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  • Obama Budget, APTA Comments to Congress Converge on Elimination of Self-Referral Loophole

    For the fourth year in a row, the federal budget plan announced by President Barack Obama proposes that the so-called Stark law be tightened up to eliminate exceptions that allow physicians to self-refer for certain services, including physical therapy. And should Congress need an additional reminder of the importance of this change, it need look no further than APTA, which recently supplied Senate and House committees with comments outlining exactly why the loopholes should be closed.

    The $4.1 trillion FY 2017 budget plan is unlikely to be enacted by Congress, where Republican leaders have stated that they would break with tradition and not hold a hearing on the budget with the administration's budget chief. Still, Obama's budget has helped to emphasize issues that the administration believes are worth attention—and action.

    According to administration budget estimates, elimination of exceptions to the prohibition on referral to in-office ancillary services (IOAS) in Medicare would result in $4.98 billion in savings over 10 years. The current IOAS exception allows for self-referral for physical therapy, anatomic pathology, advanced diagnostic imaging, and radiation therapy.

    As in past years, the Obama proposal around IOAS was applauded by the Alliance for Integrity in Medicare (AIM) a coalition of organizations, including APTA, that has been advocating for removal of physical therapy and other services from the exception.

    "Since fee-for-service continues … the financial incentive remains for clinicians to exploit the IOAS exception[s]," AIM writes in a news release on the budget. "Alternative payment models … will not be successful if arrangements that allow overutilization continue to be incentivized in the Medicare program."

    Obama's emphasis on elimination of the IOAS exception was recently echoed by APTA, which supplied comments to the Senate Finance and House Ways and Means committees.

    In those comments, APTA writes that "care furnished under the IOAS exception is often degraded, raising serious quality concerns" and that legislators should support the "original intent of the IOAS exception," which was centered on same-day services.

    "This reform is in the best interests of taxpayers, patients, and the American health care system overall," APTA writes.

    Elimination of the IOAS exceptions remains one of APTA's public policy priorities, and has gained support from the American Association of Retired Persons (AARP), which announced its position against the exceptions late in 2014.

    Comments

    • My concern is no longer the individual doctors who own physical therapy practices- there aren't any left. The hospitals own 90% of the physicians where I live- and they incentivize them to keep patients in their system. The few scripts we get in my private practice from a doctor in the system have an ALERT at the bottom- "This provider is not in the "Hopsital Name" system" It then goes on to list all the locations of out-patient in the area that are in the hopsital system. We hear stories of patient's who request us and told that they are sorry, but the new electronic system the hospital uses can't generate a script for that!! We also have physician friends who tell us if they want to refer to us, they tell the patient verbally where to go because the referrals are completely tracked and their bonuses are tied to them. I have been told that this type of referral by a system is not a violation of the Stark Law, but to me it really impacts whether private practice will be able to stay in business at all.

      Posted by Meg on 2/16/2016 8:34 AM

    • should they also discuss hospital based ancillary services while they are at it? Hospitals employ primary care physicians and specialists. Many are "strongly encouraged" to refer their business to the hospital.

      Posted by Craig Kruse on 2/16/2016 10:32 AM

    • I wholeheartedly am in agreement with the implementation of the Stark Law related to self referral kick backs. I wonder it has not been enforced sooner. The loop holes in healthcare related to the enforcement of the Stark Anti-kick Back Law are many. If you drill down to the hospitals and associated ancillary services, medical centers, and HMO's you will find that there are numerous violations. Take for example that hospitalist and staff medical personnel are strongly if not blatantly encouraged to refer to in house Physical Therapy Departments. This is a violation. HMO's will also limit or deny their policy holders from visiting a practitioner of their choice. These are gray areas and yet closely infringe on the freedom of choice and can often be traced back to self referral for gains.

      Posted by Kaethe A Flynn PT, DPT on 2/17/2016 3:51 PM

    • I hope something can be done about these loopholes. I had to close down my clinic (that successfully operated for 10 years) because a large medical conglomerate decided to offer physical therapy right next to their family practice. We were ousted out of a small, under served community that we'd supported for 10 years with subtle threats from their corporate team. Even APTA couldn't help me. I'm so frustrated and saddened by this, because this family-owned clinic came into the town before healthcare was big business.

      Posted by Nola Petrucelly on 2/17/2016 4:49 PM

    • "My concern is no longer the individual doctors who own physical therapy practices- there aren't any left. The hospitals own 90% of the physicians where I live- and they incentivize them to keep patients in their system. The few scripts we get in my private practice from a doctor in the system have an ALERT at the bottom- "This provider is not in the "Hopsital Name" system" It then goes on to list all the locations of out-patient in the area that are in the hopsital system. We hear stories of patient's who request us and told that they are sorry, but the new electronic system the hospital uses can't generate a script for that!! We also have physician friends who tell us if they want to refer to us, they tell the patient verbally where to go because the referrals are completely tracked and their bonuses are tied to them. I have been told that this type of referral by a system is not a violation of the Stark Law, but to me it really impacts whether private practice will be able to stay in business at all." ---same situation in town which I live Meg. Thankfully, I live in a small town which everyone in town basically knows most everyone, and my father worked at the hospital for 30 years before he (and literally every other PT in the OP clinic and 80% of inpatient PTs with him) left and started their own private OP clinic and PT staffing agency b/c the hospital was being greedy and stubborn (gasp!). The hospital has a serious ax to grind with our clinic and does their damnedest to put us out of business, but we keep on because out work and out class them in every way. sure would be nice to get a fair shake though

      Posted by Rob on 2/18/2016 10:33 PM

    • Just starting to look at this issue, so excuse my ignorance if the following is not an issue. But would this not also potentially hinder reimbursement for PT direct access? Would 'financial incentive' not be the same in direct access situations as well?

      Posted by Gary on 2/23/2016 8:34 AM

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