MEDICARE

Action Needed to 

Address Higher Use of 

Anatomic Pathology 

Services by Providers 

Who Self-Refer

Report to Congressional Requesters

June 2013

GAO-13-445

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-13-445, a report to 

congressional requesters

June 2013

MEDICARE

Action Needed to Address Higher Use of Anatomic 

Pathology Services by Providers Who Self-Refer 

Why GAO Did This Study

Questions have been raised about selfreferral’s role in Medicare Part B 

expenditures’ rapid growth. Selfreferral occurs when providers refer 

patients to entities in which they or 

their family members have a financial 

interest. Services that can be selfreferred under certain circumstances 

include anatomic pathology—the 

preparation and examination of tissue 

samples to diagnose disease. GAO 

was asked to examine the prevalence 

of anatomic pathology self-referral and 

its effect on Medicare spending. This 

report examines (1) trends in the 

number of and expenditures for selfreferred and non-self-referred 

anatomic pathology services, (2) how 

provision of these services may differ 

on the basis of whether providers selfrefer, and (3) implications of selfreferral for Medicare spending. GAO 

analyzed Medicare Part B claims data 

from 2004 through 2010 and 

interviewed officials from the Centers 

for Medicare & Medicaid Services 

(CMS) and other stakeholders. GAO 

developed a claims-based approach to 

identify self-referred services because 

Medicare claims lack such an indicator.

What GAO Recommends

CMS should identify self-referred 

anatomic pathology services and 

address their higher use. The 

Department of Health and Human 

Services, which oversees CMS, 

agreed with GAO’s recommendation 

that CMS address higher use of selfreferral through a payment approach, 

but disagreed with GAO’s other two 

recommendations to identify selfreferred services and address their 

higher use. GAO believes the 

recommended actions could result in 

Medicare savings.

What GAO Found

Self-referred anatomic pathology services increased at a faster rate than nonself-referred services from 2004 to 2010. During this period, the number of selfreferred anatomic pathology services more than doubled, growing from 1.06 

million services to about 2.26 million services, while non-self-referred services 

grew about 38 percent, from about 5.64 million services to about 7.77 million 

services. Similarly, the growth rate of expenditures for self-referred anatomic 

pathology services was higher than for non-self-referred services. Three provider 

specialties—dermatology, gastroenterology, and urology—accounted for 

90 percent of referrals for self-referred anatomic pathology services in 2010.

Referrals for anatomic pathology services by dermatologists, gastroenterologists, 

and urologists substantially increased the year after they began to self-refer. 

Providers that began self-referring in 2009—referred to as switchers—had 

increases in anatomic pathology services that ranged on average from 

14.0 percent to 58.5 percent in 2010 compared to 2008, the year before they 

began self-referring, across these provider specialties. In comparison, increases 

in anatomic pathology referrals for providers who continued to self-refer or never 

self-referred services during this period were much lower. Thus, the increase in 

anatomic pathology referrals for switchers was not due to a general increase in 

use of these services among all providers. GAO’s examination of all providers 

that referred an anatomic pathology service in 2010 showed that self-referring 

providers of the specialties we examined referred more services on average than 

non-self referring providers. Differences in referral for these services generally

persisted after accounting for geography and patient characteristics such as 

health status and diagnosis. These analyses suggest that financial incentives for 

self-referring providers were likely a major factor driving the increase in referrals.

Percentage Change in Medicare Anatomic Pathology Services by Provider Specialty, 2008 to 

2010

Note: Switchers are providers that did not self-refer in 2007 or 2008, but did self-refer in 2009 and 

2010.

GAO estimates that in 2010, self-referring providers likely referred over 918,000 

more anatomic pathology services than if they had performed biopsy procedures 

at the same rate as and referred the same number of services per biopsy 

procedure as non-self-referring providers. These additional referrals for anatomic 

pathology services cost Medicare about $69 million. To the extent that these 

additional referrals were unnecessary, avoiding them could result in savings to 

Medicare and beneficiaries, as they share in the cost of services.

View GAO-13-445. For more information, 

contact James C. Cosgrove at (202) 512-7114 

or cosgrovej@gao.gov.
Page i GAO-13-445 Medicare Self-Referral of Anatomic Pathology Services

Letter 1 

Background 5

Self-referred Anatomic Pathology Services and Expenditures Grew 

Faster Than Non-self-referred Services and Expenditures 10

Self-referring Providers Generally Referred More Anatomic 

Pathology Services on Average Than Non-self-referring 

Providers 14

Higher Use of Anatomic Pathology Services by Self-Referring 

Providers Results in Substantial Additional Medicare Spending 22

Conclusions 24

Recommendations for Executive Action 26

Agency and Third-Party Comments and Our Evaluation 26

Appendix I Special Stains Used in Conjunction with Anatomic 

Pathology Services Paid under Medicare 34

Appendix II Scope and Methods 39

Appendix III Average Number of Medicare Anatomic Pathology Services 

per Biopsy Procedure for Most Common Diagnoses 45

Appendix IV Age and Sex of Medicare Beneficiaries for Select Provider 

Specialties by Practice Size in 2010 48

Appendix V Average Number of Medicare Anatomic Pathology Referrals 

by Provider Self-Referral and Urban-Rural Status in 2010 50

Appendix VI Comments from the Department of Health and Human 

Services 52

Contents 
Page ii GAO-13-445 Medicare Self-Referral of Anatomic Pathology Services

Appendix VII GAO Contact and Staff Acknowledgments 55

Tables

Table 1: Change in Self-referral Rates for Medicare Anatomic 

Pathology Services from 2004 to 2010 for Select Provider 

Specialties 14

Table 2: Average Number of Medicare Anatomic Pathology 

Services Referred by Self-referring and Non-self-referring 

Providers for Select Provider Specialties in 2010 15

Table 3: Average Number of Medicare Anatomic Pathology 

Services per Biopsy Procedure for Most Common 

Diagnoses Referred by Self-referring and Non-selfreferring Providers, Select Provider Specialties in 2010 17

Table 4: Average Health Status of Medicare Beneficiaries for Select 

Provider Specialties by Practice Size in 2010 19

Table 5: Change in Average Number of Medicare Anatomic 

Pathology Services Referred by Provider Specialty, 2008 

and 2010 21

Table 6: Average Number of Medicare Special Stains Referred by 

Self-referring and Non-self-referring Providers for Select 

Provider Specialties in 2010 37

Table 7: Change in Average Number of Medicare Special Stains 

Referred by Provider Specialty, 2008 and 2010 38

Table 8: Average Number of Medicare Anatomic Pathology 

Services per Biopsy Procedure for Most Common 

Diagnoses Referred by Self-referring and Non-selfreferring Dermatologists in 2010 45

Table 9: Average Number of Medicare Anatomic Pathology 

Services per Biopsy Procedure for Most Common 

Diagnoses Referred by Self-referring and Non-selfreferring Gastroenterologists in 2010 46

Table 10: Average Number of Medicare Anatomic Pathology 

Services per Biopsy Procedure for Most Common 

Diagnoses Referred by Self-referring and Non-selfreferring Urologists in 2010 47

Table 11: Average Age of Medicare Beneficiaries for Select 

Provider Specialties by Practice Size in 2010 48

Table 12: Average Percentage of Medicare Beneficiaries Who Are 

Female for Select Provider Specialties by Practice Size in 

2010 49
Page iii GAO-13-445 Medicare Self-Referral of Anatomic Pathology Services

Figures

Figure 1: Preparation of Specimens from Tissue Samples 7

Figure 2: Number of Self-referred and Non-self-referred Medicare 

Anatomic Pathology Services, 2004–2010 12

Figure 3: Expenditures for Self-referred and Non-self-referred 

Medicare Anatomic Pathology Services, 2004–2010 13

Figure 4: Estimated Additional Medicare Spending for Anatomic 

Pathology Services Attributed to Self-Referring Providers, 

2010 23

Figure 5: Number of Self-referred and Non-self-referred Medicare 

Special Stains, 2004–2010 35

Figure 6: Expenditures for Self-referred and Non-self-referred 

Medicare Special Stains, 2004–2010 36

Abbreviations

AADA American Academy of Dermatology Association

AGA American Gastroenterological Association 

AUA American Urological Association

CAP College of American Pathologists

CMS Centers for Medicare & Medicaid Services

HHS Department of Health and Human Services

FFS fee-for-service 

HCPCS Healthcare Common Procedure Coding System

ICD-9-CM International Classification of Diseases, Ninth Revision, 

 Clinical Modification

NPI national provider identifier

OIG Office of Inspector General

PC professional component

TC technical component

TIN taxpayer identification number

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Page 1 GAO-13-445 Medicare Self-Referral of Anatomic Pathology Services

441 G St. N.W.

Washington, DC 20548

June 24, 2013

Congressional Requesters:

Expenditures for Medicare Part B services—which include physician and 

other outpatient services—have grown rapidly, increasing annually at 

5.9 percent, on average, from 2007 through 2011. In comparison, the 

national economy grew by less than half that rate during the same time 

period. Some policymakers have raised questions about the growth in 

Part B spending, including the extent to which this growth may be 

attributable to financial incentives that exist for physicians to self-refer 

certain services. Self-referral occurs when providers refer their patients 

for services delivered by entities—such as themselves or a group 

practice—with which the providers or an immediate family member has a 

financial relationship. While federal law generally prohibits self-referral 

under Medicare, there are exceptions for certain services and 

arrangements.1

Among the Medicare diagnostic and therapeutic services that may be 

self-referred under one of these exceptions are anatomic pathology 

services, in which physicians trained as pathologists prepare and 

examine tissue samples and other specimens to diagnose disease and 

guide patient care.2

 

1

Compliance with the physician self-referral law, commonly known as the Stark law, is 

outside the scope of this report. The Stark law prohibits physicians from making referrals 

for certain designated health services paid for by Medicare, to entities with which the 

physicians or immediate family members have a financial relationship, unless the 

arrangement complies with a specified exception, such as in-office ancillary services. 

