Obama Proposes to Close Stark Loophole

For the first time, President Obama has proposed excluding anatomic pathology (AP) services from the in-office ancillary services exception (IOAS) to the Stark law. The proposal is included in the president’s 2015 budget sent to Congress on March 4. While the administration previously has proposed to remove advanced imaging, physical therapy, and radiation therapy from the IOAS exception, AP services were never included. According to the Office of Management and Budget (OMB), the estimated savings to the Medicare program for removing all four services would be more than $6 billion over 10 years. The IOAS exception was created to ensure patients could have easy access to a range of medical tests or services that inform diagnosis and treatment during the time of their physician visit, such as strep and glucose testing, urinalysis, and other clinical laboratory tests. According to the College of American Pathologists (CAP), it was never intended to include AP services that involve a complex multistep  process and analysis of a tissue specimen procured as part of a procedure to diagnose cancer or other diseases and conditions. The process can almost never be completed with results available at the time of the patient’s office visit. CAP has long advocated for removal of AP services from the exception, which has led many specialists to open their own pathology labs in connection with their practices. In 2010, CAP sponsored the first research focused solely on self-referral of AP services. That study, conducted by Jean Mitchell, Ph.D., a leading health policy economist, and published in Health Affairs, found that self-referring urologists billed Medicare for 72 percent more prostate biopsy specimens compared to non-self-referring physicians. In addition, a series of Government Accountability Office reports found increases in self-referrals for magnetic resonance imaging, computed tomography, radiation therapy, and AP services. “The CAP’s strategy has been to provide reliable data, share individual case studies, and provide the facts to educate policymakers about the unintended consequences of including AP services under the IOAS exception,” said CAP President Gene Herbek, M.D., FCAP, in a statement. “In multiple meetings with White House domestic policy staff, the OMB, Congress, and the Centers for Medicare and Medicaid Services, the CAP made the case that closing the loophole protecting physicians who refer AP services to laboratories in which they, or an immediate family member, own or have a financial interest will generate significant Medicare savings, reduce unnecessary utilization, and benefit patient care.” Takeaway: Pathology groups are applauding a proposal to remove anatomic pathology services from the in-office ancillary services exception to the Stark law.