Proposal to Eliminate Physician Self-Referral Loophole from Medicare Would Protect Patients and Save Billions

ALEXANDRIA, VA, March 4, 2014 — For the second straight year, President Obama's Fiscal Year 2015 budget, released today, seeks to exclude therapy services, including physical therapy, along with radiation therapy, anatomic pathology, and advanced imaging, from the in-office ancillary services (IOAS) exception of the Stark self-referral laws. The American Physical Therapy Association (APTA) has long supported and worked to advocate for exclusion of physical therapy from the IOAS exception. APTA supports the Administration's proposal on physician self-referral and believes this issue should be addressed as part of any fundamental delivery system reform. Approval of the proposal would significantly improve health care services and save the nation billions in unnecessary Medicare spending.

"On behalf of the profession and for patients everywhere, APTA has fought long and hard to eliminate the practice of physician self-referral," said APTA President Paul A. Rockar Jr, PT, DPT, MS. "The Government Accountability Office (GAO) recently published reports clearly showing that the elimination of the practice of physician self-referral would save the country billions in unnecessary Medicare expenses and, more importantly, protect patients from being used as pawns for profit. It is encouraging to see Congress once again considering measures to ensure Medicare does not pay for many self-referred services that impede care and drive Medicare costs up."

The Stark self-referral law prohibits a physician from making referrals for certain designated health services payable by Medicare to an entity with which he or she, or an immediate family member, has a financial relationship -- unless an exception applies. The spirit of the IOAS exception is intended for the delivery of services that could be quickly administered for patient convenience, such as routine lab tests or x-rays. The expansive use of the IOAS exception by physicians to include therapy services, in a manner not originally contemplated by the law, undercuts its very purpose and substantially increases costs to the Medicare program and its beneficiaries. The Office of Management and Budget concluded that closing the loophole for these services would provide savings of just over $6 billion over the 10-year budget window, providing further evidence that these self-referral arrangements lead to overutilization of Medicare services and should be addressed by Congress.

APTA is a founding member of the Alliance for Integrity in Medicare (AIM) (, a consortium of organizations that advocates for Congress to address the IOAS loophole. The group remains concerned about the ongoing misuse of the IOAS exception to the physician self-referral law. The loophole creates a conflict of interest, providing incentive for self-referral for profit, the results of which are obvious: increased spending, unnecessary use of medical services, and, potentially compromised patient choice and care.

"Respected policy organizations, researchers and budget analysts continue to provide evidence that show the abusive financial impact of self-referral," said APTA Private Practice Section President Tom DiAngelis, PT, DPT. "However, more importantly, the practice has an equally critical impact on our patients. As health care providers we work and interact with patients every day. When physicians self refer, patients feel as though they aren’t in the driver’s seat when it comes to their own care."

APTA strongly urges Congress to follow the recommendations laid out in the Administration's budget and pass legislation to remove physical therapy, advanced diagnostic imaging, anatomic pathology, and radiation therapy from the IOAS exception in the 113th Congress. Learn more about the issue, how it affects patients and health care, and what APTA and its partners in the Coalition are doing about it.

The American Physical Therapy Association, based in Alexandria, VA, represents more than 88,000 physical therapists, physical therapist assistants, and students of physical therapy nationwide. Learn more about conditions physical therapists can treat, and find a physical therapist in your area at Consumers are encouraged to follow us on Twitter (@moveforwardpt) and Facebook.

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