ASTRO applauds new CBO estimate demonstrating that ending self-referral abuse would save Medicare more than $3 billion

Fairfax, Va. April 17, 2014 — The Congressional Budget Office (CBO) today released a new assessment of the significant costs associated with physician self-referral abuse, estimating that closing the self-referral law’s loophole would save Medicare approximately $3.4 billion over a 10-year budget window. CBO’s new savings estimate—nearly double its previous estimate—adds additional weight to the existing mountain of evidence that the in-office ancillary services (IOAS) loophole results in potentially inappropriate patient care and substantial costs to the Medicare program.

CBO’s savings estimate comes on the heels of recent efforts by the Centers for Medicare and Medicaid Services (CMS) to expose fraud and abuse in the Medicare program with last week’s release of 2012 Medicare physician reimbursement data to the public. Greater transparency of information provided with the necessary context can help identify where physician self-referral abuse is leading to inappropriate and costly cancer treatments. CMS’s release of physician payment data and today’s updated CBO savings estimate continue to highlight the need for Congress to close the self-referral loophole to protect patients and reduce Medicare spending.

The federal “Ethics in Patient Referrals Act,” also known as the self-referral law, prohibits physicians from referring a patient to a medical facility in which he or she has a financial interest in order to ensure that medical decisions are made in the best interest of the patient without consideration of any financial gain that could be realized by the treating physician. However, the law includes an exception that allows physicians to self-refer for so-called “ancillary services,” including radiation therapy. Over the years, abuse of the IOAS exception has weakened the self-referral law and diminished its policy objectives, making it simple for physicians to skirt the law’s prohibitions by structuring arrangements that meet the technical requirements of the law, thereby circumventing the intent of the law. Numerous studies have shown that physician self-referral leads to increased utilization of services that may not be medically necessary, poses a potential risk of harm to patients and costs the health care system millions of dollars each year.

“Every day, the picture gets clearer: self-referral results in wasted Medicare resources and increased risks to patients,” said ASTRO Chair Colleen A.F. Lawton, MD, FASTRO. “CBO’s announcement today authoritatively debunks the myth that closing the self-referral loophole would increase costs. To the contrary, as CBO confirms, Medicare and American taxpayers would save money if Congress acts on the evidence and closes the self-referral loophole.”

In 2013, a report by the Government Accountability Office (GAO) and a groundbreaking study published in The New England Journal of Medicine exposed abuses of the Medicare program by self-referring, urology-owned radiation therapy clinics, detecting unusually high utilization of intensity modulated radiation therapy for prostate cancer patients, particularly for those in the Medicare population. President Obama‘s FY 2015 Budget proposal, as well as several bipartisan groups, continue to recommend narrowing the self-referral loophole for radiation therapy, advanced imaging, anatomic pathology and physical therapy.

While ASTRO urges Congress to close the IOAS loophole by passing the Promoting Integrity in Medicare Act (H.R. 2914), we also recommend that CMS consider requiring all physicians who self-refer for radiation therapy services to provide CMS with all financial relationship information, whether direct or indirect, related to the physician’s group practice. Physician group practices should also disclose all direct or indirect ownership and compensation relationships (including, but not limited to, all employment and lease arrangements) it has with physicians and any other individual or entity. ASTRO believes that disclosure of these financial arrangements will help patients understand the possible conflicts of interest that could affect the treatment choices prescribed by their physicians.

“ASTRO is committed to ensuring that patients are provided with the highest quality cancer care and eliminating unnecessary Medicare spending caused by self-referral abuse. We urge Congress to consider using the savings from closing the self-referral loophole to help offset the costs of permanently repealing the Medicare physician payment formula, known as the sustainable growth rate (SGR),” concluded Lawton.

Michelle Kirkwood
703-286-1600
michellek@astro.org

ABOUT ASTRO

ASTRO is the premier radiation oncology society in the world, with more than 10,000 members who are physicians, nurses, biologists, physicists, radiation therapists, dosimetrists and other health care professionals that specialize in treating patients with radiation therapies. As the leading organization in radiation oncology, the Society is dedicated to improving patient care through professional education and training, support for clinical practice and health policy standards, advancement of science and research, and advocacy. ASTRO publishes two medical journals, International Journal of Radiation Oncology • Biology • Physics (www.redjournal.org) and Practical Radiation Oncology (www.practicalradonc.org); developed and maintains an extensive patient website, www.rtanswers.org; and created the Radiation Oncology Institute (www.roinstitute.org), a non-profit foundation to support research and education efforts around the world that enhance and confirm the critical role of radiation therapy in improving cancer treatment. To learn more about ASTRO, visit www.astro.org.

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