How Do Doctors Self-Refer?

In my full-time clinical practice days, other practitioners often referred patients to me for accidental findings on x-rays, ultrasounds, or MRI exams. Sometimes a patient would have had a CT scan of her abdomen that revealed an asymptomatic tumor inside her adrenal gland. More often, an ultrasound of the carotid arteries or an MRI of the spine uncovered a mass within the thyroid gland. This phenomenon is so common that these discoveries have a name: “incidentalomas.” Never accuse doctors of not being wordsmiths.

For thyroid incidentalomas, I would usually drag a portable ultrasound machine into the patient’s room and get a quick look at the lesion with my own eyes. Through reasonably straightforward criteria, the patient and I could choose whether or not to biopsy, to repeat an ultrasound in a year or two, or to forget we ever saw the lesion. I never charged extra for these informal bedside exams. I considered this particular use of the ultrasound machine akin to a 21st-century stethoscope. I wouldn’t charge a patient an additional fee for listening to her heart or lungs, so it didn’t seem proper to charge them for this use of ultrasound. That wasn’t charity on my part; this philosophy is becoming so prevalent as to have guidelines crop up around it.

But sometimes, I saw features in a thyroid nodule or a lymph node that made me think the lesion should be biopsied, usually by me. And I was paid well for these procedures (technically, the University of Kansas was well-paid since I was salaried. I made the same amount of money whether I did the procedure or not). A thyroid biopsy, which takes maybe ten minutes, pays about the same amount as caring for a diabetic patient for a year (thank the RUC). The revenue from diagnostic studies comes not only from the professional fee, which pays the doctor for her interpretation and consulting regarding the study but also from a “facility fee” meant to cover technical costs surrounding the maintenance and use of special equipment. A physician who owns the equipment needed to perform labs or imaging can profit by collecting both of these fees. So the incentive for me or any other doctor to do imaging or procedures in our own practices–so-called “physician self-referral”–is considerable.

Stark laws arose a few decades ago to discourage physician self-referral and kickbacks from referrals to other physicians, but they made specific exceptions to allow “necessary testing” in physician offices. Once upon a time, the American Medical Association Code of Ethics prohibited doctors from owning imaging or lab equipment. The AMA said doctors should not have a financial interest in testing. But that rule eventually changed, and now, the AMA is much softer on physician-owned testing, insisting only that doctors make diagnostic and treatment decisions without taking financial issues into account. The trouble is, from a financial standpoint, that philosophy probably doesn’t work.

Doctors are human, and physician-owned imaging and lab centers unequivocally appear to drive up the cost of care by increasing the likelihood of getting additional procedures without improving outcomes. In a tiny sample of the literature on this topic, a group of researchers has shown that MRI scans of the neck, lower back, knee, and shoulder, when performed in physician-owned machines, are much more likely to be normal, indicating overuse by the physicians who own the machines and bill for their use. Multiple studies show that physician-owned hospitals are associated with an increase in spending without a corresponding increase in quality, a phenomenon that leaks into the outpatient setting as well. For example, physicians, particularly those treating immune or malignant diseases, routinely sell drugs to their patients at a small markup. Some physicians make more of their income from such practices than they do by seeing patients. Their incentive is naturally toward using more expensive drugs, whether they consciously intend to or not.

This is the part of the post where I propose a brilliant policy strategy. Except I’m not sure there is one, apart from the transparency rules we’ve discussed at length on this blog. Physician-owned testing, after all, does come with some benefits. Patients can often get the test performed on the same day and in the same location. Since doctors are so powerful, there’s likely not a movement afoot to take their radiology machines away.

But by using more direct contracting with physicians, we could limit the incentive for doctors to overuse certain diagnostic and therapeutic procedures. If I had been paid a flat monthly rate to take care of the endocrine needs of Corporation X in my example in the intro, I would have simply done the necessary procedures on patients without even thinking of the cost to the employer or the patient or thinking of my potential income. The few hundred bucks I might have made from a couple of thyroid biopsies would have been folded into my fee for caring for the entire population.

If you have past experience with direct physician contracting (or with frustrating up-charges from doctors self-referring), please let us know. We would love to better understand the experiences of our members around this issue.

As the Medical Director of the Kansas Business Group on Health, I’m sometimes asked to weigh in on hot topics that might affect employers or employees. This is a reprint of a blog post from KBGH.

