Stanley J. Robboy, MD

May 2012

Stanley J. Robboy MD

Evidence points to ending the exception

Health Affairs, a respected peer-reviewed journal of health policy and research, devoted its April 2012 issue to value, cost, and quality in cancer care. The many articles of interest included one titled “Urologists’ self-referral for pathology of biopsy specimens linked to increased use and lower prostate cancer detection,” by Jean M. Mitchell, PhD.

Dr. Mitchell is an economist and professor of public policy at Georgetown University with a sophisticated grasp of health economics. Her work provided evidence-based support for the original legislation on physician self-referral (the “Stark law”) passed by Congress in 1992, and her further research on the topic has influenced federal policy ever since.

The in-office ancillary services (IOAS) exception to the Stark law permits physicians to have a financial interest in certain services provided on site during a patient office visit. Its purpose is to give treating physicians ready access to services, such as blood screening, that expedite diagnosis and treatment while the patient is on the premises.

The IOAS exception for anatomic pathology services, however, has been controversial from the start, particularly with respect to “insourced” biopsies, which cannot be processed, examined, and reported with a diagnosis while the patient is still in the office.

In the belief that application of the IOAS exception to anatomic pathology exploited loopholes in the Stark law that could best be remedied by Congress, the College sought legislative support for the exception’s elimination. To clarify the cost of the loopholes, we needed objective evidence. So the College partnered with the American Clinical Laboratory Association to fund an unrestricted educational research grant that would enable an objective examination of billing practices associated with insourced prostate biopsies. This was Dr. Mitchell’s research.

Using the most recent information available from Medicare at the time of her analysis, Dr. Mitchell examined data representing more than 36,000 episodes of care that included a prostate biopsy. The 2005–2007 dataset included geographically dispersed counties throughout the United States in which at least one urology group had billed Medicare for surgical pathology services that included a prostate biopsy. The data showed that:

• On average, urologists in these counties who had a financial interest in the laboratory services (that is, self-referring) billed Medicare for 4.3 more prostate specimens per patient encounter, an increase of 72 percent from the six specimens billed by non-referring urologists.


• In the final year of the study, the regression-adjusted cancer detection rate was 12 percentage points lower for self-referring urologists who had a financial stake in the number of biopsies performed.


• In Dr. Mitchell’s words, “Self-referral of prostate surgical pathology services leads to increased use and higher Medicare spending but lower cancer detection rates.”

In addition, Dr. Mitchell reported on a 2010 article in Laboratory Economics. A national analysis of Medicare laboratory certifications identified some 300 urology practices representing about 2,000 urologists across the United States that had established in-office pathology laboratories. Those urologists each generated an estimated $150,000 in annual pathology revenue.

Some urologists have pointed out that a newer standard of care for prostate biopsies called for an increased number of biopsy specimens. This may be so, but it does not explain why urologists in the same communities who did not have a financial interest billed for fewer specimens.

Medicare claims data lack clinical information, and Dr. Mitchell’s study of billing practices did not take standard of care into account.

Dr. Mitchell’s data clearly show that self-referral of prostate biopsies tends to increase utilization and costs without any clear patient benefit. The numbers suggest that eliminating the IOAS exception for anatomic pathology could save Medicare hundreds of millions of dollars annually, dollars better used for patient care. There is no longer a need to rely upon well-intentioned conjecture.

Years ago, Congress banned self-referral practices in radiology for exactly the reasons that surfaced in the Mitchell study, which is why the radiologists support us in this matter. The American Society of Clinical Pathology and other medical groups also support eliminating the IOAS loophole for anatomic pathology.

As Dr. Mitchell notes, prostate cancer is the second-leading cause of cancer death among American men, accounting for one in four new cancer diagnoses. We can now make a compelling case for legislative and regulatory remedies to eliminate loopholes that siphon funds far better used to help us improve patient outcomes.

As I write this column (two weeks after her findings were published), the number and tenor of responses make it plain that Dr. Mitchell’s article struck a chord. Our colleagues’ discomfort is a concern, but what these findings suggest is a systems failure. Dr. Mitchell’s study is not the first to find that financial self-interest and ownership can inappropriately influence physician test orders, and we are not the only group that is concerned about IOAS loopholes. Other studies, particularly in the field of radiology, have shown similar patterns.

We are not always aware of the consequences of what we do, but we do know that systems-based protections have been effective in the past. So we have standards of care, and the Stark law, and thoughtful reflection about making exceptions.

Since its founding in 1947, the CAP has advocated and fostered systems-based protections, which have brought us improved standards of care, and legal protections against inappropriate self-referral. As your president, it is my goal to strengthen these standards, promote the science of our profession, and protect the practice of pathology.