GAO: Doctors' 'self-referrals' cost Medicare more than $100M

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In 2010, doctors who self-referred made 400,000 more referrals than they would have if they didn't have a financial interest in ordering more tests, GAO said. The added referrals cost Medicare roughly $109 million.

“Medicare payment policy shouldn’t incentivize unnecessary tests that drive up costs and even jeopardize the well-being of patients,” Sen. Charles Grassley (R-Iowa) said.  “The challenge is to develop a payment system that safeguards beneficiary access to services while preventing self-referrals by physicians who abuse the system.”

GAO examined doctors' referrals for MRIs and CT scans over a six-year period. The number of self-referrals for MRIs grew by 80 percent in that time, while non-self referrals grew by only 12 percent, GAO found.

Unnecessary referrals for some tests can be harmful to patients, not just the Medicare program. Tests that use radiation — including CT scans — can increase the risk of cancer.

Doctors aren't just conducting more tests themselves — they're also sending more patients in for tests, according to GAO. Once doctors bought the necessary equipment or joined a practice that self-referred, they started writing about 67 percent more referrals for MRIs and CT scans, according to Wednesday's report.

"As stewards of the Medicare program, we need to be looking for just these kinds of abusive practices and put an end to them – strengthening the program’s fiscal health and protecting beneficiaries at the same time," said House Energy and Commerce Committee Chairman Henry Waxman (D-Calif.).