'Sunshine Act' heats up debate over imaging self-referral

Key Points

A study by the Government Accountability Office (GAO) in late June showed that Medicare spending for imaging services paid for under the physician fee schedule has more than doubled, increasing to about $14 billion between 2000 and 2006, and that the proportion of Medicare spending for such services performed in-office rose from 58% to 64%. Physicians also generated a larger share of their Medicare revenue from such imaging services, according to the GAO.

A month later, Sen. Charles Grassley (R-IA) of the Senate Finance Committee introduced legislation that would require physicians to disclose their financial interest in imaging services provided to their patients and to give such patients a list of alternative imaging providers in the area. The requirement would take effect in 2010.

According to Dr. Mitchell, nearly 33% of providers who submitted bills for magnetic resonance imaging scans, 22% of those who submitted bills for computed tomography scans, and 17% of those submitting bills for positron-emission tomography scans were classified as "self-referrals." Further, 61% of those billing for MRIs and 64% of providers billing for CT did not own their own imaging equipment, but were involved in lease or payment-per-scan referral arrangements.

"Increases in utilization rates were substantially higher for scans performed by self-referring physicians than for images that originated from a referral to a radiologist or hospital," Vivian Ho, PhD, professor of medicine at Baylor College of Medicine and associate professor of economics at Rice University in Houston, said of the Georgetown study.

In the GAO report, the independent watchdog agency recommended that the Centers for Medicare & Medicaid Services examine the feasibility of expanding its payment safeguard mechanisms "by adding more front-end approaches, such as prior authorization."

Grassley said he based his legislation on recommendations by MedPAC, which in March 2005 pointed out that advances in technology had made it feasible for increasing numbers of physicians to provide imaging services within their own offices and fulfill the desire of patients to have their tests in a more convenient setting. MedPAC noted that Medicare payments for imaging services were shifting from hospitals to physicians and said that the agency had an interest in ensuring that tests were performed by skilled technical personnel and interpreted by qualified physicians.

The report also said that Medicare should "strengthen the rules that restrict physician investment in imaging centers to which they refer patients," a recommendation that was repeated in congressional testimony by MedPAC Chairman Glenn M. Hackbarth.

Grassley's Medicare Imaging Disclosure Sunshine Act of 2008 would require referring physicians to disclose their ownership interest in imaging services such as MRI, CT, and PET at the time of referral and to provide Medicare beneficiaries with a list of alternative providers.

Grassley pointed out that such a provision was included in the Medicare bill he had introduced in June to help resolve the physician fee reduction crisis and in the agreement struck with Sen. Max Baucus (D-MT), Finance Committee chairman.

Grassley said that technology has resulted in "great advances" in imaging services in recent years, with improvements "holding much promise for earlier and more accurate diagnoses of life-threatening diseases, which often may lead to improved outcomes for patients." But, he said, "We must do more to help control the potential for overutilization of imaging services."