Doctors Cost Medicare $100 Million By ‘Self-Referring’ Their Patients For Profits

According to a new report by the Government Accountability Office (GAO), doctors who “self-referred” Medicare patients for advanced imaging tests — a practice where doctors refer their patients to image testing facilities in which they have a direct or indirect financial stake — cost the Medicare program $100 million in 2010 alone.

The GAO found that over the course of six years, doctors’ self-referrals for MRIs grew by 80 percent even though referrals to other doctors and practices grew by a mere 12 percent, suggesting that the imaging tests were inspired by personal gain rather than patients’ needs. Doctors’ increasing use of the controversial practice raises concerns that they are ordering unnecessary procedures in order to reap added Medicare reimbursements at the expense of patient safety and the fiscal security of the Medicare entitlement.

As The Hill reports, lawmakers from both sides of the aisle have reacted strongly to the findings, which appear to show doctors systematically gaming the system:

“The results of this report are eye opening,” Senate Finance Committee Chairman Max Baucus (D-Mont.) said. “Self-referrals offer an incentive for providers to order more tests than they would otherwise. It’s clear they are driving up costs. Providers’ bottom lines shouldn’t be getting in the way of their patients’ care and best interests.”

In 2010, doctors who self-referred made 400,000 more referrals than they would have if they didn’t have a financial interest in ordering more tests, GAO said. The added referrals cost Medicare roughly $109 million.

“Medicare payment policy shouldn’t incentivize unnecessary tests that drive up costs and even jeopardize the well-being of patients,” Sen. Charles Grassley (R-Iowa) said. “The challenge is to develop a payment system that safeguards beneficiary access to services while preventing self-referrals by physicians who abuse the system.” […]

Doctors aren’t just conducting more tests themselves — they’re also sending more patients in for tests, according to GAO. Once doctors bought the necessary equipment or joined a practice that self-referred, they started writing about 67 percent more referrals for MRIs and CT scans, according to Wednesday’s report.

The massive spike in image testing referrals by doctors who buy new imaging equipment or join a self-referring practice further reinforces the charge that these tests are being ordered for personal profit. Even worse, unnecessary advanced imaging tests such as MRIs and CT scans don’t just drive up Medicare costs — they also expose elderly patients to potentially harmful levels of radiation without serving them any discernible medical benefit.

Billing fraud schemes in Medicare are woefully common, and have been the target of aggressive Obama Administration anti-fraud efforts. Just last month, the U.S. arrested 91 health care professionals across seven different cities in a $430 million Medicare fraud bust. Unfortunately, fraudulent tactics such as redundant medical testing are difficult to track, as they are largely left to doctors’ personal discretion. But they come at a high price for the Medicare safety-net and the well-being of the seniors it strives to protect.