients’ best interests, thereby reducing unnecessary and inappropriate services and costs to the Medicare program. PIMA will also strengthen provisions in the law that maintains access to care for rural Medicare patients.

PIMA is supported by the Alliance for Integrity in Medicare (AIM), which is comprised of the American Clinical Laboratory Association (ACLA), the American Physical Therapy Association (APTA), the Association for Quality Imaging (AQI), the American Society for Radiation Oncology (ASTRO), the American Society for Clinical Pathology (ASCP), the College of American Pathologists (CAP), and the Radiology Business Management Association (RBMA).




Altamash Mir
Altamash Mir
Health Care Consultant & Blogger based out of Chicago, IL.

1 Comment

  1. Steve says:

    Very Informative article

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