• The physician referral law, the Ethics in Patient Referrals Act, prohibits physicians from referring patients to facilities in which he or she has an ownership interest to ensure that care decisions are based on sound clinical judgement and not on any financial gain that could be realized by the referring physician. When initially passed, lawmakers included an exception to the law that was intended to provide common sense flexibility so that doctors could provide a number of straightforward, fast services, such as simple lab tests, x-rays, crutches and other durable medical equipment, during an office visit as a convenience to the patient. However, as a result of market developments, in practice, many of these services are neither ancillary nor provided in the office. Due to misaligned financial incentives, there has been a sharp increase in services that are at best unnecessary and, at worst, dangerous.

    In practices where the urologist had a financial interest in the treatment center, over the last decade, there has been an alarming increase in utilization of intensity-modulated radiation therapy (IMRT), one of several effective treatment options for prostate cancer.

    Gaming the system without regard for patients is harmful and also runs counter to the goal of providing greater value to the consumer. The Obama Administration signaled its intent to protect patients and preserve Medicare resources when it recommended closing the IOAS loophole for the fourth consecutive year — a move that the Congressional Budget Office estimates would save $3.3 billion over 10 years. It would allow the IOAS exception to apply in practices that are truly integrated and demonstrating effective cost containment. Failure to meaningfully address this blatant abuse of the self-referral exception will inhibit true delivery and payment system reform.

    As we transition to a system that rewards quality and not volume, it is important that Congress do all it can to drive participation in new and innovative payment arrangements. One critical way to champion that effort is to support the Promoting Integrity in Medicare Act (H.R. 5088), which modernizes Medicare and the self-referral law by closing the IOAS loophole and limiting its use to integrated and truly collaborative multi-specialty group practices. Introduced by Rep. Jackie Speier (D-Calif.), the Promoting Integrity in Medicare Act of 2016 (PIMA), will not only root out fraud and abuse, but will also result in better care for our seniors and billions of dollars in Medicare savings.