Physician self-referral

Physician self-referral

Physician self-referral is a term describing the practice of a physician ordering tests on a patient and having them performed either by himself or by a facility from which he receives a financial incentive for the referral.

There are many forms of self-referral. Examples are: having an EKG done in your internists office, having an x-ray done in your physicians office, suggesting a surgery that would be done by the physician suggesting it, or the ordering of imaging tests done at a facility owned or leased by the ordering physician.

It has been long recognized that the ability to self refer is an incentive to physicians to order more tests than they might otherwise. Laws designed to control this have been passed: Stark Law I and II. However the exceptions designed to allow necessary testing in physicians offices have been exploited to largely nullify the intent of the law. In particular, the in-office exception, which allows testing on equipment in the physicians office, has resulted in many physicians purchasing high-tech and expensive equipment such as CT scanners, MR scanners, and Nuclear Scanners for their own offices. Such purchases were not foreseen at the time that the laws were written.

The incentive for this practice is in large part the result of rapidly declining reimbursements for what has been termed “cognitive” physician care, i.e. the time spent talking to a patient and determining what course of diagnostic testing or treatment is best for that patient. Many clinical physicians feel that in order to have a financially viable practice, it is necessary to have income streams derived from patient testing.

The impact has been greatest in the field of imaging or Radiology. It is important to understand that the revenue derived from performing imaging exams comes from two sources: the facility fee and the professional fee. The facility fee is reimbursement for the use of the machine and all the associated technical costs. The professional fee is the amount paid for interpretation of the results by the Physician. Physician owners of the imaging machinery can derive profit from the venture by collecting both of these fees. The fees are paid by the patient, the patient's insurance company or the government.

For example, when a patient is seen at a hospital and receives a CT scan, a technical fee is paid to the hospital to cover the costs of the CT machine and running it. The professional fee is charged by the Physician Radiologist to interpret the exam and document the findings. This is the common ethical standard for the practice of imaging in medicine.

In the case of self referral, for example, you would be seen in a doctor's office and that doctor would recommend a study that is performed at the doctors office and possibly interpreted by the doctor who tells you the exam is necessary. This is usually the case for procedures such as Echocardiography and Nuclear Cardiac Imaging. Here, the physician or Cardiologist would collect the entire technical and professional fees for himself. In other settings, such as orthopedic offices, it is common practice to bid out the important Radiologist's interpretation of the cases to lowest bidder and only pay them a portion of the professional fee for the interpretation, pocketing the difference.

Risks of Self-Referral

The risk to the physician-owner of such a venture is minimal, since the physician-owner has it in his power to increase the volume of scans to any point necessary to insure profitability. This is recognized by the vendors of the machinery, who have moved aggressively to sell imaging machines to physicians who are not board certified or specialized in radiology. One vendor of medical imaging equipment has marketing information to physicians which states:“Are you dissatisfied with declining reimbursement rates, escalating demands on your time and increased competition? You can counteract these prevailing trends by capturing new revenue opportunities through providing diagnostic imaging services, such as MRI and CT, in your own office. Instead of sending your patients—and revenue—to another provider, your patients will appreciate the convenience, while you increase your bottom line.”]

There is a large volume research that indicates that this practice has a major effect on increasing medical costs in the US. In 2004, Levin estimated the cost of unnecessary self referred imaging to be conservatively, $16 billion per year. Reviews of the literature supporting this statement have been published in the Journal of the American College of Radiology. [Levin DC, Rao VM. Turf wars in radiology: the overutilization of imaging resulting from self-referral. J Am Coll Radiol. 2004;1:169–172.] [ Turf Wars in Radiology: Updated Evidence on the Relationship Between Self-Referral and the Overutilization of Imaging Levin DC, Rao VM. J Am Coll Radiol. 2008;5;806-810.]

Examples of Self-Referral

Examples of evidence that self referral increases utilization and costs:

1) Radionuclide myocardial perfusion imaging (RMPI) is used to assess the effect of coronary artery disease on the heart. Among doctors who specialize in the field of radiology, the utilization rate for this exam increased by 2% over the period 1998-2002. Among cardiologists, the rate increased by 78%. The vast bulk of this large increase occurred in cardiologists' private offices' where they both recommend the exam and collect the fees to perform the exam, rather than in hospital settings where they do not benefit financially from ordering these tests. [Levin DC, Intenzo CM, Rao VM, Frangos AJ, Parker L, Sunshine JH. Comparison of recent utilization trends in radionuclide myocardial perfusion imaging among radiologists and cardiologists. J Am Coll Radiol. 2005;2:821–824.]

2) A recent study by Gazelle, et al, found that a patient being cared for by a physician who self referred imaging studies was 1.196 to 3.228 times more likely to have an imaging study as compared to a patient being cared for by a physician who did not self refer. [Gazelle GS, Halpern EF, Ryan HS, Tramontano AC. Utilization of diagnostic medical imaging: comparison of radiologist referral versus same-specialty referral. Radiology. 2007;245:517–522.]

3) Between 2000 and 2005, ownership or leasing of MRI scans by non-radiologists grew by 254%, compared with 83% among radiologists. By 2005 in the Medicare population, nonradiologist physicians performed more than 384,000 MRI examinations on units they owned or leased, and their share of the private-office MRI market had increased from 11% in 2000 to 20% in 2005. [Levin DC, Rao VM, Parker L, Frangos AJ, Sunshine JH. Ownership or leasing of MRI facilities by non-radiologist physicians is a rapidly growing trend. J Am Coll Radiol. 2008;5:105–109.] For other examples, see

Defense of Self-Referral

Defense of the practice of self referral is often rationalized and cloaked in a single word, "convenience". The self-referring physician claims that he or she performs the examination in the office strictly for the convenience of the patient. This is the primary explanation for self referral. However, the convenience argument does not justify unnecessary exams, increasing medical costs to society, or the absence of peer-reviewed quality imaging performed for the sake of profit. Often, the patient cannot be seen by the physician on the same day the study is performed, negating the argument.


External links

* [ Diagnostic Imaging Online]
* [ Self referral Reform]

Wikimedia Foundation. 2010.

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