• Quote: Self-referrals

    Docs and dollars: This one’s a twofer. The first is a hotly-discussed NEJM paper showing that urologists (not radiation oncologists, as we’ve covered earlier) owning a stake in radiation therapy equipment tend to recommend that equipment more often than docs without an ownership stake. The second is a less-publicized government report showing that surgeons with a stake in device distributors also recommend those devices more than other surgeons. This shouldn’t surprise anyone — doctors are human, after all. The Stark laws designed to prevent physician self-referral, for some reason, make an exception for the IMRT conflict-of-interest in the first paper. And I don’t think any legislation foresaw the physician-owned-distributorships in the second article.

    Karan Chhabra, Project Millennial


    • If physicians were forced to publish all-inclusive pricing for their services, it wouldn’t matter that they recommend their own facilities and expensive equipment, since competition would force physicians to moderate any excesses.

      The fact that every service, facility, drug and piece of equipment comes unbundled, with all the pricing quite hidden, is what conspires to cheat the patient and consumer. I just got pricing from an ophthalmologist in Austin for cataract surgery. His office didn’t know how much the facility charges, anesthesiologist charges, or drug charges would be, but gave me numbers to call. I called the numbers, but the anesthesiologist needed the CPT code for the procedure and the procedure’s duration, requiring me to go back to the ophthalmologist. The total cost for one eye came to $4400.

      I called and e-mailed for prices in Thailand, Costa Rica, Prague, Monterrey, Nuevo Laredo and Rio de Janeiro. Not only did they quote me all-inclusive prices–in some cases including lodging–but the total in Monterrey was $1400 (18000 pesos) per eye, excluding travel and lodging, and basically the same (2000 to 3000 reais) in Rio de Janeiro, where I have a home I visit every year anyway. The other foreign places were even cheaper.

      It seems a person has to be a fool or at least suffer an accident to justify seeking treatment in the USSA. Anyone who participates in Obamacare is a greater fool, and a young man who pays premiums that subsidize female breeding or old folks’ care is the consummate fool.

    • I would really like to know if the historical timing of different reforms and market trends supports the hypothesis that ambulatory surgery centers became common _in response to_ their being a new setting not covered by the Stark laws, rather than that status being an unfortunate side effect. (I imagine after a certain point it became more a matter of lobbyists preventing the extension of Stark to them.)

    • Got to cover those lease payments on those 7 series BMWs somehow.

    • It’s not as bad as it may seem. The in-office ancillary services exception to Stark was intended to encourage office-based procedures because the reimbursement rate is lower (and falling) than the much higher (and rising) reimbursement rate for the same procedure in the hospital. As for contractual relationships between manufacturers/vendors of medical devices and physicians, that will soon take care of itself. A little known provision in ACA mandates the disclosure of, and the creation of a database for, all those relationships. the much maligned unemployed and underemployed lawyers out there with lots of time on their hands will soon be mining the database to bring qui tam lawsuits against the physicians and manufacturers/vendors. Free enterprise at work!

      • Needless to say, physicians in those contractual relationships need to think real hard about continuing them. Hell hath no fury like a hungry lawyer.

      • I wasn’t aware of that rationale for the Stark Law exception. Very interesting — thanks for sharing.

    • While there’s obvious reason for concern here, it is also worth noting the potential for reverse causality–doctors invest in things they have a lot of faith in.

    • The economic, actual or apparent, conflicts of interest for physicians continue to be a pervasive influence on the character of our nation’s healthcare. In the last 10 years, the construction of two hospitals in Omaha was partially financed by the equity from a group of physicians who became members of their Medical Staffs . So, how does any public monitoring obligation occur involving trust, collaboration and transparency during the Medical Staff meetings of these hospitals as they become funded by Medicare and Medicaid? I suspect that it exists as an extension of their legal consultants. But, I recall no discussion of these issues locally or nationally.

    • Which comes first, the chicken or the egg? If a physician doesn’t believe in a procedure he certainly isn’t going to invest in it. If he does believe in a procedure he is going to use it. So which comes first, the chicken or the egg?

      Who has better individual control over a procedure, a doctor or a corporation? If the doctor screws up he can be sued (without immunity) and lose his license. If the business screws up the shell can go bankrupt and reopen under another name. Who is the biggest self referrer for x-rays? The non radiologist physician owners of an x-ray center or radiologists? Radiologists even though most of the times the radiologist is practicing good medicine.

      Historically in some areas Medicare radiology clinics were opened up by private practitioner owners. There were two basic motivations, self interest and interest in the patient. Prior to the clinic in some areas the hospitals billed the outpatient x-ray at a rate far higher than the reasonable charge. At that time there was a clause in the laws permitting them to do so, but no one else. Patients would be handed large bills and made to wait long periods of time while emergencies were being performed in the hospital. The new x-ray clinics later closed by the Stark Laws would charge only the allowable rate and take the patients on time. There was no proof that larger costs were incurred by the physician owned clinics than the hospital owned x-ray department. The clinics pushed the hospitals into changing the way they did outpatient procedures. Doesn’t that tell us that competition of this nature is good, not evil?

      As an aside take a look at todays surgicenter costs and the costs of hospital colonoscopies. Medicare pays almost twice as much to the hospital as it does to the surgicenter while at the same time it tries to curtail surgicenters from existing. Why are they paying more? Why not equal? What do the patient’s want?

      All this being said, the best way to approach to varying price schedules is through transparency and the ability of the patient to go wherever he wishes for care without penalty.

    • The bulk of any procedure’s cost is the technical fee (paid to the provider such as the hospital) and so the Stark laws (governing physician self-referral) may have intentionally omitted these sorts of doc-owned centers in order to encourage physicians to move volume out of high-cost hospitals in a safe way (at the price of higher off-the-books physician reimbursement. Their self-interest is likely to save the system money if one assumes that the cost declines outweigh the potentially increased utilization.

      Given the magnitude of the differential between reimbursement for in-patient and out-patient procedures, giving physicians incentives to move volume out may be far more cost-effective than imagined (not aware of any peer-reviewed research that has looked into it though some commercial payors like Blue Shield of Ca. have and are moving in that direction).

    • A few years back we sold our group practice ancillaries to our local hospital. I can tell you that some of my partners overused our testing for gain. Now that we no longer own the equipment, they no longer overuse. The pricing of testing done with our equipment is now set by the hospital, and the numbers are outrageous! So high in so many cases that we commonly refer outside the system.

    • My thoughts are that the United States has a heavy emphasis on commercial freedom. People tend not to like it when they are restricted from entering into specified business relationships or to use certain business methods. Then they tend to lobby their state legislature or Congress and then the laws tend to get exemptions written in.

      Maybe a better solution from a technical perspective is to simply pay less. Have states or the Federal government conduct all-payer rate setting, and then ratchet the rates down, especially for advanced technology. My understanding is Japan has far more MRIs and CT scanners per capita than we do here, but they pay very little per scan.

      Of course, this being the US, politics would get in the way no matter what we do.