Published 12/1/2012

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.

The AAOS response
In response to the Senate Finance Committee request, John R. Tongue, MD, president of the American Association of Orthopaedic Surgeons (AAOS) noted that if the CBO reported “significant savings from closing the IOAS exception, Congress could use those savings to help prevent the impending ‘fiscal cliff.’” He requested an in-person meeting with the director of the CBO and urged AAOS members to contact their Congressional representatives and support the integrated care model that the IOAS exception represents.

In response to Dr. Tongue’s call to action, orthopaedic surgeons have sent more than 1,100 messages to members of Congress. The AAOS has established a Legislative Action Center website (http://capwiz.com/aaos/home/) to make it easy for members to find out who their representatives are and to contact them.

At a time when Congress is focused on improving care coordination through the development of accountable care organizations and other models, removing the IOAS exception seems counterintuitive. “Eliminating the IOAS exception would be detrimental to orthopaedic patients because they would no longer be able to receive the continuum of care necessary to recover from musculoskeletal conditions,” argued Dr. Tongue. “Fragmentation of care means lower quality and higher costs.”

Dr. Tongue was equally concerned about the impact of the GAO report, noting that in-office imaging services can lead to greater patient adherence to treatment plans and improved outcomes in orthopaedics. “The ability to provide in-office ancillary services within an orthopaedist’s office is an integral resource for musculoskeletal patients with limited mobility,” he wrote.

Dr. Tongue’s communications: