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Congress would be required in order to shut down physician self-referral loopholes

As of right now, physicians can refer patients for medical services (usually MRI and CT scans, anatomic pathology, and intensity-modulated radiation therapy) at enterprises that they have a financial stake in – yielding them a profit. This controversial practice could potentially change, though. Authors of a new “Viewpoint” in JAMA report that the Government Accountability […]

As of right now, physicians can refer patients for medical services (usually MRI and CT scans, anatomic pathology, and intensity-modulated radiation therapy) at enterprises that they have a financial stake in – yielding them a profit.

This controversial practice could potentially change, though. Authors of a new “Viewpoint” in JAMA report that the Government Accountability Office (GAO) has filed recent reports that could lead to the new Congress closing these loopholes in the system that have existed for years. Making this change could save the federal government millions of dollars a year.

The article’s co-author Dr. Eli Y. Adashi, professor of medicine in the Alpert Medical School and former dean of medicine and biological sciences at Brown University, says this practice of self-referral makes sense for physicians, logically (and financially).

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If a patient needs a CT scan, why not send him or her to a diagnostic imaging clinic that the physician owns? The problem with this, though, is that a physician could potentially order scans that aren’t really necessary, or better equipment/technicians could be available elsewhere.

“It is capitalism at its best and at its worst,” Adashi said. “It’s important to point out the uncomfortable relationship between money and medicine.”

As Adashi and co-author Dr. Robert Kocher, a senior fellow at the University of Southern California, included in their report: Congress passed two laws in 1989 and 1993 (referred to as “Stark I” and “Stark II”) that basically prohibited physician self-referrals – prohibited with the exception of 35 loopholes, thus allowing physicians to continue the practice.

Some areas of medicine seem to be taking advantage of this practice more than others.

“Observations on self-referrals of IMRT services for the treatment of prostate cancer were particularly disconcerting,” Adashi and Kocher wrote. “The utilization of self-referred IMRT services increased by as much as 356 percent at a time when the utilization of the non-self-referred variety decreased by 5 percent.”

This could take some time before Congress makes any changes, but one way this could take a turn is a shift from for the “fee-for-service” healthcare payment model to accountable care organizations.

Imagine that – doctors actually having better incentives for quality care at lower prices. Sounds nice.