42 U.S.C. § 1395nn(b)(2).The requirements of the in-office ancillary services exception 

are found at 42 C. F. R. § 411.355(b) (2012).

Providers from an array of physician specialties, 

including dermatology, urology, and gastroenterology, may self-refer the 

preparation of a patient’s tissue for examination, the examination of this 

tissue to make a diagnosis, or both. Proponents of self-referral contend

that arrangements in which physicians have laboratories in their offices 

2

Anatomic pathology includes multiple subspecialties, such as surgical pathology—the 

macroscopic and microscopic examination of surgical specimens; cytopathology—the 

examination of cells from fluids or smears; and hematology—the examination of cells from 

bone marrow aspirations or biopsies. For the purposes of this report “anatomic pathology” 

services refer to those services with a Healthcare Common Procedure Coding System 

(HCPCS) code of 88305.

 
 

Page 2 GAO-13-445 Medicare Self-Referral of Anatomic Pathology Services

allow providers to make rapid diagnoses and improve coordination of 

care. In 2010, expenditures for anatomic pathology services under the 

Medicare physician fee schedule—the payment system used to 

determine fees for physician-billed services in Medicare fee-for-service 

(FFS)—totaled $1.94 billon.

While we and other federal agencies have reported on physician selfreferral, only a series of studies by the Department of Health and Human 

Services (HHS) Office of the Inspector General (OIG) has focused 

explicitly on how self-referral may affect the provision of anatomic 

pathology services.3

You asked us to examine the prevalence of self-referral of anatomic 

pathology services and Medicare spending for these services.

Specifically, in 2007, HHS OIG issued three studies 

that examined self-referral of anatomic pathology services among three 

urology practices. The HHS OIG found that, for all three practices, 

utilization of anatomic pathology services increased after the practice 

began to self-refer.

4 In this 

report, we examine (1) trends in the number of and expenditures for selfreferred and non-self-referred anatomic pathology services from 2004 

through 2010, (2) how the provision of anatomic pathology services may 

differ for providers who self-refer when compared with other providers, 

and (3) the implications of self-referral for Medicare spending on anatomic 

pathology services.

 

3

For studies by GAO and other agencies on physician self-referral, see, for example, 

GAO, Medicare: Higher Use of Advanced Imaging Services by Providers Who Self-Refer 

Costing Medicare Millions, GAO-12-966 (Washington, D.C.: Sept. 28, 2012) and Medicare 

Payment Advisory Commission, Report to the Congress: Improving Incentives in the 

Medicare Program (Washington, D.C.: June 2009). For studies by HHS OIG on physician 

self-referral of anatomic pathology services, see Department of Health and Human 

Services, Office of the Inspector General, Audit of Pathology Laboratory Services Claimed 

by Florida Urology Physicians, P.A. for the Period September through December 2004

(Washington, D.C.: June 2007); Review of Pathology Services Claimed by Urology Tyler, 

P.A. Tyler, Texas from May Through December 2004 (Washington, D.C.: June 2007); and 

Audit of Pathology Laboratory Services Claimed by Atlantic Urological Associates, P.A. for 

Calendar Year 2004 (Washington, D.C., June 2007).

4

In addition to this report on anatomic pathology services, we have ongoing work related 

to the self-referral of intensity-modulated radiation therapy services and physical therapy 

services.
 

Page 3 GAO-13-445 Medicare Self-Referral of Anatomic Pathology Services

To identify trends in the number of and expenditures for self-referred and 

non-self-referred anatomic pathology services, we analyzed claims from 

the Medicare Part B Carrier File for 2004 through 2010. Because there is 

no indicator or “flag” on Medicare claims that identifies whether or not 

services were self-referred, we developed a claims-based methodology to 

identify services as either self-referred or non-self-referred.5 Specifically, 

we classified services as self-referred if the provider that referred the 

beneficiary for an anatomic pathology service and the provider that 

performed the anatomic pathology service were identical or had a 

financial relationship with the same entity.6 We focused our review of 

anatomic pathology services and service components to services with a 

Healthcare Common Procedure Coding System (HCPCS) code 88305, 

which is the code for anatomic pathology services related to the 

examination of tissue samples taken through biopsy procedures.7 About 

66 percent of the $1.94 billion in expenditures for anatomic pathology 

services in 2010 were associated with HCPCS code 88305. (We also 

reviewed services with HCPCS codes 88312, 88313, and 88342—special 

stains—which are used in conjunction with anatomic pathology services 

to assist providers in making a diagnosis. See app. I for our analysis 

related to special stains.) We limited the universe for this portion of our 

analysis to those anatomic pathology services performed in a provider’s 

office or in an independent clinical laboratory.8

 

5

An indicator or “flag” could be, for example, a modifier that a provider lists on a claim to 

indicate that a service is self-referred. Providers currently use modifiers to provide 

additional information about a service to CMS. For example, if a provider is only billing for 

the technical component of an anatomic pathology service, the provider would use a 

modifier to alert CMS that the claim does not cover the professional component of the 

service.

We focused on these 

settings because the financial incentive for providers to self-refer is most 

direct when the service is performed in a physician office. Further, we 

limited our analysis to self-referral of the preparation of these services, 

because we could determine that the services were performed in a 

6

Providers could have a financial relationship with the same entity if, for example, they are 

part of the same group practice. 

7

We use the term “biopsy procedure” to refer to the process of extracting tissue samples 

for analysis. Multiple tissue samples (sometimes also referred to as biopsies) can be 

extracted from a single biopsy procedure.

8

Providers can also provide anatomic pathology services in settings other than physician 

offices or clinical laboratories, such as hospitals.
 

Page 4 GAO-13-445 Medicare Self-Referral of Anatomic Pathology Services

physician’s office or independent laboratory.9

To determine how the provision of anatomic pathology services may differ 

for providers who self-refer when compared with other providers, we 

performed two separate analyses. First, we compared the provision—that 

is, the number of referrals made—of anatomic pathology services by selfreferring providers and non-self-referring providers in 2010, 

disaggregated by provider size (i.e., the number of Medicare beneficiaries 

seen by the provider), provider specialty, geography (i.e., urban or rural) 

and patient characteristics.

We used the claims to 

identify trends in the number and proportion of self-referred and non-selfreferred anatomic pathology services performed from 2004 through 2010, 

the expenditures for these services from 2004 through 2010, and the 

proportion of self-referred and non-self-referred anatomic pathology 

services by provider specialty for 2004 and 2010. To determine 

expenditures, we used the allowed charges variable from the Medicare 

Part B Carrier File, which includes the amounts paid by Medicare and the 

beneficiary.

10 Second, we determined the extent to which 

the number of anatomic pathology referrals made by providers changed 

after the providers began to self-refer. Specifically, we identified a group 

of providers who began to self-refer anatomic pathology services in 2009 

and calculated the change in the number of anatomic pathology referrals 

the providers made from 2008 (i.e., the year before they began selfreferring) through 2010 (i.e., the year after they began self-referring).11

To determine the implications of self-referral for Medicare spending on 

anatomic pathology services, we summed the number of and 

expenditures for all anatomic pathology services performed in 2010 

We then compared this change to the change made by (1) providers who 

self-referred anatomic pathology services over this time period and 

(2) providers who did not self-refer services over the time period.

 

9

We did not analyze the self-referral related to the interpretation of these services 

because we could not reliably determine whether they were performed in a physician’s 

office or independent laboratory using Medicare Part B Carrier File data.

10We defined urban settings as metropolitan statistical areas, a geographic entity defined 

by the Office of Management and Budget as a core urban area of 50,000 or more in 

population; all other settings are considered rural.

11We used 4 years of experience (2007 through 2010) to categorize providers even 

though we compared referrals in 2008 to 2010 because we wanted to ensure that 

providers that began self-referring in 2009 did not self-refer for at least the 2 prior years.
 

Page 5 GAO-13-445 Medicare Self-Referral of Anatomic Pathology Services

across the three provider specialties—dermatology, gastroenterology, 

and urology—we reviewed. We then calculated the number of and 

expenditures for anatomic pathology services if self-referring providers 

performed biopsy procedures at the same rate as and referred the same 

number of services per biopsy procedure as non-self-referring providers 

of the same provider size and specialty. We repeated this analysis 

incorporating an approximation of the payment reduction for anatomic 

pathology services that became effective in 2013.12

We took several steps to ensure that the data used to produce this report 

were sufficiently reliable. Specifically, we assessed the reliability of the 

data we used from the Centers for Medicare & Medicaid Services 

(CMS)—the agency that administers Medicare—by interviewing officials 

responsible for overseeing these data sources, reviewing relevant 

documentation, and examining the data for obvious errors. We 

determined that the data were sufficiently reliable for the purposes of our 

study. For further information on the scope and methodology for this 

report, see appendix II.

We conducted this performance audit from January 2012 through June

2013 in accordance with generally accepted government auditing 

standards. Those standards require that we plan and perform the audit to 

obtain sufficient, appropriate evidence to provide a reasonable basis for 

our findings and conclusions based on our audit objectives. We believe 

that the evidence obtained provides a reasonable basis for our findings 

and conclusions based on our audit objectives.

Anatomic pathology services aid in the diagnosis and treatment of 

diseases such as cancers and gastroenteritis—a condition that causes 

irritation and inflammation of the stomach and intestines. Medicare pays 

providers for performing the services and subsequently interpreting the 

results. Payment for the performance of the services can be made 

through different payment systems, depending on where the anatomic 

pathology service is performed. In 2010, Medicare paid about 

$1.28 billion under the physician fee schedule for anatomic pathology 

 

12See Medicare Program; Revision of Payment Policies Under the Physician Fee 

Schedule for CY 2013, 77 Fed. Reg. 68,892 (Nov. 16, 2012).

Background 
 

Page 6 GAO-13-445 Medicare Self-Referral of Anatomic Pathology Services

services across all settings, of which about $945 million was for services 

performed in physician offices and independent laboratories.

Anatomic pathology services involve the examination of tissues and other 

specimens to diagnose diseases, such as cancers and gastroenteritis, 

and guide patient care. The services may be performed after a biopsy 

procedure used to obtain tissue samples. For example, after removing 

tissue samples during a biopsy procedure on a patient’s prostate, a 

urologist may refer the patient’s tissue sample for examination to 

determine whether, on the basis of an analysis of the tissue sample or 

samples, the patient has prostate cancer. After collecting these tissue 

samples, a non-self-referring provider may send them to an independent 

diagnostic laboratory, a hospital laboratory, or pathology physician group 

for further preparation and analysis. In contrast, self-referring providers 

may prepare specimens or evaluate specimens or both at their practices, 

rather than involving an external diagnostic laboratory or pathology 

physician group. For example, the ordering provider’s group practice may 

have a technician who prepares specimens into slides or include a 

pathologist who interprets these specimens, or both.

Providers have discretion in determining the number and type of tissue 

samples that become a specimen. For example, a provider referring 

anatomic pathology services may include more than one tissue sample in 

a specimen if the samples are from the same areas of abnormal tissue 

(see fig. 1). Alternatively, a provider may choose to create multiple 

specimens, each containing a single tissue sample. Providers differ on 

whether or to what extent tissue samples can be combined in creating a 

specimen or if each tissue sample must become a specimen. For 

example, urologists differ on whether it is clinically appropriate to combine 

tissue samples obtained through a prostate biopsy procedure or whether 

each tissue sample must became a specimen. The resultant number of 

specimens has implications for payment as each specimen submitted for 

analysis can be billed to Medicare separately as an anatomic pathology 

service. CMS policy states that specimens submitted for individual 

examination should be medically reasonable and necessary for diagnosis.

Finally, a pathologist—a specialty provider trained to interpret 

specimens—examines the specimen with and without a microscope and 

prepares written results of this examination for the referring provider.

Anatomic Pathology 

Services
 

Page 7 GAO-13-445 Medicare Self-Referral of Anatomic Pathology Services

Figure 1: Preparation of Specimens from Tissue Samples

Note: Two specimens—anatomic pathology services—are prepared from four tissue samples in fig. 1.

Providers have the discretion to determine the number of samples that become specimens, so 

alternatively, four specimens could have been prepared from these four tissue samples. The resultant 

number of specimens has implications for payment as each specimen submitted for analysis can be 

billed to Medicare separately as an anatomic pathology service.

Depending on the level of complexity, biopsy procedures can involve risks 

for patients. For example, biopsies of the skin to detect cancer are 

generally considered safe, but complications such as bleeding, bruising, 

or infection can occur.13 Additional complications, such as difficulty 

urinating and infections resulting in hospitalization, can occur from other 

biopsy procedures.

Medicare’s payments for anatomic pathology services are separated into 

two components—the technical component (TC) and the professional 

component (PC). The TC payment is intended to cover the cost of 

preparing a specimen for analysis, including the costs for equipment, 

supplies, and nonphysician staff. The PC payment is intended to cover 

the provider’s time examining the specimen and writing a report on the 

findings. The PC and TC can be billed together, on what is called a global 

 

13Key types of skin biopsy procedures include (1) shave (use of a tool to remove a small 

section of the top layers of the skin), (2) punch (use of a circular tool to remove a small 

section of the skin), and (3) excisional (use of a scalpel to remove an entire area of 

abnormal skin). 

Medicare Payment and 

Billing Policies for 

Anatomic Pathology 

Services
 

Page 8 GAO-13-445 Medicare Self-Referral of Anatomic Pathology Services

claim, or alternatively the components can be billed separately. For 

instance, a global claim could be billed if the same provider prepares and 

examines the specimen, whereas the TC and PC could be billed 

separately if the performing and interpreting providers are different.

Medicare reimburses providers through different payment systems 

depending on where the anatomic pathology service is performed. When 

an anatomic pathology service is performed in a provider’s office or 

independent clinical laboratory, both the PC and TC are reimbursed 

under the Medicare physician fee schedule. Alternatively when the 

service is performed in an institutional setting such as a hospital inpatient 

department, the provider is reimbursed under the Medicare physician fee 

schedule for the PC, while the TC is reimbursed under a different 

Medicare payment system. For instance, the TC of an anatomic 

pathology service performed in a hospital inpatient setting is reimbursed 

through a facility payment made under Medicare Part A.

In response to concerns about potential overutilization of anatomic 

pathology services due to physician self-referral, CMS established rules 

limiting the reimbursements allowed under certain self-referral 

arrangements. Specifically, in 2008 CMS imposed an “anti-markup rule” 

that prohibits providers from billing Medicare for anatomic pathology 

services for amounts that exceed what the providers themselves pay to 

subcontract the services from other providers or pathology laboratories.14

However, in the 2009 physician fee schedule final rule, CMS identified an 

exception to the anti-markup rule: a service may be marked up when 

performed by a physician who shares a practice with the billing provider.15

 

14Specifically, billing providers under these arrangements are limited in the amount they 

can charge Medicare for the cost of leasing equipment and contracting with staff to 

perform the service when the services are purchased from other providers or performed at 

a site other than where the full range of physician services is provided. See Medicare 

Program: Revisions to Payment Policies under the Physician Fee Schedule and Other 

Part B Payment Policies for CY 2008. 72 Fed. Reg. 66,222. (Nov. 27, 2007) (amending 

42 C.F.R. § 414.50).

Since then, arrangements in which a provider group practice includes a 

15Medicare Program; Payment Policies Under the Physician Fee Schedule for CY 2009, 

73 Fed. Reg. 69,726 (Nov. 19, 2008) (amending 42 C.F.R. § 414.50). Under this rule, a 

shared practice exists if either (1) the performing physician furnishes at least 75 percent of 

his or her services through the billing provider, or (2) the physician performs or conducts 

and supervises a diagnostic test in the office of the billing provider. 

Certain Policies 

Implemented by CMS 

Regarding Anatomic 

Pathology Services
 

Page 9 GAO-13-445 Medicare Self-Referral of Anatomic Pathology Services

pathologist in the practice’s office space have become a common selfreferral arrangement.

In the 2009 physician fee schedule, CMS also introduced a payment 

change for anatomic pathology services related to a specific biopsy 

procedure due to concern of overpayment. Specifically, CMS began 

paying for multiple anatomic pathology services from prostate saturation 

biopsy procedures through a single payment, rather than paying for each 

specimen individually. This specific biopsy procedure involves taking 

numerous tissue samples—typically 30 to 60—to increase the likelihood 

of detecting prostate cancer in a subgroup of high-risk individuals in 

whom previous conventional prostate biopsies had been negative. As a 

result, CMS introduced four new HCPCS codes to pay for these 

specimens, which were previously paid through HCPCS 88305.16 The 

four HCPCS codes noted are payment for 1 to 20 specimens (G0416), 21 

to 40 specimens (G0417), 41 to 60 specimens (G0418), and more than 

60 specimens (G0419).17 The payment change resulted in a substantial 

decrease in payment for anatomic pathology services resulting from 

prostate saturation biopsy procedures.18

CMS reduced its payment for anatomic pathology services in 2013 as 

part of its efforts to examine the payment for certain high-volume 

services. Specifically, CMS reduced its payment of anatomic pathology 

services in 2013 because it determined that fewer resources—equipment, 

supplies, and nonphysician staff—were required to prepare anatomic 

pathology services, which in turn reduced payment for the TC. Effective 

January 1, 2013, CMS reduced Medicare’s reimbursement for anatomic 

pathology services under the physician fee schedule by lowering 

 

1673 Fed. Reg. 69,726, 69,751 (Nov. 19, 2008). CMS made this change after concluding 

that anatomic pathology services resulting from prostate saturation biopsies did not 

require the same amount of provider work in terms of evaluation, interpretation, and 

reporting as other anatomic pathology services.

17In the 2013 physician fee schedule, CMS revised HCPCS G4016 to payment for 10 to 

20 specimens. See Medicare Program; Revisions to Payment Policies Under the 

Physician Fee Schedule, 77 Fed. Reg. 68,892 (Nov. 16, 2012).

18For example, on the basis of 2009 payment rates, a provider that performed both the TC 

and PC for 30 anatomic pathology services resulting from a prostate saturation biopsy 

procedure was paid about $1,233 under G0417. However, if a provider was paid at the 

2009 payment rate for HCPCS code 88305 for each of the 30 services, he or she would 

have received about $3,116.
 

Page 10 GAO-13-445 Medicare Self-Referral of Anatomic Pathology Services

reimbursement for the TC by approximately half. With this change, a 

payment for a global claim for an anatomic pathology service was 

reduced by approximately 30 percent.19

In 2010, there were about 16.2 million anatomic pathology services 

performed in all settings, including physician offices and hospitals. In 

2010, expenditures for anatomic pathology services paid under the 

physician fee schedule totaled about $1.28 billion across all settings.

About $945 million of the $1.28 billion—74 percent—in expenditures for 

anatomic pathology services in 2010 were for services performed in 

physician offices and independent laboratories.

The number of self-referred anatomic pathology services increased at a 

faster rate than non-self-referred anatomic pathology services from 2004 

through 2010. Similarly, expenditures for self-referred anatomic pathology 

services increased at a faster rate than expenditures for non-self-referred 

services. The share of anatomic pathology services that were selfreferred increased overall during the period we reviewed.

While both the number of self-referred and non-self-referred anatomic 

pathology services grew overall from 2004 through 2010, self-referred 

services increased at a faster rate than non-self-referred services.

