CMS Reduces Physician Self-Referrals Under Medicare

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Self-Referrals

CMS is taking steps tocrack down on arrangements where physicians refer patients tobusinesses in which they have a financial stake, a practice known asself-referral, the Wall Street Journal reports. In recentyears, physicians have been making profits estimated at $8 billionannually through the practice, according to a recent study by McKinsey.

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Critics say that self-referral results in the ordering of unnecessarytests and procedures, while supporters contend that it "improvesmedical services, especially outside metropolitan areas, where patientsmight not otherwise be able to access the latest technologies,"according to the Journal.

CMS has said thatself-referral arrangements are "creating incentives for overutilizationand corrupting medical decision-making." The agency has proposed "toughnew restrictions" that would "essentially ban Medicare payments formany self-referred services," the Journal reports.

Theproposed rules are slated to go into effect in January 2008, butobservers say they already are having an effect, according to the Journal.Daniel Mulholland, a health care attorney in Pittsburgh who has advisedhospitals on such arrangements, said, "A lot of people have just calleda time out on these deals," adding, "The party is over" (Armstrong, Wall Street Journal, 9/12).

Reprinted with permission from kaisernetwork.org. Youcan view the entire Kaiser DailyHealth Policy Report, search the archives, and sign up for email deliveryat kaisernetwork.org/email. The Kaiser Daily Health Policy Report is published for kaisernetwork.org, afree service of The Henry J. Kaiser Family Foundation.

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