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The Government Accountability Office (GAO) has issued a report recommending the Centers for Medicare and Medicaid Services (CMS) take steps to address overutilization of anatomic pathology services by self-referral providers (where a provider refers patients to an entity in which the provider has a financial interest). The GAO analyzed Medicare Part B claims data (2004-2010), focusing on referrals from dermatology, gastroenterology and urology which encompassed 90 percent of self-referrals in 2010.

The number of self-referred anatomic pathology services more than doubled from 2004 to 2010 with expenditures growing approximately 164 percent, while the number of non-self-referred anatomic pathology services increased by approximately 38 percent with expenditures increasing approximately 57 percent. The GAO further found that self-referring providers referred more anatomic pathology services than non-self-referring providers. Depending upon the specialty, self-referring providers referred from seven percent to 52 percent more services per procedure. The higher rates were shown not to be the result of patient diagnosis, health status or demographic information.

Anatomic pathology services paid for under the Medicare physician fee schedule totaled more than $1 billion in 2010. The GAO estimated that in the same year for anatomic pathology services, self-referring providers cost Medicare $69 million more than if their referral patterns matched non-self-referral providers.

The GAO recommends CMS:

  1. Develop a method to identify self-referral anatomic pathology services
  2. Develop a mechanism to evaluate the appropriateness of biopsy procedures
  3. Reduce financial incentives for referring a higher volume of specimens per biopsy procedure

The GAO report also includes evaluations of the GAO’s methodology and findings from the Department of Health and Human Services and four professional associations, including the College of American Pathologists.

For more information, please contact:

Richard S. Cooper

Jane Pine Wood

Bridget K. Cougevan

McDonald Hopkins has a large and diverse healthcare practice, which is national in scope. The firm represents a wide variety of healthcare providers, facilities, vendors, technology companies and associations. Our diverse experience enables us to give our clients a unique perspective on the issues that may confront them in the rapidly evolving healthcare environment.