Specifically, the number of self-referred anatomic pathology services 

more than doubled over the period we reviewed, growing from about 

1.06 million services in 2004 to about 2.26 million services in 2010 (see 

fig. 2).20

 

19See Medicare Program; Revision of Payment Policies under the Physician Fee 

Schedule for CY 2013, 77 Fed. Reg. 68,892 (Nov. 16, 2012). This estimate of the 2013 

payment reduction does not include payment reductions that may result from 

implementation of the Budget Control Act of 2011, Pub. L. No. 112-25, 125 Stat. 240, as 

amended by the American Taxpayer Relief Act of 2012 (Pub. L. No. 112-240, 126 Stat. 

2313) (2013). 

In contrast, the number of non-self-referred anatomic pathology 

20Payment for these services include expenditures beneficiaries paid as part of costsharing paid under Medicare.

2010 Anatomic Pathology 

Services Utilization and 

Expenditures 

Self-referred 

Anatomic Pathology 

Services and 

Expenditures Grew 

Faster Than Non-selfreferred Services and 

Expenditures 

Number of Self-referred 

Anatomic Pathology 

Services Increased at a 

Faster Rate Than Non-selfreferred Services
 

Page 11 GAO-13-445 Medicare Self-Referral of Anatomic Pathology Services

services increased about 38 percent, growing from about 5.64 million 

services to about 7.77 million services. Because of the faster growth in 

self-referred anatomic pathology services, the proportion of anatomic 

pathology services that were self-referred grew from about 15.9 percent 

in 2004 to about 22.5 percent in 2010. Notably, the number of selfreferred anatomic pathology services increased from 2004 through 2010, 

even after accounting for the decrease in the number of Medicare FFS 

beneficiaries.21 Specifically, the number of self-referred anatomic 

pathology services per 1,000 Medicare FFS beneficiaries grew from 

about 30 to about 64, an increase of about 113 percent.

 

21While the total number of Medicare beneficiaries increased during our study period, the 

number of beneficiaries enrolled in Medicare FFS decreased. This was due to increased 

enrollment in the Medicare Advantage program, an alternative to the original Medicare 

FFS program in which private health plans offer health care coverage to Medicare 

beneficiaries.
 

Page 12 GAO-13-445 Medicare Self-Referral of Anatomic Pathology Services

Figure 2: Number of Self-referred and Non-self-referred Medicare Anatomic 

Pathology Services, 2004–2010

Note: Results include services performed in a physician’s office or diagnostic laboratory for services 

with a Healthcare Common Procedure Coding System (HCPCS) code of 88305. Services performed 

in other settings, such as hospital outpatient departments, are not included.

Although both self-referred and non-self-referred anatomic pathology 

services increased over the period of our study, the number of selfreferred anatomic pathology services decreased slightly from about 

1.67 million in 2007 to about 1.65 million in 2008 before increasing about 

14 percent to 1.88 million services in 2009.22

 

22This increase in 2009 corresponds to CMS’s identification of an exception to the antimarkup rule implemented in 2008. See Medicare Program; Payment Policies Under the 

Physician Fee Schedule for CY 2009, 73 Fed. Reg. 69,726 (Nov. 19, 2008) (amending 

42 C.F.R. § 414.50). 

This decrease in 2008 

corresponds to the implementation of CMS’s anti-markup rule that limits 

reimbursement for anatomic pathology services in certain self-referral 

arrangements. In contrast, the number of non-self-referred anatomic 
 

Page 13 GAO-13-445 Medicare Self-Referral of Anatomic Pathology Services

pathology services increased every year during the period we studied, 

with the largest annual increase (about 13 percent) in 2008.

While Medicare expenditures for self-referred and non-self-referred 

anatomic pathology services grew from 2004 through 2010, expenditures 

for the self-referred services increased at a faster rate. Specifically, 

expenditures for self-referred anatomic pathology services grew about 

164 percent from 2004 to 2010, increasing from about $75 million in 2004 

to $199 million in 2010 (see fig. 3). In contrast, non-self-referred anatomic 

pathology expenditures increased about 57 percent, from $473 million to 

about $741 million.

Figure 3: Expenditures for Self-referred and Non-self-referred Medicare Anatomic 

Pathology Services, 2004–2010

Note: Results include expenditures for anatomic pathology services performed in a physician’s office 

or diagnostic laboratory for Healthcare Common Procedure Coding System (HCPCS) code 88305.

Services performed in other settings, such as hospital outpatient departments, are not included.

Medicare’s Expenditures 

for Self-referred Anatomic 

Pathology Services Grew 

Faster Than Expenditures 

for Non-self-referred 

Services
 

Page 14 GAO-13-445 Medicare Self-Referral of Anatomic Pathology Services

Consistent with the overall trend, the proportion of anatomic pathology 

services that were self-referred increased for the three provider 

specialties—dermatology, gastroenterology, and urology—that accounted 

for over 90 percent of self-referred anatomic pathology services in 2010 

(see table 1). For example, the proportion of anatomic pathology services 

self-referred by dermatologists increased from 24 percent in 2004 to 

about 29 percent in 2010.

Table 1: Change in Self-referral Rates for Medicare Anatomic Pathology Services 

from 2004 to 2010 for Select Provider Specialties

Provider 

specialty

Percentage of 

anatomic pathology 

services 

self-referred in 2004

Percentage of 

anatomic pathology 

services

self-referred in 2010

Percentage of 

self-referred 

services referred by

specialty in 2010

Dermatology 24.0% 29.3% 58.9%

Urology 13.9 32.5 16.4

Gastroenterology 6.6 20.9 14.9

Total N/A N/A 90.2%

Source: GAO analysis of CMS data.

Note: No other provider specialty referred more than 2 percent of self-referred anatomic pathology 

services in both 2004 and 2010.

Self-referring providers in 2010 generally referred more anatomic 

pathology services on average than those providers who did not self-refer 

these services, even after accounting for differences in specialty, number 

of Medicare FFS beneficiaries seen, patient characteristics, or geography.

Providers’ referrals for anatomic pathology services substantially 

increased the year after they began to self-refer.

Share of Self-referred 

Anatomic Pathology 

Services Increased across 

Provider Specialties 

Referring Most Anatomic 

Pathology Services

Self-referring 

Providers Generally 

Referred More 

Anatomic Pathology 

Services on Average 

Than Non-selfreferring Providers 
 

Page 15 GAO-13-445 Medicare Self-Referral of Anatomic Pathology Services

Across the three provider specialties—dermatology, gastroenterology, 

and urology—that refer the majority of anatomic pathology services, we 

found that in 2010, self-referring providers referred more anatomic 

pathology services, on average, than other providers, regardless of 

number of Medicare FFS beneficiaries seen. Specifically, we found this 

pattern for dermatologists, gastroenterologists, and urologists treating 

small, medium, and large numbers of Medicare beneficiaries (see 

table 2). Notably, for all provider specialties, providers who treated a large 

number of Medicare FFS beneficiaries—more than 500—had the highest 

relative rate within each specialty.

Table 2: Average Number of Medicare Anatomic Pathology Services Referred by 

Self-referring and Non-self-referring Providers for Select Provider Specialties in 

2010

Average number of anatomic 

pathology services referred

Provider specialty 

and number of unique 

Medicare FFS 

beneficiaries

Self-referring 

providers a Non-self-referring providers

Relative rate of 

self-referring 

providers

Dermatology

b

1 to 250 169 143 1.18

251 to 500 541 451 1.20

>500 1,583 1,013 1.56

Gastroenterology

1 to 250 171 140 1.22

251 to 500 417 350 1.19

>500 813 645 1.26

Urology

1 to 250 100 75 1.33

251 to 500 248 174 1.43

>500 465 303 1.53

Source: GAO analysis of CMS data.

Notes: We use the term anatomic pathology services to refer specifically to those services with a 

Healthcare Common Procedure Coding System (HCPCS) code of 88305, the examination of 

specimens from tissue samples taken through biopsy procedures. Provider specialties above 

represent 29,870 providers who referred about 64 percent of anatomic pathology services across all 

settings during 2010. Providers were considered to be self-referring if they self-referred anatomic 

pathology services for at least one biopsy procedure. Of the 29,870 providers represented above that 

referred at least one beneficiary for an anatomic pathology service in 2010, 7,177 were self-referring 

and 22,693 were non-self-referring. Of the 7,177 self-referring providers, 3,364 were dermatologists, 

1,769 were gastroenterologists, and 2,044 were urologists. Of the non-self-referring providers, 6,656 

were dermatologists, 9,566 were gastroenterologists, and 6,471 were urologists. 

Self-referring Providers 

Generally Referred More 

Anatomic Pathology 

Services Than Other 

Providers Regardless of 

Practice or Patient 

Characteristics
 

Page 16 GAO-13-445 Medicare Self-Referral of Anatomic Pathology Services

a

The number of unique Medicare fee-for-service (FFS) beneficiaries refers to the number of unique 

beneficiaries that received at least one service from a provider.

b

Self-referring providers generally referred more anatomic pathology 

services on average than non-self-referring providers due to referring 

more services—specimens to be examined—per biopsy procedures and, 

in certain cases, performing a greater number of biopsy procedures. 

Across the three specialties we reviewed, self-referring providers referred 

more services per biopsy procedure, on average, than non-self-referring 

providers, regardless of the number of Medicare FFS beneficiaries seen. 

Specifically, self-referring providers referred from 7 percent to 52 percent 

more services per biopsy procedure for the provider specialty and size 

category combinations we examined. Further, we observed a greater 

number of biopsy procedures performed by self-referring providers in 

certain cases. Specifically, self-referring dermatologists treating medium 

and large numbers of Medicare FFS beneficiaries performed about 8 and 

38 percent more biopsy procedures on average, respectively, than nonself-referring dermatologists treating similar numbers of Medicare 

beneficiaries.

The relative rate of self-referring providers refers to the factor by which the average number of 

anatomic pathology services referred by self-referring providers is greater or less than the average 

number of anatomic pathology services referred by non-self-referring providers. For example, if the 

relative rate of self-referring providers is equal to 2, it would mean that, on average, self-referring 

providers referred twice as many anatomic pathology services as non-self-referring providers.

