by Douglas W. Jackson, MD
self-referral is a term currently used in the media to imply a
conflict of interest. By definition, self referral is when a physician
schedules tests or recommends procedures on a patient that are performed by
that surgeon and/or from a facility in which he or she receives financial
incentives for that referral. Examples of this in orthopedic practices would
include ordering X-rays, imaging studies and
physical therapy performed at a facility owned or leased by
the ordering physician. Self-referral is also considered by some to be
recommending a surgical procedure that the physician performs after coming to a
diagnosis and treatment plan with the patient.
There is a growing trend in the press and among
regulators of questioning all physician-owned
ancillary services where we may send our patients. These types
of self-referrals are being stigmatized and blamed by many experts in health
care as contributing to unnecessary and excessive utilization of medical
resources and contributing to our soaring national health care costs.
There are scandals exposed periodically of fraudulent
billings from self-owned facilities as well as published reports implying that
in certain circumstances physical therapy is recommended twice as often by
physicians with a stake in the therapy centers than physicians with no
financial ties to the facilities. In addition, critics have implied that nearly
40% of body scans ordered by physicians who owned imaging centers were deemed
unwarranted, in comparison to a rate of 28% requested by independent doctors.
Stark laws were written and passed by Congress with the intent
of decreasing the ability to self-refer and reduce overutilization and
unnecessary testing. Exceptions included in that legislation allowed testing in
physicians’ offices which critics feel neutered the intent of the law.
Under the in-office exception, many orthopedic surgeons utilize digital
roentgenogram equipment, MRI scanners and, on occasion, CT scanners in their
offices. I would anticipate that Stark or other legislators will attempt to
write new legislation in an attempt to further curtail some aspects of self
referral related to ancillary services. In addition, there are ongoing lobbying
efforts from hospital associations and radiologists to restrict physician
ownership of ancillary and imaging services.
The increase in self-referrals to physician-owned
ancillary services was occurring simultaneously as declining reimbursements for
surgical procedures and “cognitive” physician care. Besides patient
convenience and quality control, ancillary services were added to keep
physicians’ practices as financially viable as possible. In some current
incidences, the income stream from ancillary services approach and even exceeds
that earned by the physicians from direct patient care. Ancillary services in
the office offer convenience to the patient and often can be done less
expensively than in hospital and other radiology facilities.
Need for comparative effectiveness research
Let us look at two examples of self-referral that will
be getting more attention in 2011: One is outside of orthopedics and one
within. As the result of the rising cost for Medicare and its increasing
percentage of our federal budget, cost cutting measures will be vigorously
explored in 2011. While Medicare has been prohibited from publishing individual
physician billings, there will be much more published of composite billings and
regional variations as well as flagrant examples of fraud.
These two examples I have chosen are presented to
stimulate your thinking in the controversial area of deciding on
Medicare-covered treatments: prostate cancer treatment and the use of spinal
fusion surgery. It is not my intent to comment on the varied scientific and
patient issues impacting reasons to neither choose these technologies nor make
any comments on the issue of royalties. There are respected surgeons on both
sides of the issues for using this new technology in Medicare cases.
These are medical conditions that do not have the
natural history clarified in the Medicare population and there is a lack of
agreement for optimal treatment. Under these circumstances, we will see forces
outside of organized medicine making many of the future utilization decisions.
If Medicare will not reimburse for a new technology in the senior age group,
the use of the specific technology with drop off significantly.
The issue driving this debate is the high reimbursement
for new technology that is still awaiting definitive outcomes to justify the
additional costs. In the case of the 190,000 American men who are diagnosed
with prostate cancer each year, the best treatment in the older population
remains controversial as prostate cancer tends to grow slowly. Many victims
will die from other causes. A new and appealing treatment for prostrate cancer
involves a sophisticated form of radiation therapy called IMRT (intensity modulated radiation therapy). It is widely
recognized as superior to the type of external radiation it replaced because it
targets the tumor more specifically, limiting damage to healthy tissue. It has
become a heated debate among health-care professionals on its
cost-effectiveness in the Medicare population. Eight years ago, virtually no
patients received the treatment; however in 2008, Medicare spent an estimated
$1 billion or more on IMRT largely for the treatment of prostate cancer.
This example points out the pressing need for
comparative effectiveness research to provide us data as Medicare is
constrained from considering cost alone as the basis in coverage decisions for
new technologies. The reimbursements for new technology are driven by the
companies to encourage practitioners to use a new technology that is being
introduced and promoted. The Medicare payment system, whether it is to a
urologist, a radiation oncologist, or other professionals, the reimbursement
for using new technology needs to be in line with treatments of proven
effectiveness. Companies’ strategies for most new technology include
presenting a return on investment for physicians. The argument is made that
owning IMRT machines offers lucrative Medicare reimbursement. It has been
presented that one urologist managing two new IMRT cases per month can expect a
potential increase in income of $336,000 annually. This is an
oversimplification and assumes ongoing flow of patients receiving this
technology and continued reimbursement at close to current levels.
Paying for new technology
One example in orthopedic surgery which remains a
controversial procedure for all but a few indications in the Medicare
spinal fusion at one or multiple levels. The rods and screws
implanted for spinal fusion can cost the payers tens of thousands of dollars
for the hardware. Corporate whistleblowers and congressional critics contend
that the companies influence and offer promotions to surgeons that represent
conflicts of interest and result in the overuse of surgical hardware in this
population. The comparisons are being made for spinal implant
“kickbacks” similar to those that were made in joint replacements.
The Medicare system and even private insurance is asking for supportive data to
substantiate these additional costs for this new technology in the elderly and
With the limits on our resources to continue to fund
Medicare, someone or groups will have to make tough cost-minded judgments on
what procedures are justified in patient care. Spinal implants are just one of
many examples that have been targeted as areas where there is a need to remove
any financial incentive that may result in more surgeries than necessary.
We, as a profession, and our patients will be served to
assist in cutting unnecessary costs for Medicare entitlements. We need to be
leaders and help address these issues in 2011. It does not help us to argue in
the press over our individual opinions if a spinal fusion is appropriate in the
aging population for more then a small number of conditions. We need to be part
of the urgent need for comparative effectiveness research in this area. Studies
chosen for decision making will be done with or without us.
We need to be part of cost-effectiveness and
quality-of-life studies or live with the ones that are done.
Douglas W. Jackson, MD, is chief medical editor of
Orthopedics Today. He can be reached at Orthopedics
Today, 6900 Grove Road, Thorofare, NJ 08086; e-mail: