Medicare-covered physician self-referrals for anatomic pathology services -- diagnoses of human tissue -- more than doubled between 2004 and 2010, although new reimbursement policies may be stemming the tide, according to a new Government Accountability Office report.
Across medical disciplines, providers that started self-referring in 2009 increased their use of anatomic pathology services between 14 percent and 58 percent in 2010, compared to 2008, the GAO found, and dermatologists, gastroenterologists and urologists in particular "substantially increased" anatomic pathology referrals the year after they began to self-refer.
The lawmakers who ordered the report -- Senators Max Baucus, Chuck Grassley, and Carl Levin and Representative Henry Waxman -- pointed to the findings as evidence of volume-based healthcare driven by financial incentives.
"The analysis suggests that financial incentives for self-referring providers is likely a major factor driving the increase in referrals for these services," Waxman, a Democrat from Southern California, said in a media release.
In 2010, Medicare spent just shy of $2 billion on some 16.2 million individual anatomic pathology services, with about $945 million of that paid for anatomic pathology diagnostics performed in physicians' offices and independent labs.
Although both self-referred and non-self-referred anatomic pathology services grew between 2004 and 2010, self-referrals increased at a rate of 113 percent over that time, while non-self-referrals increased at a rate of only 38 percent.
By the GAO's estimation, self-referring providers ordered some 918,000 more anatomic pathology services that they otherwise would have if they were referring at the rates of non-self-referring providers -- at an extra cost of $69 million in 2010.
Along with the question of Medicare spending, the GAO's findings also stirred some concern about over-screening, and whether self-referrals for in-house diagnostics act as an incentive to test for prostate cancer in particular, a disease that's of debatable danger to elderly men who might die of other things before it progresses.
"Abuse of these arrangements could impose unnecessary costs on taxpayers and beneficiaries, while exposing patients to potential complications from unnecessary procedures," said Carl Levin, a Democratic senator from Michigan.
The GAO said some of the increases in self-referrals between 2004 and 2010 may be due in part to Medicare payment policies -- although those recently changed.
In 2008, amid concerns about overuse, the Centers for Medicare & Medicaid Services imposed an "anti-markup rule" prohibiting providers from billing Medicare for anatomic pathology services in amounts exceeding the subcontracting costs the providers themselves pay.
In the 2009 physician fee schedule final rule, though, CMS created an anti-markup exception that let the service costs be increased when performed by a physician sharing a practice with the billing provider.
"Since then, arrangements in which a provider group practice includes a pathologist in the practice's office space have become a common self-referral arrangement," the GAO wrote.
But that 2009 fee schedule also introduced a payment change for anatomic pathology services related to a specific prostate cancer biopsy procedure. CMS started paying for multiple anatomic pathology services from prostate saturation -- screening 30 to 60 tissue samples for prostate cancer in high-risk individuals who previously tested negative under conventional biopsies -- with a single payment.
"The payment change resulted in a substantial decrease in payment for anatomic pathology services resulting from prostate saturation biopsy procedures," the GAO wrote.
And as of this year, CMS also reduced payment for anatomic pathology "because it determined that fewer resources -- equipment, supplies and nonphysician staff -- were required to prepare anatomic pathology services," the GAO said. That, in turn, reduced payments for the services' technical components, which can be billed together with the professional component in global claim.
CMS lowered Medicare reimbursement for anatomic pathology technical components by about half -- which reduced payments for anatomic pathology global claims by about 30 percent.