23

The higher number of referrals for anatomic pathology services among 

self-referring providers relative to other providers of the same size and 

specialty cannot, in general, be explained by differences in patient 

diagnoses, patient health status, other patient characteristics, or 

geography.

In the remaining provider specialty and size category 

combinations, the rate of biopsy procedures performed by self-referring 

providers was similar to that for non-self-referring providers.

Differences in referrals for anatomic pathology services between selfreferring and non-self-referring providers of the same specialty treating a 

similar number of Medicare FFS beneficiaries could not be explained by 

differences in their patients’ diagnoses. Generally, we found that the 

types and proportions of patient diagnoses were similar for self-referring 

and non-self-referring providers of the same specialty. However, we 

 

23We classified anatomic pathology services as being from the same biopsy procedure if 

they were referred by the same provider, for the same beneficiary, on the same day.

Patient Diagnoses
 

Page 17 GAO-13-445 Medicare Self-Referral of Anatomic Pathology Services

found that self-referring providers referred more anatomic pathology 

services per biopsy procedure for nearly all—53 of 54—primary 

diagnoses for which beneficiaries were referred for anatomic pathology 

services.24

Table 3: Average Number of Medicare Anatomic Pathology Services per Biopsy Procedure for Most Common Diagnoses 

Referred by Self-referring and Non-self-referring Providers, Select Provider Specialties in 2010

This pattern is particularly evident for those diagnoses that 

accounted for a large proportion of anatomic pathology services referred 

within each specialty (see table 3).For example, self-referring urology 

providers referred on average about 12.5 anatomic pathology services 

per biopsy procedure for diagnosis of elevated prostate specific antigen 

(790.93) while non-self-referring urology providers referred about 

8.5 anatomic pathology services per biopsy procedure for this diagnosis.

For further information on the average number of anatomic pathology 

services referred per biopsy procedure by beneficiary primary diagnosis, 

see appendix III.

Average number of anatomic 

pathology services per biopsy 

procedure

Provider specialty and most common diagnoses, including 

International Classification of Diseases, Ninth Revision, 

Clinical Modification (ICD-9-CM) diagnostic code

Self-referring 

providers

Non-self-referring 

providers

Percentage 

difference 

Dermatology

Neoplasm of uncertain behavior of skin (238.2) 1.8 1.6 13%

Other malignant neoplasm of skin of other and unspecified parts of face 

(173.3)

1.6 1.4 14

Actinic keratosis (702.0) 1.7 1.5 13

Gastroenterology

Benign neoplasm of colon (211.3) 2.2 1.9 16

Atrophic gastritis, without mention of hemorrhage (535.10) 2.2 1.9 16

Unspecified gastritis and gastroduodenitis, without mention of hemorrhage (535.50) 2.7 2.0 35

Urology

Elevated prostate specific antigen (790.93) 12.5 8.5 47

 

24We examined the number of services referred per biopsy procedure for each diagnosis 

that comprised at least 1 percent of the diagnoses listed on the claims referred by selfreferring providers for each of the three provider specialties. The one primary diagnosis for 

which self-referring providers did not refer more services per biopsy procedure on average 

than non-self-referring providers was unspecified disorder of skin and subcutaneous 

tissue (709.9). This diagnosis accounted for approximately 1.6 percent of the diagnoses 

listed on claims for self-referring dermatologists.
 

Page 18 GAO-13-445 Medicare Self-Referral of Anatomic Pathology Services

Average number of anatomic 

pathology services per biopsy 

procedure

Provider specialty and most common diagnoses, including 

International Classification of Diseases, Ninth Revision, 

Clinical Modification (ICD-9-CM) diagnostic code

Self-referring 

providers

Non-self-referring 

providers

Percentage 

difference 

Malignant neoplasm of prostate (185) 8.5 6.1 39

Malignant neoplasm of bladder, part unspecified (188.9) 1.8 1.7 6 

Source: GAO analysis of CMS data.

Note: Proportion of all diagnoses referred for anatomic pathology services represented by the three 

most common codes varies by specialty. Specifically, the three most common diagnoses account for 

36.3 percent and 30.2 percent of biopsy procedures performed by self-referring and non-self-referring 

dermatologists, 43.2 percent and 44.7 percent of biopsy procedures performed by self-referring and 

non-self-referring gastroenterologists, and 50.3 percent and 46.6 percent of biopsy procedures 

performed by self-referring and non-self-referring urologists, respectively.

Differences in the number of referrals for anatomic pathology services 

between self-referring and non-self-referring providers of the same 

specialty treating similar numbers of Medicare FFS beneficiaries could 

generally not be explained by differences in patient health status. 

Specifically, for all three provider specialties we reviewed, the 

beneficiaries seen by self-referring providers treating a small, medium, or 

large number of Medicare FFS beneficiaries were of similar health status 

as patients seen by non-self-referring providers of the same specialty and 

size category (see table 4), as indicated by having similar average risk 

scores.25 If self-referring providers saw relatively sicker beneficiaries, it 

could have explained why these providers referred more anatomic 

pathology services on average than other providers of the same provider 

specialty and size categories.

 

25A risk score is a relative measure of a beneficiary’s expected health care costs and 

serves as a proxy for a beneficiary’s health status.

Patient Health Status
 

Page 19 GAO-13-445 Medicare Self-Referral of Anatomic Pathology Services

Table 4: Average Health Status of Medicare Beneficiaries for Select Provider 

Specialties by Practice Size in 2010

Average risk score of beneficiaries

Provider specialty and number of 

unique Medicare fee-for-service 

(FFS) beneficiaries

b

Self-referring 

providers a Non-self-referring providers

Dermatology

1 to 250 1.20 1.18

251 to 500 1.15 1.15

> 500 1.12 1.13

Gastroenterology

1 to 250 1.40 1.49

251 to 500 1.36 1.40

> 500 1.34 1.38

Urology

1 to 250 1.37 1.40

251 to 500 1.37 1.36

> 500 1.35 1.33

Source: GAO analysis of CMS data.

a

The number of unique Medicare FFS beneficiaries refers to the number of unique beneficiaries that 

received at least one service from a provider.

b

Differences in the number of anatomic pathology service referrals 

between self-referring and non-self-referring providers of the same 

specialty treating similar numbers of Medicare FFS beneficiaries could 

not be explained by differences in the age and sex of beneficiaries. In 

particular, the age and sex of Medicare FFS beneficiaries were generally 

consistent between those beneficiaries seen by self-referring providers 

and those seen by non-self-referring providers for all provider specialties 

and size categories we examined. For further information on the average 

age and sex of beneficiaries seen by self-referring and non-self-referring 

providers of the provider specialties we examined, see appendix IV. 

A beneficiary’s risk score is a proxy for health status and is equivalent to the ratio of expected health 

care expenditures for that beneficiary under Medicare FFS relative to the average health care 

expenditures for all Medicare FFS beneficiaries. For example, a beneficiary with a risk score of 1.05 

would have expected expenditures that were 5 percent higher than an average Medicare FFS 

beneficiary. The risk scores presented are normalized using the FFS normalization factor of 1.041 

that CMS used to normalize risk scores in 2010. Normalization keeps the average Medicare FFS risk 

score constant at 1.0 over time.

Differences in the number of anatomic pathology service referrals 

between self-referring and non-self-referring providers could not generally 

be explained by whether a provider practiced in an urban or rural area. 

Other Patient Characteristics 

Geography 
 

Page 20 GAO-13-445 Medicare Self-Referral of Anatomic Pathology Services

Self-referring providers of the same specialty treating a similar number of 

Medicare beneficiaries generally referred more anatomic pathology 

services on average than non-self-referring providers, regardless of 

whether the provider practiced in an urban or rural area. For example, 

self-referring dermatologists and urologists treating a similar number of 

Medicare FFS beneficiaries had higher referral rates on average for 

anatomic pathology services, regardless of whether they practiced in an 

urban or rural location. Likewise, self-referring gastroenterologists treating

a medium or large number of Medicare FFS beneficiaries referred a 

higher number of anatomic pathology services on average than non-selfreferring gastroenterologists treating a similar number of Medicare 

beneficiaries, regardless of whether they practiced in an urban or rural 

location. For further information on referral of anatomic pathology 

services across provider specialties and size categories in urban and 

rural areas, see appendix V.

Our analysis shows that, across the three provider specialties we 

reviewed, providers’ referrals for anatomic pathology services 

substantially increased the year after they began to self-refer. In our 

analysis we examined the number of anatomic pathology referrals made 

by “switchers”—those providers that did not self-refer in 2007 or 2008 but 

began to self-refer in 2009 and continued to do so in 2010—and 

compared these referrals to the number made by providers that did not 

begin to self-refer during this period. Providers could self-refer by setting 

up an in-office laboratory, contracting for laboratory services, or joining a 

group practice that already self-referred. We found that the switchers saw 

large increases in the number of anatomic referrals they made from 2008 

to 2010 when compared with other providers (see table 5). Specifically, 

across the three provider specialties we reviewed, the switcher group of 

providers increased the number of anatomic pathology referrals they 

made from 2008 to 2010 by at least 14.0 percent and by as much as 

58.5 percent. In contrast, providers that self-referred anatomic pathology 

services during the entire period experienced smaller changes in the 

number of referrals, ranging from a 1.4 percent increase to an 

11.6 percent increase, depending on the provider specialty. Among 

providers that did not self-refer anatomic pathology services, the number 

of referrals the providers made for these services ranged from a decrease 

of 0.2 percent to an increase of 2.8 percent, depending on the provider 

specialty.

