On April 10, 2013, President Obama released his proposed federal budget for fiscal year 2014.  Buried within the budget is a proposal to limit physician self-referrals for certain ancillary services.  Specifically, the budget proposes to encourage what it calls “more appropriate” use of ancillary services by limiting those providers who may self-refer for radiation therapy, therapy services and advanced imaging services to those providers who meet certain “accountability standards”. The budget does not define what these “accountability standards” may be, but if this provision is adopted, standards would likely be developed by CMS.

 Through the use of the In-Office Ancillary Services Exception, many physician practices have successfully developed radiation therapy and advance imaging services, and, in many cases, such services have been very profitable.  Because of this profitability, use of the In-Office Ancillary Services Exception for radiation therapy, outpatient therapy and advance imaging services has, from time-to-time, come under scrutiny.  For example, in a 2010 report  MEDPAC proposed excluding outpatient therapy and radiation therapy services from the In-Office Ancillary Services Exception on the basis that such services are not truly connected with a related office visit and were imposing a significant burden on Medicare finances.  The budget proposal also comes on the heels of the Affordable Care Act’s amendment to the In-Office Ancillary Services Exception, which now requires physicians that rely on the Exception for radiology and other advanced imaging services to provide certain disclosures to patients.

This is not the first time such limitations have been proposed, and it remains to be seen whether the proposed provisions contained in the budget will be adopted.  Furthermore, even if adopted, the scope of the restrictions will likely depend on how CMS interprets the applicable “accountability standards.”  Nevertheless, radiation therapy, outpatient therapy and advanced imaging services have become important components of many physician practices, and physicians should be prepared to respond in the event the proposed limitations are adopted.