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October 27, 2015



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ICYMI: Orthopaedic Surgeons Responds to IOAS Article

The following article was published on Find the article online here.

In defense of orthopedic medicine and referral to in-office services
By Richard Bruch, M.D. and Jim P. Kidd, CMPE

imageAn Oct. 2 blog posting in The Hill titled “Reform the IOAS self-referral exception” is notable for its shockingly loose interpretation of the facts surrounding physician self-referral of physical therapy (PT) practices and its reference to a “study” purported to support the need to eliminate the physician self-referral of patients to PT practices physicians may own. Presumably, the author of that section of the essay is Sharon Dunn, President of the American Physical Therapy Association (APTA.)

Dr. Dunn and her co-authors contend that “reforming”, e.g., eliminating, the in-office ancillary services (IOAS) exception to the “Stark” law will help solve Medicare’s financial woes, thereby alleviating the need to drastically raise beneficiary premiums. This contention is based on their belief that when ancillary services are vertically integrated in a physician’s practice, because these other services generate additional revenue, the physician will order unnecessary services and drive up costs to Medicare. We suggest that is a significantly flawed assumption, at least regarding the two ancillary services most commonly integrated with an orthopedic practice--PT and imaging. In response, we refer to three significant studies that focused on the in-office utilization issue.

  • An April 2014 Government Accountability Office (GAO) study of physical therapy referrals between 2004 and 2010 found that physician self-referred physical therapy services to Medicare beneficiaries remained generally flat. However, the number of non-self-referred physical therapy services, the type advocated by Dr. Dunn, increased by 41 percent. Consequently, expenditures for non-self-referred services jumped 57 percent, from $1.2 billion in 2004 to $1.9 billion in 2010. Further, this report found that orthopedic surgeons practicing in both urban and rural areas were less likely to self-refer patients for unnecessary physical therapy services.
  • The 2009 Developing Outpatient Therapy Payment Alternatives study, funded by the Centers for Medicare and Medicaid and published by RTI International in 2012, found that between 2004 and 2009, physical therapy expenditures increased by 57 percent in independently-owned physical therapy practices while decreasing 38 percent in physician-owned settings. In other words, receiving treatment in a physician-owned physical therapy setting costs, on average, $356 less (or 40 percent less) when compared to treatment in an independently-owned physical therapy practice.
  • Professor Robert Ohsfeldt at Texas A&M University, in conjunction with Oxford Outcomes, produced a study of Medicare claims data and survey data on orthopedic surgeons. The study found no difference between the MRI utilization behavior of orthopedic surgeons who have an on-site MRI machine and those who do not for Medicare patients. The policy implication of the study is that the assumption of self-referral patterns for advanced diagnostic imaging leads to higher utilization of advanced imaging services is incorrect. The study concludes that any changes in relevant policy will not lead to reduced advanced imaging utilization.

The study Dr. Dunn references as evidence of physician-owned abuse in PT is one found in the Forum for Health Economics and Policy. This is notable for two reasons. First, this “study” examined non-Medicare patients who were treated only for lower back pain. The apparent point of Dunn’s blog has to do with the IOAS self-referral exception for PT which impacts all musculoskeletal PT-related services related to Medicare patients. Why cite a study, as she does, that is focused only on a single condition and also has nothing to do with Medicare or its beneficiaries? Second, the study supported by Dunn was funded, in part, by the Physical Therapy Foundation, an offshoot of Dunn’s organization, the APTA--not exactly independent or impartial.

It is worth noting the June 2011 report from the Medicare Payment Advisory Commission (MedPAC) in which the Commission refused to endorse removing services from the IOAS out of concern that doing so could have unintended consequences for the delivery of healthcare in the United States. That is understandable given that eliminating the ability of orthopedic physicians to self-refer would restrict a Medicare beneficiary’s access to the highest quality care available and would constitute a significant disservice to this patient population.

Moreover, removal of integrated services such as PT would be counter-productive to CMS’ goal of moving more care into models that improve value and cost through care coordination, such as their Bundled Payments for Care Improvement initiative.

The orthopedic physician is the engineer of their patient’s healthcare and the best trained to evaluate, treat and respond to issues related to musculoskeletal diseases and conditions. We share the concern for ensuring Medicare remains a viable program for current and future beneficiaries.  As the physicians and practices that treat a significant portion of those beneficiaries, we also have their best interests in mind for both the containment of cost and quality of care they receive.

Bruch is consultant to Triangle Orthopaedic Associates, P.A. and advocacy committee representative at The OrthoForum.Kidd is president of American Association of Orthopaedic Executives.