Providers’ Referrals for 

Anatomic Pathology 

Services Increased the 

Year after They Began to 

Self-refer
 

Page 21 GAO-13-445 Medicare Self-Referral of Anatomic Pathology Services

Table 5: Change in Average Number of Medicare Anatomic Pathology Services Referred by Provider Specialty, 2008 and 2010

Primary specialty Referral type

Number of 

providers

Average number of 

unique Medicare 

fee-for-service

(FFS) 

beneficiaries, 2010

Anatomic 

pathology 

services, 2008

Anatomic 

pathology 

services, 2010 a

Percentage 

change 

2008 to 2010 a

Dermatology Switchers 130 478.2 658.6 815.5 23.8%

Self-referring 1,353 573.6 803.9 815.0 1.4

 Non-self-referring 2,361 424.4 451.9 453.2 0.3

Gastroenterology Switchers 195 335.5 338.7 386.1 14.0

Self-referring 438 380.9 413.7 439.6 6.3

 Non-self-referring 4,833 365.1 340.8 350.4 2.8

Urology Switchers 215 619.1 257.3 407.7 58.5

Self-referring 498 626.8 289.4 322.9 11.6

 Non-self-referring 3,192 473.6 175.8 175.4 -0.2

Source: GAO analysis of CMS data.

Notes: Anatomic pathology services refer specifically to services with Healthcare Common Procedure 

Coding System (HCPCS) code 88305. We define switchers as those providers that did not self-refer 

in 2007 or 2008, but did self-refer in 2009 and 2010.

a

Providers in the switcher groups for the three specialties we reviewed had 

an increase in the number of anatomic pathology referrals they made 

from 2008 to 2010 due to an increase, on average, in the number of 

anatomic pathology services referred per biopsy procedure. Across the 

three specialties we reviewed, the increase in the number of specimens 

submitted for examination from each biopsy procedure from 2008 to 2010 

ranged from 13.3 percent to 48.9 percent. For all three specialties we 

reviewed, the increase in the number of anatomic pathology services 

referred per biopsy procedure was greater for providers in the switchers 

group than for providers who did not self-refer from 2008 through 2010 or 

those providers who self-referred for all 3 years.

The average number of anatomic pathology services referred by self-referring providers, non-selfreferring providers, and switchers are influenced in part by the average number of unique Medicare 

FFS beneficiaries seen by each referral type. For example, in 2008, both switchers—who did not selfrefer in 2008—and non-self-referring urologists averaged approximately 0.4 anatomic pathology 

referrals per unique Medicare FFS beneficiary. However, switchers averaged more anatomic 

pathology referrals than non-self-referring providers in 2008 because they saw, on average, more 

unique Medicare FFS beneficiaries.

The increase in anatomic pathology referrals for providers that began 

self-referring in 2009 cannot be explained exclusively by factors such as 

providers joining practices with higher patient volumes, different patient 

populations, or different practice cultures. Specifically, providers that 

remained in the same practice from 2007 through 2010, but began self-
 

Page 22 GAO-13-445 Medicare Self-Referral of Anatomic Pathology Services

referring in 2009, also had a bigger increase in the number of anatomic 

pathology referrals than did providers that did not change their selfreferral status. The increase in the number of anatomic pathology 

services referred by providers in the switcher group that met this criterion 

from 2008 to 2010 ranged from an increase of 6.8 percent to an increase 

of 38.6 percent, depending on the provider specialty.

We estimate that Medicare spent about $69 million more in 2010 than the 

program would have spent if self-referring providers performed biopsy 

procedures at the same rate as and referred the same number of services 

per biopsy procedure as non-self-referring providers of the same provider 

size and specialty (see fig. 4).26

 

26We limited our analysis to expenditures directly related to anatomic pathology services. 

There may be additional costs associated with the increased use of anatomic pathology 

services by self-referring providers, if these services result in inaccurate diagnoses and, in 

turn, additional services or procedures that are unnecessary. In contrast, increased use of 

anatomic pathology services may partially offset some of these direct anatomic pathology 

costs if increased use led to the early detection of disease and resulted in less-invasive 

and less-costly treatments.

This additional spending can be attributed 

to the fact that self-referring providers in the 3 provider specialties we 

examined referred about 918,000 more anatomic pathology services in 

2010. In 2013, CMS reduced its payment of anatomic pathology services 

because it determined that fewer resources—equipment, supplies, and 

non-physician staff—were required to prepare anatomic pathology 

services. If the lower 2013 Medicare reimbursement rates for anatomic 

pathology services were in effect in 2010, Medicare would have spent 

approximately $48 million more than it would have if self-referring 

providers performed biopsy procedures at the same rate as and referred 

the same number of services per biopsy procedure as non-self-referring 

providers of the same provider size and specialty.

Higher Use of 

Anatomic Pathology 

Services by SelfReferring Providers 

Results in Substantial 

Additional Medicare 

Spending 
 

Page 23 GAO-13-445 Medicare Self-Referral of Anatomic Pathology Services

Figure 4: Estimated Additional Medicare Spending for Anatomic Pathology Services 

Attributed to Self-Referring Providers, 2010

Notes: Anatomic pathology services refer specifically to services with Healthcare Common Procedure 

Coding System (HCPCS) code 88305. Our analysis included expenditures for anatomic pathology 

services referred by dermatologists, gastroenterologists, and urologists. Combined, these three 

specialties were responsible for approximately 64 percent of all referrals for anatomic pathology 

services and 90 percent of all self-referred anatomic pathology services in 2010. We calculated 

expenditures for services as if self-referring providers performed biopsy procedures at the same rate 

as and referred the same number of services per biopsy procedure as non-self-referring providers of 

the same specialty and size in 2010. To estimate expenditures for 2010 as though the 2013 payment 

rate were in effect, we reduced expenditures for anatomic pathology services by 30 percent.

These 2013 estimated expenditures do not include the payment reductions that may result from 

implementation of the Budget Control Act of 2011, Pub. L. No. 112-25, 125 Stat. 240, as amended by 

the American Taxpayer Relief Act of 2012 (Pub. L. No. 112-240, 126 Stat. 2313) (2013).

a

This calculation likely underestimates the total amount of additional 

Medicare spending that can be attributed to self-referring providers 

because we did not include all Medicare providers in our analysis.

Specifically, we limited our analysis to anatomic pathology services 

Estimated additional expenditures at the 2013 payment rate do not equal the difference of estimated 

2010 expenditures if paid at the 2013 payment rate and the estimated expenditures if self-referring 

providers performed biopsy procedures at the same rate as and referred the same number of 

services per biopsy procedure as non-self-referring providers due to rounding.
 

Page 24 GAO-13-445 Medicare Self-Referral of Anatomic Pathology Services

referred by dermatologists, gastroenterologists, and urologists. These 

specialties account for approximately 64 percent of anatomic pathology 

services referred across all settings and about 90 percent of all selfreferred anatomic pathology services in 2010.

Anatomic pathology services are vital services that help providers 

diagnose disease and guide treatment options for patient care. 

Proponents of self-referral contend that the ability of providers to self-refer 

anatomic pathology services has the potential benefit of more rapid 

diagnoses and better coordination of care. Our review indicates that 

across the major provider specialties that refer beneficiaries for anatomic 

pathology services, self-referring providers generally referred more 

anatomic pathology services on average than other providers of the same 

specialty treating similar numbers of Medicare patients. This increase is 

due to a greater number of specimens submitted for examination from 

each biopsy procedure, and in certain cases a greater number of biopsy 

procedures performed. This increase raises concerns, in part because 

biopsy procedures, although generally safe, can result in serious 

complications for Medicare beneficiaries. Further, our analysis shows that 

across these provider specialties, providers’ referrals for anatomic 

pathology services substantially increased the year after they began to 

self-refer.

The relatively higher rate of anatomic pathology services among selfreferring providers cannot be explained by patient diagnosis, patient 

health status, or geographic location. Taken together, this suggests that 

financial incentives for self-referring providers were likely a major factor 

driving the increase in anatomic pathology referrals. In 2010, providers 

who self-referred made an estimated 918,000 more referrals for anatomic 

pathology services than they likely would have if they were not selfreferring. Notably, these additional referrals cost CMS about $69 million in 

2010 alone. To the extent that these additional services are unnecessary, 

avoiding them could result in savings to Medicare and to beneficiaries.

Despite the potential safety and financial implications of unnecessary 

anatomic pathology services, CMS does not have policies to address the 

effect of how self-referral affects the utilization of and expenditures for 

anatomic pathology services. CMS does not currently have the ability to 

identify anatomic pathology services that are self-referred so that the 

agency can track the extent to which anatomic pathology services are 

self-referred and identify services that may be unnecessary. Specifically, 

Medicare claims do not include an indicator or “flag” that identifies 

Conclusions 
 

Page 25 GAO-13-445 Medicare Self-Referral of Anatomic Pathology Services

whether services are self-referred or non-self-referred. Thus, CMS does 

not currently have a method for easily identifying such services and 

cannot determine the effect of self-referral on utilization and expenditures 

for anatomic pathology services. Including a self-referral flag on Medicare 

Part B claims submitted by providers who bill for anatomic pathology 

services is likely the easiest and most cost-effective approach.

If CMS could readily identify self-referred anatomic pathology services, 

the agency may be better positioned to identify potentially inappropriate 

utilization of biopsy procedures. CMS could, for example, consider 

performing targeted audits of providers who perform a higher average 

number of biopsy procedures, compared to providers of the same 

specialty treating a similar number of Medicare beneficiaries. Given our 

report findings, CMS may want to initially focus its efforts on self-referring 

dermatologists who treated a larger number of Medicare beneficiaries.

While providers have discretion in determining the number of tissue 

samples that become specimens, CMS’s current payment system 

provides a financial incentive for providers to refer a higher number of 

specimens—or anatomic pathology services—per biopsy procedure. 

Providers can double their payment for anatomic pathology services, for 

example, by submitting four specimens from four tissue samples instead 

of combining the four tissue samples into two specimens. However, 

providers differ on whether or to what extent tissue samples can be 

combined in creating a specimen or if each tissue sample must become a 

specimen. CMS has already implemented a payment approach for one 

specific biopsy procedure—prostate saturation biopsy—that pays 

providers through a single payment rather than paying for each specimen 

individually within a given range of anatomic pathology services, such as 

1 to 20 specimens. However, this policy does not apply to anatomic 

pathology services from other biopsy procedures. CMS could expand this 

payment approach to other biopsy procedures and associated anatomic 

pathology services.
 

