GAO report finds self-referring doctors may be driving up healthcare costs

Doctors appear more likely to refer Medicare patients to physical therapy if they have a financial interest in the service, according to a new Government Accountability Office report. 

The report found family practice and internal medicine providers in urban areas are more commonly referring physical therapy if they had a stake.

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The report also found that family practices that could refer patients to physical therapy at the same practice increasingly did so compared to physicians who could not “self-refer.”

Also, once providers began to “self-refer” patients to physical therapy, referrals increased at a faster rate than for providers who could not refer patients to physical therapy services where they had a stake.

The report did find exceptions. Orthopedic surgeons, for example, were less likely to refer patients to physical therapy services where they had a financial stake than surgeons who did not have a stake in services.

The study was requested by Senate Judiciary Committee ranking member Sen. Chuck Grassley (R-Iowa), House Ways and Means Committee ranking member Rep. Sandy Levin (D-Mich.) and House Energy and Commerce Committee ranking member Henry A. Waxman (D-Calif.).

They said the report showed physicians were most likely to refer patients to physical therapy if they had a financial stake, at a cost to taxpayers.

“It is clear based on the totality of the recent self-referral reports from the Government Accountability Office that we need to move toward a value based health care system that promotes better care, not higher volume,” Levin said.

The latest GAO paper is its fourth and final report on what is motivating physicians to refer patients for certain tests and treatments.

In three previous reports, the agency looked at when physicians referred patients for imaging tests, blood work and certain cancer treatments, and found similar correlations between financial interest and rate of referral.

“Viewed collectively, the four GAO reports show substantial evidence that financial incentives, not patients’ needs, are driving some referral patterns,” said Levin. 

Waxman and Grassley acknowledged that the latest report was not as certain in finding a link. Nonetheless, they said the totality of the evidence showed doctors are driving up healthcare costs through self-referrals.

“Along with my colleagues, I remain concerned about the effect of physician self-referral driving unnecessary use of health care services,” said Waxman. “The findings in today’s report, while not as direct as other reports on this topic, raise additional questions for exploration.

“While previous GAO reports have shown a conclusive link between self-referrals and increased medical spending, this report’s findings are less clear,” Grassley said. “The report does show that we need to continue to monitor this area to be sure doctors aren’t unnecessarily referring patients for physical therapy when they have a financial interest. Medicare dollars should be spent appropriately, not wasted on unnecessary services.”