Medicare proposes to rein in physician "self referrals"

The Centers for Medicare and Medicaid Services (CMS) is moving to rein in the practice of physician "self referral," the process by which physicians own "magnetic resonance imaging, or MRI, facilities, surgery centers and diagnostic sites" and then send their own patients to them." (Source: "Medicare Moves to Cut 'Self Referral' Practice" The Wall Street Journal, Sept. 12, 2007.)

The article quotes critics of the practice as saying "self-referral fuels the ordering of unnecessary exams or procedures as the doctors stand to profit from the increased business. Supporters say that doctors' investment in new facilities improves medical services, especially outside metropolitan areas, where patients might not otherwise be able to access the latest technologies." A recent study from McKinsey and Company puts "doctors' profits from this practice, known as self-referral, at $8 billion a year."

CMS has said the self-referral arrangements are "creating incentives for overutilization and corrupting medical decision-making" and "may be little more than a method to share hospital revenue with referring physicians in spite of unnecessary costs to the (Medicare) program and to beneficiaries." It isn't clear if CMS plans to outright ban the practice with regards to Medicare, or simply restrict it. The proposed rules are "slated to go into effect as early as January, but could be delayed or modified between now and then." However, the article quotes Northeast Georgia Health System Chief Executive Jim Gardner as saying it's not a question of if Medicare will ban these arrangements, "but when."