Page 26 GAO-13-445 Medicare Self-Referral of Anatomic Pathology Services

In order to improve CMS’s ability to identify self-referred anatomic 

pathology services and help CMS avoid unnecessary increases in these 

services, we recommend that the Administrator of CMS take the following 

three actions:

1. Insert a self-referral flag on Medicare Part B claim forms and require 

providers to indicate whether the anatomic pathology services for 

which the provider bills Medicare are self-referred or not.

2. Determine and implement an approach to ensure the appropriateness 

of biopsy procedures performed by self-referring providers.

3. Develop and implement a payment approach for anatomic pathology 

services that would limit the financial incentives associated with 

referring a higher number of specimens—or anatomic pathology 

services—per biopsy procedure.

We provided a draft of this report to HHS, which oversees CMS, for 

comment. HHS provided written comments, which are reprinted in 

appendix VI. We also obtained comments from representatives from four 

professional associations selected because they represent an array of 

stakeholders with specific involvement in anatomic pathology services. 

Three associations provided oral comments: the College of American 

Pathologists (CAP), which represents pathologists; the American 

Academy of Dermatology Association (AADA), which represents 

dermatologists; and the American Gastroenterological Association (AGA), 

which represents gastroenterologists. The American Urological 

Association (AUA), which represents urologists, provided written 

comments. We summarize and respond to comments from HHS and 

representatives from the four professional associations in the following 

sections.

HHS reviewed a draft of this report and provided written comments, which

are reprinted in appendix VI. In its comments, HHS stated that it 

concurred with, and had addressed, one of our recommendations, but did 

not concur with our other two recommendations. HHS provided few 

comments on our findings that self-referring providers referred 

substantially more anatomic pathology services than non-self-referring 

providers.

Recommendations for 

Executive Action

Agency and ThirdParty Comments and 

Our Evaluation

HHS Comments
 

Page 27 GAO-13-445 Medicare Self-Referral of Anatomic Pathology Services

HHS stated that it concurred with, and has already addressed, our 

recommendation that CMS develop and implement a payment approach 

for anatomic pathology services that would limit the financial incentives 

associated with referring a higher number of anatomic pathology services 

per biopsy procedure. According to HHS, the payment revaluation for 

anatomic pathology services in 2013 decreased payment by 

approximately 30 percent and significantly reduced the financial 

incentives associated with self-referral for these services. We are pleased 

that CMS examines and revalues HCPCS codes to ensure that payment 

for services matches the resources involved and adjusts payment to the 

extent needed. However, the payment revaluation that occurred in 2013 

does not address the higher referral of anatomic pathology services we 

found associated with self-referring providers. Although no consensus 

exists on the number and type of tissue samples that become a 

specimen—an anatomic pathology service—the current payment system 

pays more if providers create more specimens from the same number of 

samples. We continue to believe that CMS should develop a payment 

approach that addresses the incentive to provide more services.

HHS did not concur with our recommendation that CMS insert a selfreferral flag on the Medicare Part B claims form and require providers to 

indicate whether the anatomic pathology services for which a provider 

bills Medicare are self-referred or not. In its response, HHS did not 

provide reasons for not concurring with this recommendation, but stated 

that the President’s fiscal year 2014 budget proposal includes a provision 

to exclude certain services from the in-office ancillary services exception.

HHS added that anatomic pathology services may share some 

characteristics with the services mentioned in the proposal. To the extent 

that self-referral for anatomic pathology services continues to be 

permitted, we believe that including an indicator or flag on the claims 

would likely be the easiest and most cost-effective approach to improve 

CMS’s ability to identify self-referred anatomic pathology services. Such a 

flag would allow CMS to monitor the behavior of self-referring providers 

and could be helpful to CMS in answering broader policy questions on 

self-referral.

HHS did not concur with our recommendation that CMS determine and

implement an approach to ensure the appropriateness of biopsy 

procedures performed by self-referring providers. In its response, HHS 

noted that it would be difficult to make recommendations regarding 

whether services are appropriate without reviewing large numbers of 

claims, reporting that 918,000 instances of self-referral that we identified 

would need to be reviewed. Further, the agency stated that it does not 
 

Page 28 GAO-13-445 Medicare Self-Referral of Anatomic Pathology Services

believe that this recommendation will address overutilization that occurs 

as a result of self-referral. We do not suggest or intend that CMS review 

every anatomic pathology service to determine whether it is appropriate.

Self-referral, however, could be a factor CMS considers in its ongoing 

efforts to identify and address inappropriate use of Medicare services. As 

noted in the report, CMS could, for example, consider performing targeted 

audits of providers that perform a higher average number of biopsy 

procedures, compared to providers of the same specialty treating similar 

numbers of Medicare beneficiaries. In this regard, a flag that we also 

recommended to identify self-referred services would facilitate such 

audits.

On the basis of HHS’s written response to our report, we are concerned 

that HHS does not appear to recognize the need to monitor the selfreferral of anatomic pathology services on an ongoing basis and 

determine those services that may be inappropriate or unnecessary. HHS 

did not comment on our key finding that providers’ referrals for anatomic 

pathology services across the three specialties we examined substantially 

increased the year after they began to self-refer. Nor did HHS comment 

on our estimate that additional referrals for anatomic pathology services 

from self-referring providers cost CMS about $69 million in 2010 or 

$48 million based on the 2013 payment rates. Given these findings, we 

continue to believe that CMS should take steps to monitor the utilization 

of anatomic pathology services and ensure that the services for which 

Medicare pays are appropriate. By not monitoring the appropriateness of 

these services, CMS is missing an opportunity to save Medicare 

expenditures.

Representatives from CAP expressed concern that our methodology to 

identify self-referral missed certain self-referral arrangements for 

anatomic pathology services and that our findings understate effects from 

self-referral. According to the CAP representatives, because our 

methodology did not identify providers who self-refer the PC only and did 

not include financial relationships that do not share TINs, effects from 

self-referral are greater than our findings suggest. As noted in the report, 

we excluded claims with a only a PC from our finding on utilization and 

expenditures trends for anatomic pathology services because we could 

not reliably determine that they were performed in the physician office or 

independent laboratory. We identified financial relationships among 

providers using TINs, which would identify the provider, the provider’s 

employer, or another entity to which the provider reassigns payment. To 

the extent that providers self-refer only the PCs of anatomic pathology 

Professional Association 

Comments College of 

American Pathologists
 

Page 29 GAO-13-445 Medicare Self-Referral of Anatomic Pathology Services

services or self-refer to entities with which they do not share TINs, 

differences between self-referring and non-self-referring providers would 

be greater, and our estimate of the differences would be more 

conservative. CAP representatives also raised questions about selfreferral that our report did not address, such as why the report did not 

examine cancer detection rates or whether anatomic pathology services 

should be included in the in-office ancillary services exception. These 

issues were outside the report’s objectives. While the representatives 

from CAP agreed with the recommendation to include a self-referral flag 

on the Medicare Part B claims form, they disagreed with our other 

recommendations, stating that they would not sufficiently address the 

report findings. We believe that our recommendations incorporate actions 

that address the problems we identified.

Representatives from the AADA stated that dermatologists should 

continue to be allowed to prepare and review their own anatomic 

pathology services because they receive considerable training as part of 

their education and offered several possible explanations for the 

additional anatomic pathology services referred and biopsy procedures 

performed by self-referring providers. For example, they raised the 

possibility that the increase in anatomic pathology services referred and 

biopsy procedures performed by providers in the switcher group was due 

to increases in patient volume, providers joining a larger group practice or 

hiring a mid-level practitioner allowing the provider to see more patients.

They also raised the possibility that providers in the switcher group 

became further specialized, resulting in a change in the number and type 

of diagnoses for their patients. Also, the AADA reported that our reliance 

on TINs to identify self-referral could be problematic because providers 

working in large, university-based practices would be flagged as selfreferring, despite lacking a financial incentive to provide more services.

As noted in the report, the increase in anatomic pathology referrals for 

providers that began self-referring in 2009 cannot be explained 

exclusively by factors such as providers joining practices with higher 

patient volumes, different patient populations, or different practice 

cultures. Specifically, providers that remained in the same practice from 

2007 through 2010, but began self-referring in 2009, had a bigger 

increase in the number of anatomic pathology services referred than 

providers who did not change their self-referral status. Further, we found 

that the types and proportions of patient diagnoses were similar for selfreferring and non-self-referring providers of the same specialty and that 

self-referring providers referred more anatomic pathology services per 

biopsy procedure for nearly all—53 of 54—primary diagnoses for which 

American Academy of 

Dermatology Association 
 

Page 30 GAO-13-445 Medicare Self-Referral of Anatomic Pathology Services

beneficiaries were referred for anatomic pathology services. To the extent 

that providers who share a TIN, but do not have a financial incentive to 

refer more services, are counted as self-referring, our findings would 

likely underestimate differences between self-referring and non-selfreferring providers and would thus provide a conservative estimate of the 

effects of self-referral.

The AADA agreed with our recommendation of determining an approach 

to ensure the appropriateness of biopsy procedures, but disagreed with 

our recommendation of a payment approach limiting the financial 

incentives associated with a higher number of services per biopsy 

procedure. Specifically, the AADA expressed concern about any 

disincentives for dermatologists to perform biopsy procedures. As noted 

in the report, increases in the number of anatomic pathology services per 

biopsy procedure were primarily responsible for the growth of anatomic 

pathology services referred by providers in the switcher group from 2008 

to 2010 across provider specialties. We continue to believe that CMS 

should develop and implement a payment approach for anatomic 

pathology services that would limit the financial incentives associated with 

referring a higher number of services per biopsy procedure.

