In-office Ancillary Services Exception Under Fire

Physician-owned ancillary services—particularly advanced diagnostic imaging—came under fire from two directions recently. First, the Senate Finance Committee requested that the Congressional Budget Office (CBO) score the removal of the in-office ancillary services (IAOS) exception to the Stark Law as it applies to physical therapy, clinical laboratory services, and advanced diagnostic imaging. Then, the U.S. Government Accountability Office (GAO) released a report indicating that physicians overutilized advanced imaging services when they or their practices had an ownership interest.

According to the GAO report, from 2004 to 2010, providers’ referrals of magnetic resonance imaging (MRI) and computed tomography (CT) services substantially increased the year after providers gained an ownership interest in these services or joined a group practice that already had such an interest. The report claimed that the number of MRI services ordered during the study period increased by more than 80 percent among those who had recently acquired in-office advanced imaging services, compared with an increase of 12 percent for MRI services among those who do not offer in-office advanced imaging services.

The agency estimated that in 2010, providers who offered in-office advanced imaging services likely made 400,000 more referrals for such services than they would have if they did not own advanced imaging services, for an additional cost to Medicare of $109 million.

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