For First-Rate Care, Seek Second Opinions

As the Medical Director of the Kansas Business Group on Health I’m sometimes asked to weigh in on hot topics that might affect employers or employees. This is a reprint of a blog post from KBGH:

Imagine that tomorrow as you brush your teeth you notice a small lump in your neck. You see your doctor, who diagnoses a nodule on your thyroid gland. She sends you immediately to a surgeon who tells you that you need to have your thyroid gland removed. A thyroidectomy is a big operation, and this is all moving so fast, and you’ve crossed that gauzy boundary from “person” to “patient” in a matter of days. What do you do?

Many of us would seek a second opinion, one of the most time-honored rituals in medicine. A patient, unsure of the accuracy of a diagnosis or the veracity of a treatment plan seeks a second physician to confirm or refute the findings or recommendations of the first physician.

Do second opinions work?

Second opinions—whether they’re a matter of a second radiologist or pathologist reviewing images or slides or an endocrinologist reviewing the case above—have a demonstrable impact on the care delivered to a patient. A commonly cited number is that 30 percent of patients can expect their diagnosis or treatment plan to change with a second opinion, but I’m unable to find the original source of that number. A 2014 systematic review in Mayo Clinic Proceedings, though, found that between 10 and 62 percent of second opinions yield a “major change in the diagnosis, treatment, or prognosis” of a patient.

So it is no surprise that surveys have found that nearly one in five patients who saw a doctor in the past year sought a second opinion, and more than half of patients who are cancer survivors sought a second opinion at some point during their cancer care.

It just makes financial sense: an insurer—or you, the employer, if you’re self-insured—would rather not pay for a $5,000 thyroidectomy when a second consultation and thyroid ultrasound, which cumulatively cost only a few hundred dollars and which likely leaves your neck unscarred, would suffice. 

Second opinions appear to help the mental health of patients, not just the accuracy of their diagnoses. An Australian study found that the opinion of a second oncologist gave more than half of cancer patients greater confidence in their diagnosis and treatment plan. A study of neurology patients found that patients were most satisfied with the amount of information and emotional support provided by the neurologist offering the second opinion.

Do insurance providers pay for them?

The majority of insurance plans cover second opinions. It just makes financial sense: an insurer—or you, the employer, if you’re self-insured—would rather not pay for a $5,000 thyroidectomy when a second consultation and thyroid ultrasound, which cumulatively cost only a few hundred dollars and which likely leaves your neck unscarred, would suffice.

Medicare covers second opinions if “a doctor recommends that you have surgery or a major diagnostic or therapeutic procedure,” and if the opinions of the first two physicians differ, will cover a third opinion. And many state Medicaid programs have or have had mandatory “Second Surgical Opinion Programs,” which require patients to obtain a second opinion before surgery as a condition of their coverage.

In Kansas, Medicaid managed care providers Sunflower, United Healthcare, and Aetna all cover second opinions. However, some managed care plans and HMOs do not cover second opinions. Some states, including California and New York, have laws that guarantee HMO members the right to a second opinion. Kansas, to our knowledge, does not have such a law.

Some self-insured employers such as Wal-Mart have taken the leap to insist that their employees go to “Centers of Excellence” for all high-risk procedures like spine surgery and bariatric surgery. The purpose of these trips is not just to get the procedure done; Wal-Mart and others want to know if the procedure is necessary in the first place.

What can employers do to help?

Startups have emerged to help with this process. The telemedicine company 2nd.md advertises heavily on the internet, but we are unaware of the quality of their care or their costs. Docpanel.com provides radiology-specific second opinions. The company best known to me is Grand Rounds, a company which now serves primarily in care coordination, but whose focus was once the connection of patients with specialists to confirm and explain high-burden diagnoses. [disclosure: I once interviewed for a contract position at Grand Rounds, but I have no relationship with the company]

But there is likely no need to go directly to a new vendor. Check with your insurance provider or third-party administrator to confirm that your employees have access to second opinions, and educate your employees about their options. The Patient Advocate Foundation has a brief handout that may be helpful. A delicate balance must be struck: it is usually a mistake to interfere in the relationship between a patient and a trusted practitioner (see our prior post on HyVee and stem cells). It is not a mistake in the slightest, though, to give patients the opportunity to seek out additional opinions in case of uncertain diagnoses or complex treatment plans. The first doctor’s feelings may be bruised in some cases; I’ve been on both ends of that relationship. That’s okay. Those hurt feelings may be the cost of doing business for getting a more accurate diagnosis, a more up-to-date therapy plan, or a more realistic prognosis. And those can potentially have real health benefits to your employees and real dollars-and-cents benefits to your bottom line.