NCPA - National Center for Policy Analysis


October 23, 2006

Worried that unnecessary diagnostic tests are adding to the nation's soaring medical costs, federal health-care officials are moving to shrink loopholes that let doctors profit from referring patients for MRI scans and other costly medical tests.  They also are examining whether physicians across the nation are billing Medicare appropriately for scanning done in their offices, says the Wall Street Journal.

The U.S. Centers for Medicare & Medicaid Services, part of the Department of Health and Human Services, has proposed new rules designed to crack down on the practice of "self-referral," in which a doctor has a financial interest in tests or other services he or she orders for a patient:

  • Among the changes under consideration are tougher rules that prohibit doctors, in some cases, from billing Medicare more for a scan than what it cost them to perform the test or what they paid someone else to do it.
  • Because Medicare is the largest U.S. medical-insurance provider, private health insurers often follow its lead.

Some critics, however, say the proposed changes are too sweeping and will make it harder for some patients to get the tests they need:

  • Medical imaging is one of Medicare's fastest-growing costs, rising an average of 20 percent a year since 1999.
  • In 2005, the federal health insurance program for the elderly paid $7 billion for imaging scans.
  • Some studies have shown that doctors with a financial interest in big-ticket machines for magnetic resonance imaging or other tests are more likely to order those tests.

Source: David Armstrong, "U.S. Seeks to More Tightly Restrict Doctors' Billings for Medical Tests," Wall Street Journal, October 23, 2006.

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