A new bill introduced in the House on August 1, 2013 by Congresswoman Jackie Speier (D-CA) and Congressman Jim McDermott (D-WI) would dramatically narrow the in-office ancillary services (IOAS) exception to the Stark law for physician groups performing imaging, pathology radiation therapy and physical therapy services. The bill (“Promoting Integrity of Medicare Act of 2013”) would amend the IOAS exception by excluding “specified non-ancillary services” from its protection. Initially, the bill identifies the following services as “non-ancillary services” excluded from the IOAS exception: (a) pathology services; (b) radiation therapy services and supplies; (c) advanced imaging services (i.e., CT, MRI and PET); and (d) physical therapy services. If adopted, the bill would prohibit, for example, a physician ordering advanced imaging services for a Medicare beneficiary if the services are performed in the ordering physician’s offices. However, referrals of low-end imaging, such as x-ray or ultrasound, would still fall within the IOAS exception.

In addition, the bill would require enhanced CMS review of so-called “non-ancillary services” to identify those creating a high risk of Stark Law noncompliance, including using prepayment reviews, claims audits, focused medical review, or computer algorithms. The bill would also create higher penalties for referrals of “non-ancillary services” by imposing upon those referrals civil monetary penalties that are greater than the penalties currently authorized for other violations of the Stark law.

The bill was introduced after others in the federal government have criticized self-referral. A September 2012 study by the Government Accounting Office found that the number of advanced imaging services ordered by physicians increased when the services were performed in the referring physician’s office. The GAO recommended that CMS improve its ability to identify self-referral of advanced imaging services and address increases in these services. More recently, the Obama Administration’s proposed federal budget for fiscal year 2014 suggested excluding radiation therapy, therapy services, and advanced imaging from the IOAS exception, except in cases where a practice meets certain accountability standards. No action on the bill, the GAO recommendation or the Obama budget has been taken to date.