GAO report raises concerns about pathology services

A report released on July 15, 2013 by the Government Accountability Office (GAO), based on analysis of claims from the Medicare Part B Carrier File for 2004-2010, concludes that self-referring providers generated more referrals for anatomic pathology on average than other providers. 

The GAO was commissioned by Congress to look at utilization patterns and expenditure trends associated with physician self-referred and non-self-referred anatomic pathology services. This report follows a similar report released last year that looked at self-referral for advanced imaging services.

In its response to the report, the AADA expressed deep concern with the report’s findings and reiterated its strong position against the inappropriate use of ancillary services.

The anatomic pathology report finds, among other conclusions, that:

  • Self-referred anatomic pathology services increased at a faster rate than non-self-referred services from 2004 to 2010.
  • The growth rate of expenditures for self-referred anatomic pathology services was higher than for non-self-referred services.
  • Three provider specialties — dermatology, gastroenterology, and urology — accounted for 90 percent of referrals for self-referred anatomic pathology services in 2010.
  • Referrals for anatomic pathology services by dermatologists, gastroenterologists, and urologists substantially increased the year after they began to self-refer. 
  • In 2010, self-referring providers of the specialties examined referred more services on average than non-self-referring providers.

GAO’s conclusions

Based on its analysis the GAO concluded that, after eliminating factors such as patient demographics (e.g., age, sex, and geography), financial incentives for self-referring providers were likely the major factor driving the increase in referrals.

GAO asked CMS to consider conducting audits of providers, initially focusing on self-referring dermatologists who treat a larger number of Medicare beneficiaries. However, HHS did not agree with this recommendation, noting that the President’s 2014 budget proposal suggests excluding certain services from the in-office ancillary service exception to the Stark law and indicating that the report suggests that anatomic pathology “may share some characteristics” with those services.

The GAO report did not recommend eliminating the in-office ancillary services exception, but it did recommend that CMS should identify self-referred anatomic pathology services and address their higher use. HHS agreed with the recommendation that CMS address higher use of self-referral through a payment approach and cited the 30 percent fee cut for 88305 (the HCPCS code for anatomic pathology that the GAO studied) in 2013 as evidence that it is already doing so, but disagreed with GAO’s other recommendations to identify self-referred services through a flag on claims and to address appropriateness of self-referred biopsy procedures.

AADA responds, reiterates commitment to preserving access to dermatopathology   

In its official response the AADA expressed deep concern with the report's findings and reiterated its strong position against the inappropriate use of ancillary services. Earlier this year, the AADA Board took a strong stance by issuing a statement against certain dermatopathology arrangements and will continue to encourage its members to be vigilant stewards of this resource. 

The AADA strongly supports and will continue to support dermatologists’ ability to read their own slides — as is consistent with their training — to meet the needs of patients and to provide more integrated patient care.

In response to the report, some have advocated closing the in-office ancillary services exception, which enables dermatologists to provide pathology services to their patients. The AADA is firmly against closing the exception, which would severely undermine the ability of dermatologists to provide the comprehensive care that they were trained to provide and that their patients expect.

The AADA has concerns about certain aspects of the report, but our leaders and members are committed to working to ensure that pathology services are utilized in the most appropriate and cost-effective manner possible.

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Maintaining compliance manual Maintaining Compliance in Dermatology: Safeguarding Against Financial Risk
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