President's 2014 budget takes on self-referral

In its 2014 budget plan released April 10, the Obama administration has directly targeted self-referral, proposing that certain imaging services be excluded from the in-office ancillary services exception to the federal Stark law. Unfortunately, the budget also proposes prior authorization for imaging services.

Not only does the proposal address self-referral directly for the first time, it quantifies the savings that would be gained by closing this loophole -- $6.1 billion over 10 years, according to Cynthia Moran, assistant executive director of the American College of Radiology (ACR).

"This president has not mentioned self-referral in any previous budgets," Moran told "Even though this document is a policy 'wish list,' it's significant that the administration has named a dollar amount of money that would be saved by narrowing the Stark law."

The Stark law bars physicians from referring Medicare patients to entities that provide services such as diagnostic imaging if the physician has a financial relationship with that entity -- unless the in-office ancillary services exception applies. The exception allows physicians and group practices to provide these services in their offices, in the hopes of balancing patient convenience, efficiency of services, and quality and continuity of care against the prevention of exam referrals that financially benefit the physician.

The president's proposed 2014 budget would remove advanced diagnostic imaging, radiation therapy, and physical therapy from the in-office ancillary services exception to the Stark law. However, the budget does allow for an exception to this proposed policy, in cases in which a practice meets "certain accountability standards" as defined by the secretary of the U.S. Department of Health and Human Services (HHS).

"This budget calls for the secretary to develop these 'accountability standards,' " Moran said. "It's not clear what these would be, but they could be standards that would exempt multispecialty, integrated practices like accountable care organizations."

The budget also calls for mandatory prior authorization for advanced imaging for the most expensive imaging services. That policy is just not a good idea, Moran said.

"The ACR will vehemently oppose this proposal, and will push for a policy that will incorporate decision-support tools and appropriateness criteria," she said. "That's one of our highest priorities this year."

What happens next?

The document did not include specific reductions in reimbursement for advanced diagnostic imaging services. But that's no reason to relax, according to the ACR. The president's proposed budget is not binding legislation -- in fact, it's only one of several means the administration can use to change reimbursement policies for radiologists.

"The Patient Protection and Affordable Care Act gave the secretary of Health and Human Services expansive authority to lower physician reimbursements," the ACR said in a statement. "As has been done repeatedly, we can expect a new round of proposed reimbursement changes to our services in upcoming rule making from the Centers for Medicare and Medicaid Services throughout this year."

Congress has always written its own budgets, choosing elements from the president's to incorporate or not, Moran said. The likelihood of self-referral legislation remains slim -- especially since the issue is so divisive in Congress. But HHS Secretary Kathleen Sebelius could choose to move forward on her own authority.

"Self-referral is political kryptonite for many members of Congress," she said. "But the secretary has clear authority to implement something like this -- she doesn't need legislation to close off these abuses. If this is truly an important issue to the White House, the secretary can go forward today and close the Stark law loophole."

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