Statement: Inconclusive GAO Report on Self-Referral and Physical Therapy Services Shows Need for Further Research

June 2, 2014

The American Physical Therapy Association (APTA) has long supported the elimination of physician self-referral for physical therapy services, which presents substantial potential to inappropriately influence medical decision-making and limit the beneficiary's right to choose his or her physical therapist.

The recent General Accountability Office (GAO) report on self-referral and utilization of physical therapy services underscores the need for further research in this area, particularly further study regarding medical necessity, clinical appropriateness, and effectiveness of physical therapy services in self-referral arrangements.

The limitations in the methodology that GAO itself acknowledges in the report are numerous. Most important, the report's research data lack relevant factors such as the severity of a patient's condition, impairments, and comorbidities. The research also fails to capture the quality of care provided. Data on the frequency of visits and total expenditures are irrelevant without knowing patient severity and outcomes.

Also problematic is the report's inclusion of all outpatient services delivered in institutional settings-such as hospitals and skilled nursing facilities (SNFs)-in its data of services provided by non-self-referrers. Approximately 40% of outpatient physical therapy expenditures under Medicare are billed by SNFs, and those facilities are far more likely than a self-referring private practice to treat patients with more complex conditions requiring extensive care. This imbalance clearly skews data and clouds results.

The bottom line is that the GAO report is unable to reach any definitive conclusions regarding self-referral and utilization as they relate to physical therapy services, so the need for further research continues. APTA's upcoming physical therapy outcomes registry will address that need, and the association's "Integrity in Practice" campaign is expressly designed to eliminate fraud, abuse, and waste from health care.

APTA believes that self-referral of physical therapy services creates an inappropriate incentive to refer services in-house, thus limiting patient choice. Consistent with the findings of other studies, GAO found that physicians show a sharp increase in referral rates for physical therapy services when they switch to a self-referral practice model.

To assist in the collection of additional research that would support GAO's aims and facilitate patient access to physical therapy, APTA recommends that policy makers take the following actions:

  • Require self-referring providers to notify patients of their right to obtain physical therapy services from any provider they choose
  • Require self-referring providers to give patients a list of physical therapists, including those who do not have a financial relationship with the referrer, who practice in their locality
  • Require Medicare claim forms to include a unique modifier to make it clear when services were received as the result of a self-referral arrangement

APTA also strongly believes physical therapy should be removed from the "in office ancillary services" (IOAS) exception to the federal Stark self-referral laws. The IOAS exception was created to recognize that in some cases patient convenience may justify the risks that are inherent in self-referral. However, permitting physicians to self-refer for physical therapy treatment is no more convenient for a patient than receiving services in another treatment facility in which the physician has no financial ties. Physical therapy is rarely provided on the same day as a related physician office visit, and therefore inclusion of these services in the IOAS exception was a flawed policy decision from the start.

APTA will continue to work with GAO and other entities to ensure appropriate steps are taken to create informed policy on self-referral under the Medicare system, and the association will continue to push for passage of the Promoting Integrity in Medicare Act (H.R. 2914), which would exclude physical therapy from the IOAS exception.

ADVERTISEMENT