News and Insights

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The Government Accountability Office (“GAO”) published a report in September 2012 indicating that providers who self-referred patients for MRIs, CTs, and PET services cost Medicare about $109 million more in 2010 than it would have if the patients obtained the services from entities that did not employ, and were not owned by, the referring physician.

The GAO report argues that financial incentives are a major factor for the increase in the number of advanced imaging services ordered, based on the finding that providers who purchased or leased imaging equipment, or who joined practices that self-referred, substantially increased their referrals for MRIs and CTs. For example, the number of self-referred MRI services from 2004 through 2010 increased more than 80%, while the number of self-referred CTs during the same time period more than doubled.

As a result of the findings in the report, the GAO calls for a modifier “flag” that would be required on the submission of claims that involved a self-referred advanced imaging service. The GAO also proposed a payment reduction for self-referred advanced imaging services. The policies of the Centers for Medicare and Medicaid Services that restrict physician self-referrals were noted by the GAO as having a positive effect in reducing the utilization of the imaging services.

The GAO report is an indicator of the government’s persistence in detecting, monitoring, and curtailing certain types of referrals that the government perceives as abusive. This confirms the trend of increasing reviews and investigations into a physician’s referral patterns.

To read the full report, click here.

Effective January 1, 2012, Medicare no longer paid for the technical component of diagnostic MRI, CT, nuclear medicine, or PET tests unless the practice is accredited by one of the following three organizations: (1) American College of Radiology; (2) the Intersocietal Accreditation Commission; or (3) The Joint Commission. Practices that bill Medicare for these modalities should carefully review and consider the implications of this accreditation requirement to ensure continued compliance with Medicare’s reimbursement rules, the Anti-Markup Rule, and the Stark Law.

 To become accredited, practices must meet standards established by an accrediting organization. Each organization assesses, among other things, the qualifications of physicians who supervise the technical component of the diagnostic test. Practically speaking, two of the three accrediting organizations require the supervising physician to be a radiologist with expertise in the particular modality.

Medicare’s diagnostic testing billing requirement permits any physician to supervise the technical component of a diagnostic test. However, with this accreditation requirement the supervising physician for accreditation purposes may also need to be the supervising physician for billing purposes. The fact that many practices contract with an outside radiologist for accreditation purposes could make compliance with the Anti-Markup Rule and the In-Office Ancillary Services (“IOAS”) exception to the Stark Law exceedingly difficult.

At the risk of oversimplification, the Anti-Markup Rule prohibits a practice from billing Medicare for the technical and professional components of diagnostic tests unless the practice complies with one of two tests, which will be difficult for most practices to comply with when the accreditation requirement goes into effect. Further, the IOAS exception to the Stark Law is the main exception to the Stark Law that permits practices to bill Medicare and Medicaid for ancillary services, including diagnostic imaging tests and nuclear medicine. Compliance with the IOAS exception’s physician supervision requirement is more difficult with this accreditation requirement.

 All practices that seek reimbursement for the technical components of MRI, CT, nuclear medicine, or PET should carefully review the implications of the accreditation requirement.