In-office Ancillary Services Exception
Physicians recommend a wide range of services for their patients. In many cases, these recommendations involve the use of equipment or skilled personnel within those physicians’ practices. This practice of "self-referral" for certain types of services has come under increased scrutiny in recent years, primarily over concerns that it may lead to over-utilization and higher overall health care costs. The U.S. Government Accountability Office (GAO) conducted several studies of self-referred services subject to the in-office ancillary services exception (IOASE) to the Stark Law, examining data from 2004 to 2010. Although none of the GAO studies suggested repealing the IOASE, proposals to eliminate it have been made by some members of Congress and the Administration.
To explore the issue in more depth, the AMA contracted for a study, "Outpatient ancillary trends in the Medicare fee-for-service population: 2008-2012," by the independent actuarial firm Milliman, Inc., to examine Medicare claims for several types of service that were the subject of recent GAO scrutiny, including advanced imaging, intensity-modulated radiation therapy (IMRT), physical therapy, and pathology or laboratory services. Milliman used claims from 2008 to 2012 from the 5 percent sample of Medicare fee-for-service enrollees to examine changes in spending and utilization for these services.
The data simply do not support the argument that self-referral encourages inappropriate utilization or increased Medicare spending. Instead, these results indicate that:
- For most of the ancillary services, the proportion provided in physician offices compared to hospital settings is relatively small, suggesting that imposing pay cuts or self-referral restrictions on these services will not produce significant savings.
- In general, five-year annualized utilization and spending trends for these services show declining and even negative growth rates in office settings.
- Taken together, these trends indicate that concerns about potential cost and utilization related to physician ownership are unwarranted.
- There is a real risk that policies intended to preclude or discourage physician investment in ancillary services could backfire by accelerating their movement out of physicians’ offices where Medicare and its beneficiaries often pay less than when the identical services are provided in the hospital.
The full Milliman study and detailed exhibits pertaining to each type of service examined are provided below, together with the AMA-prepared summary and analysis: