Milliman Study Provides New Evidence Against In-office Ancillary Restrictions

A new analysis commissioned by the American Medical Association (AMA) of outpatient ancillary services offers new evidence that self-referral does not encourage inappropriate utilization or increase Medicare spending.

The analysis of Medicare claims data from 2008-2012 using a 5 percent sample of Medicare fee-for-service enrollees was conducted by the independent actuarial firm Milliman, Inc. The study examined several types of services that have been scrutinized by the U.S. Government Accountability Office (GAO), including advanced imaging. Unlike the GAO study, the Milliman study looked not just at physician claims, but also claims from other relevant outpatient settings including hospital outpatient departments and independent labs, and examined a much broader universe of procedure codes and two more recent years of data.

Instead of increasing costs and utilization, the Milliman study found that utilization of advanced imaging services in the office declined by -3.8 percent over the five-year study period, and more sharply (-7.4 percent) in the later years (2010 to 2012). Comparatively, utilization dropped in the hospital outpatient department by -1.1 percent (2008-2012) and -4.5 percent (2010-2012). 

The share of spending in physicians' offices for advanced imaging also dropped from 36 percent of the total in 2008 to 28 percent in 2012. Taken together, these trends indicate that concerns about potential cost and utilization related to physician ownership are unwarranted. In fact, there is risk that policies to discourage or restrict in-office use of ancillary services could have the effect of disrupting multispecialty practice models, discouraging delivery and payment innovation, and reducing continuity of care for Medicare beneficiaries with no discernible benefit to the Medicare program. 

Also noteworthy is that during the study period, Milliman looked at Medicare population trends, including composite risk scores which increased for Medicare fee-for-service beneficiaries each year of the study period. This is significant because decreases in utilization and spending for advanced imaging occurred at the same time the risk adjusters Medicare uses to measure beneficiaries' need for medical care rose by almost 5 percent.

The study does not distinguish between services that were self-referred and those that were referred by others in the physician office setting. However, given that physician offices account for less than 30 percent of advanced imaging spending and a substantial percentage of these "office" services are provided through free-standing centers that rely on referrals from unrelated physician practices, the evidence seems to suggest that changes in practice patterns driven by guidelines and appropriate use criteria are having the desired effect on appropriate utilization of advanced imaging services in both the office and hospital outpatient department settings.

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