HCFA Decries Self-Referral, Circa 1999

Googling "self-referral" brings up many interesting articles. Here are some exerpts from the testimony of Kathy Buto, who was then Deputy Director, HCFA Center for Health Plans & Providers U.S. Department of Health and Human Services, before the House Ways & Means Health Subcommittee on May 13, 1999:

Chairman Thomas, Congressman Stark, distinguished Subcommittee members, thank you for inviting us to discuss limits on physician self-referrals for Medicare and Medicaid beneficiaries. These limits were enacted into law, with leadership from this Subcommittee, to prevent increased program costs and potential harm to beneficiaries from unnecessary tests and treatments. They are based on numerous studies showing that physicians made far more referrals when they had a financial interest in a testing or treatment facility. Some studies also found higher prices and lower quality with self-referrals. The American Medical Association has declared self-referral unethical in most instances. . .

Concern about the ethical risks inherent in physician self-referral dates back at least to a 1986 Institute of Medicine study. A 1989 HHS Inspector General study documented that physicians who owned or invested in independent clinical laboratories referred Medicare patients for 45 percent more laboratory services than did physicians who did not have such financial interests. In 1991, the American Medical Association Council on Ethical and Judicial Affairs concluded that physicians should not refer patients to a health care facility outside their office at which they do not directly provide services and in which they have a financial interest. And in 1992, the American Medical Association House of Delegates voted to declare self-referral unethical in most instances.

So, Stark and HCFA, now CMS, had a pretty good understanding about self-referral, even back in 1999. And there was even a reasonable approach proposed:

We have taken steps in our proposed regulations to clarify the law and create appropriate flexibility. One of the most important provisions establishes that referrals to an entity with which a physician has a compensation arrangement are generally permissible as long as the compensation is at "fair market value," furthers a legitimate business purpose, and is not tied to the volume or value of physician referrals. This exception goes a long way in simplifying the policy under the law.

They were off to a pretty good start, weren't they? But somehow things got lost in the translation, and we have the mess created by "shysters and promoters" looking for ways through the Stark I and II loophole, as Stark himself phrases it.

But, keep it simple, and even doctors will be able to understand it. How about Dr. Reicher's "No machine fee for self-dealing in medical imaging." That's pretty simple, too, and right to the point.