Medicare Part B expenditures, which include payment for advanced imaging services, are expected to continue growing at an unsustainable rate. In efforts to identify the root of these steep growth rates, questions have been raised about physician self-referral's role in this growth. Self-referral occurs when a provider refers patients to entities in which the provider or the provider's family members have a financial interest. Senators Max Baucus (D-Montana) and Chuck Grassley (R-Iowa) and Representatives Pete Stark (D-California), Sander Levin (D-Michigan) and Henry Waxman (D-California) asked the Government Accountability Office (GAO) to examine the prevalence of advanced imaging self-referral and its effect on Medicare spending. The report examines (1) trends in the number of and expenditures for self-referred and non-self-referred advanced imaging services, (2) how provision of these services differs among providers on the basis of whether they self-refer, and (3) implications of self-referral for Medicare spending. The GAO report estimates that in 2010 alone, Medicare spent $109 million unnecessary dollars associated with physician self-referrals. Such referrals serve as an incentive for providers to order more tests than they otherwise would. From 2004 through 2010, self-referred and non-self-referred advanced imaging services both increased, with the larger increase among self-referred services. The number of self-referred MRI services increased over this period by more than 80 percent, for example, while the number of non-self-referred MRI services increase by only 12 percent. The GAO analysis showed that providers' referrals of MRI and CT services substantially increased the year after they began to self-refer. GAO estimates that in 2010, providers who self-referred likely made 400,000 more referrals for advanced imaging services than they would have if they were not self-referring.

The Government Accountability Office (GAO)  has designated Medicare and Medicaid as high-risk programs partly because their size and complexity make them vulnerable to fraud. GAO was asked to provide information on the types of providers that are the subjects of fraud cases. The resulting GAO report identifies provider types who were the subjects of fraud cases in (1) Medicare, Medicaid, and CHIP that were handled by federal agencies, and changes in the types of providers in 2005 and 2010; and (2) Medicaid and CHIP fraud cases that were handled by Medicaid Fraud Control Units (MFCUs). To identify subjects of fraud cases handled by federal agencies, GAO combined data from three agency databases and removed duplicate subject data. GAO also reviewed public court records, such as indictments, to identify subjects’ provider types. To describe providers involved in fraud cases handled by the MFCUs, GAO collected aggregate data from 10 state MFCUs, which represented the majority of fraud investigations, indictments, and convictions nationwide. According to data GAO collected from 10 state Medicaid Fraud Control Units (MFCU), over 40 percent of the 2,742 subjects investigated for health care fraud in Medicaid and CHIP in 2010 were home health care providers and health care practitioners. Of the criminal cases pursued by these MFCUs, home health care providers comprised nearly 40 percent of criminal convictions and 45 percent of subjects sentenced in 2010. Civil health care fraud cases pursued by these MFCUs in 2010 resulted in judgments and settlements totaling nearly $829 million. Pharmaceutical manufacturers were to pay more than 60 percent ($509 million) of the total amount of civil judgments and settlements.

A new brief from Health Affairs and the Robert Wood Johnson Foundation (RWJF) focuses on efforts to combat a longstanding challenge: fraud and abuse in health care. These issues constitute compelling problems for the Medicare and Medicaid programs, with related costs of $98 billion last year.