Physician Collaboration Isn’t Collusion to Increase Costs

“This GAO report sheds new light on the behavior of physicians reaping personal gain by referring patients to services at locations where they have an ownership interest. The analysis suggests that financial incentives for self-referring providers is likely a major factor driving the increase in referrals for these services. As Congress looks to reign in unnecessary spending, my colleagues and I should explore this area in greater depth,” Rep. Waxman said.

Explore you should, Representative Waxman. For if you look beyond the GAO’s conclusions, you will find that what we really need are bundled payments and a regulatory environment that supports, not inhibits, innovation to improve high-value health care.

Just because physicians have come together to manage their own futures doesn’t mean that their intent is to collude and increase costs. Could it not also indicate that health-care professionals have joined together to provide better care in a more efficient manner that reduces waste and unnecessary services to save the system money?

My practice, which initially started with 25 physicians in suburban Chicago, has owned an anatomic pathology laboratory since 2010. We see commercial, Medicare and Medicare Advantage, Tricare, Medicaid, and other patients. We have grown to 38 physicians, and we regularly monitor the percentage of pathology specimens generated by the physicians in our ASC and office-based endoscopy suites as part of our quality improvement initiatives.

I am proud to say that our rate of pathology specimens per endoscopic procedure has held steady at the rate that we were at before we opened our own path lab. The pathologists who work with our practice are university trained professionals who have a special expertise and interest in gastrointestinal pathology and our path lab routinely provides its reports within 24hrs which are then immediately passed on to the patient.

Mr. Waxman was not alone in his comments. The College of American Pathologists (CAP) called attention to the GAO report documenting millions of dollars in wasteful health-care spending by physicians who self-refer anatomic pathology services, and called on Congress to take immediate action outlawing this business practice.

But the sword swings both ways. Who monitors the pathologist when they order a special stain for a specimen? Isn’t there a potential for the pathologist or pathology company to generate additional income when special stains are ordered?

One of the first interventions that our practice made after opening our pathology lab, which is certified by CAP, was to limit the use of special stains even though we would have generated more money by doing just the opposite.

There are significant quality issues to consider here. In the GAO study no attempt was made to identify the characteristics of the respective study groups. Most GI groups that own their own path lab are larger, and therefore subject to a higher level of peer review than what is performed in the typical community hospital. Our GI peers monitor individual biopsy patterns to assure that we maintain high levels of adenoma detection rates (ADR), for higher ADR levels are associated with decreased incidence of colorectal cancer. We monitor the quality of the pathology specimens that we generate: if I don’t obtain an adequate specimen, our pathologist calls me on it.

I chair the Practice Management and Economics Committee for the American Gastroenterological Association where we have discussed the topic of inappropriate pathology practices. Unfortunately, there are very few published standards for us to use to create guidelines and metrics. We continue to strive to find a solution for this and would welcome a joint initiative with CAP.

Pathology is an important tool in the fight against colorectal cancer. Banning high-quality in-house GI pathology is not the answer.

The best way to solve this issue is to allow for a pilot that bundles the expense for the pre-procedure E/M visit, the colonoscopy, sedation and anatomic pathology into a single payment. If the service can safely be performed in a cost-effective ASC rather than an HOPD setting, then we should encourage such. This would control the cost better than banning self-referral. We have to be responsible for not only the quality of the procedures we perform, but also the expenses incurred to those who are paying for the care.

Lawrence Kosinski, MD is chair of the Practice Management and Economics Committee for the American Gastroenterological Association (AGA).

8 replies »

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  2. Dr. Kosinski,

    Just curious. To where did you send your pathology work before you brought it in-house?

    Also, if your anatomic pathology results are not available to your patients during their visit, then why do you think in-house pathology fits under the IOASE to Stark?

    And to Ms. Cupo above: Pathology asked to be exempted from meaningful use requirements related to EHRs, because we don’t see patients and don’t really use EHRs. Pathologists are not asking to be exempted from PQRS, which is the same federal quality assurance program in which other clinical specialties participate.

  3. Not a saint by any means. We opened our path lab for multiple reasons. Yes, one of them was financial, but we knew that this reimbursement was going to be tightened over time. That’s just the reality of healthcare today. We have absorbed the 52% cut in technical fees. That’s because one of the other reasons we opened the lab was to prepare for bundled payments. Our 35 physician group owns five ASCs and we know that bundles are around the corner. We want our patients to only get one bill and not feel like they are being “nickled and dimed” to death. As a result, our ASC reimbursement is one of the most competitive in our area. Our pathologist does very well. Although I can’t share actual numbers, he makes more money than I do. As far as our biopsies are concerned, we monitor this as one of our quarterly quality metrics in or Endo Center. As of the last quarter, it is essentially the same as it was in 2009 before we opened our lab. I guess you have a hard time believing that some of us are actually trying to do the right thing for our patients.

  4. How are you dealing with Medicare’s 52% cut in technical fee. You opened your own lab to capture the technical fee. Not for any other reason.
    Is the pathologist a partner or employee?
    How much are you paying the pathetic pathologist per 305?
    Are you taking part of the pathologist professional fee even though you have nothing to do with reading the slide?
    I find it very hard to believe that the number of biopsies you do have not increased. You must be a saint.

  5. Great article. Interesting that pathology wants to eliminate self-referral but is supporting legislation to exempt them from federal quality reporting programs since they claim they have no interaction with patients. Everyone must be accountable, not just a select few.

  6. Wow this is self serving. Where else in society would we be rightly suspicious of self referrals – can anyone give me a list? There should be no financial gain from referrals – direct or indirect. It’s called ethics.

  7. Great article Dr. K. Physicians can accomplish significant cost savings and quality improvement within the healthcare system if only those initiatives were rewarded and applauded instead of viewed with self-serving skeptism by folks like Rep Waxman.