Representatives from the AGA asked for further information about the 

providers in our analysis (particularly gastroenterologists in the switcher 

group) and diagnoses of the beneficiaries referred for anatomic pathology 

services, and offered several possible explanations for the additional 

anatomic pathology services referred and biopsy procedures performed 

by self-referring providers. Specifically, the AGA raised the possibility that 

providers in the switcher group joined larger groups that perform more 

anatomic pathology services or changed the types of biopsy procedures 

they performed. Finally, the AGA also noted that an appropriate number 

of anatomic pathology services is not known. Specifically, they reported 

that larger practices, which are also more likely to self-refer, are more 

likely to have formal peer review, which could result in more anatomic 

pathology services referred. We have included an appendix with 

additional information on the number of services per biopsy procedure for 

the most common diagnoses for which beneficiaries were referred for 

anatomic pathology services in 2010. As noted, the types and proportions 

of diagnoses for which beneficiaries were referred for anatomic pathology 

services were similar for self-referring and non-self-referring providers.

We found that self-referring providers referred more services per biopsy 

procedure on average than non-self-referring providers for nearly all of 

these diagnoses. We acknowledge that the appropriate number of 

American 

Gastroenterological 

Association 
 

Page 31 GAO-13-445 Medicare Self-Referral of Anatomic Pathology Services

referrals for these services is not known, but the consistent pattern of selfreferring providers’ higher use suggests that additional scrutiny is 

warranted. The AGA agreed with our recommendations, but did not think 

the recommendation on a payment approach for anatomic pathology 

services limiting the financial incentives associated with referring a higher 

number of specimens per biopsy procedure was as applicable to

providers of their specialty.

The AUA agreed with our recommendation to identify self-referred 

services but did not agree with our other recommendations to examine 

the appropriateness of biopsy procedures performed by self-referring 

providers or develop a payment approach that would limit the financial 

incentives for referring a higher number of anatomic pathology services.

The AUA said that there were problems with the study’s design and data 

gathering methodology originating from problems with identifying selfreferral which resulted in their questioning the validity of the report 

findings. AUA did not provide further detail on their methodological 

concerns. We believe our methodology to identify self-referred services 

and classify providers as self-referring using one hundred percent of 

Medicare Part B claims is a reasonable and valid approach. In designing 

our methodology, we consulted with officials from CMS, specialty 

societies, and other researchers. Our approach is similar to the one used 

by MedPAC for its study of the effect of physician self-referral on use of 

imaging services.

27

As agreed with your offices, unless you publicly announce the contents of 

this report earlier, we plan no further distribution until 30 days from the 

report date. At that time, we will send copies to the Secretary of Health 

and Human Services, interested congressional committees, and others.

In addition, the report will be available at no charge on the GAO website 

at http://www.gao.gov. 

 

27See Medicare Payment Advisory Commission: Report to the Congress: Improving 

Incentives in the Medicare Program (Washington, DC, June 2009).

American Urological 

Association 
 

Page 32 GAO-13-445 Medicare Self-Referral of Anatomic Pathology Services

If you or your staff has any questions about this report, please contact me 

at (202) 512-7114 or cosgrovej@gao.gov. Contact points for our Offices 

of Congressional Relations and Public Affairs may be found on the last 

page of this report. GAO staff who made major contributions to this report 

are listed in appendix VII. 

James C. Cosgrove

Director, Health Care
Page 33 GAO-13-445 Medicare Self-Referral of Anatomic Pathology Services

List of Requesters

The Honorable Max Baucus

Chairman

Committee on Finance

United States Senate

The Honorable Charles E. Grassley

Ranking Member

Committee on the Judiciary

United States Senate

The Honorable Henry A. Waxman

Ranking Member

Committee on Energy and Commerce

House of Representatives

The Honorable Sander Levin

Ranking Member

Committee on Ways and Means

House of Representatives
Appendix I: Special Stains Used in 

Conjunction with Anatomic Pathology Services 

Paid under Medicare

Page 34 GAO-13-445 Medicare Self-Referral of Anatomic Pathology Services

As part of our work, we also analyzed additional anatomic pathology 

services—known as special stains—that providers may use in conjunction 

with anatomic pathology services to enhance their ability in making a 

diagnosis. We focused our special stains analysis on services with 

Healthcare Common Procedure Coding System (HCPCS) codes 88312, 

88313, and 88342 that were used in conjunction with the anatomic 

pathology service, HCPCS code 88305. We considered special stains 

billed on the same date, by the same provider, for the same beneficiary 

as those used in conjunction with anatomic pathology services. In 2010, 

expenditures under the physician fee schedule for these three special 

stain services totaled approximately $387 million. Providers may utilize 

special stains with a HCPCS code of 88312 on specimens to detect the 

presence of infectious organisms such as bacteria and fungus, special 

stains with a HCPCS code of 88313 to detect the presence of iron, and 

special stains with a HCPCS code of 88342 to identify the origin of a 

cancer.1 Use of special stains is determined by the provider referring 

anatomic pathology services, the pathologist interpreting the anatomic 

pathology service, or both. We examined (1) trends in the number of and 

expenditures for self-referred and non-self-referred special stains, and 

(2) how the provision of special stains differs for providers who self-refer 

when compared with other providers.

Similar to anatomic pathology services, the number of both self-referred 

and non-self-referred special stains increased from 2004 through 2010, 

with self-referred special stains increasing at a faster rate than services 

that were not self-referred. Specifically, the number of special stains that 

were self-referred increased from about 60,000 in 2004 to about 340,000 

in 2010, an increase of more than 400 percent (see fig. 5). Further, we 

found that self-referred special stains increased more than non-selfreferred special stains for each of the three special stains we studied. In 

contrast, non-self-referred special stains grew from about 710,000 

services to about 1.80 million services, an increase of about 150 percent.

 

1

This special stain (88342 – immunohistochemistry) is used to evaluate diseases, 

including diagnosis, staging, and prognosis. For example, immunohistochemistry can be 

used to detect whether the specimen where cancer has been found is the primary site of 

that cancer or whether the cancer has spread to that location from elsewhere in the body.

Appendix I: Special Stains Used in 

Conjunction with Anatomic Pathology 

Services Paid under Medicare

Utilization of and 

Expenditures for Selfreferred and Non-selfreferred Special Stains
Appendix I: Special Stains Used in 

Conjunction with Anatomic Pathology Services 

Paid under Medicare

Page 35 GAO-13-445 Medicare Self-Referral of Anatomic Pathology Services

Figure 5: Number of Self-referred and Non-self-referred Medicare Special Stains, 

2004–2010

Note: Results include special stains—those services with Healthcare Common Procedure Coding 

System (HCPCS) codes of 88312, 88313, and 88342—that were performed in a physician’s office or 

diagnostic laboratory and used in conjunction with the examination of tissue taken through biopsy 

procedures (HCPCS code 88305). Special stains performed in other settings, such as hospital 

outpatient departments, or performed with other anatomic pathology services are not included.

Similar to expenditures for anatomic pathology services, Medicare’s 

expenditures for both self-referred and non-self-referred special stains 

used in conjunction with HCPCs code 88305 also grew rapidly during the 

period we studied, with the greater rate of increase among expenditures 

for self-referred services. Specifically, expenditures for self-referred 

special stains grew more than six-fold, increasing from about $4 million in 

2004 to about $30 million in 2010 (see fig. 6). In comparison, 

expenditures for non-self-referred special stains more than tripled during 

these years, growing from about $46 million in 2004 to about $162 million 

in 2010.
Appendix I: Special Stains Used in 

Conjunction with Anatomic Pathology Services 

Paid under Medicare

Page 36 GAO-13-445 Medicare Self-Referral of Anatomic Pathology Services

Figure 6: Expenditures for Self-referred and Non-self-referred Medicare Special 

Stains, 2004–2010

Note: Results include expenditures for special stains, those services with Healthcare Common 

Procedure Coding System (HCPCS) codes 88312, 88313, and 88342, performed in a physician’s 

office or diagnostic laboratory that were performed with the anatomic pathology services (HCPCS 

code 88305) that are a focus of our study. Special stains performed in other settings, such as hospital 

outpatient departments, or performed with other anatomic pathology services are not included.

For two of the three specialties we examined, self-referring providers 

referred a higher number of special stains on average than non-selfreferring providers of the same specialty treating similar numbers of 

Medicare fee-for-service (FFS) beneficiaries. Specifically, self-referring 

gastroenterologists and urologists referred more special stains on 

average than non-self-referring gastroenterologists and urologists treating 

a similar number of Medicare beneficiaries. We also found this pattern for 

self-referring dermatologists treating small numbers of Medicare FFS 

beneficiaries. Provider specialty and size category combinations we 

studied where self-referring providers referred more special stains on 

average than non-self-referring providers represented about 86 percent of 

special stains referred by these specialties.

Self-referring and Non-selfreferring Providers 

Referral for Special Stains
Appendix I: Special Stains Used in 

Conjunction with Anatomic Pathology Services 

Paid under Medicare

Page 37 GAO-13-445 Medicare Self-Referral of Anatomic Pathology Services

Table 6: Average Number of Medicare Special Stains Referred by Self-referring and 

Non-self-referring Providers for Select Provider Specialties in 2010

Average number of special 

stains referred

Provider specialty 

and number of 

unique Medicare FFS 

beneficiaries

Self-referring 

providers a Non-self-referring 

providers

Relative rate of selfreferring providers

Dermatology

b

1 to 250 17.6 15.3 1.15

251 to 500 32.8 36.8 0.89

>500 63.3 67.7 0.94

Gastroenterology

1 to 250 73.4 44.2 1.66

251 to 500 201.9 119.4 1.69

>500 514.0 242.9 2.12

Urology

1 to 250 17.0 12.6 1.35

251 to 500 36.3 31.8 1.14

>500 79.9 52.9 1.51

Source: GAO Analysis of CMS data.

Notes: Results include special stain HCPCS codes 88312, 88313, or 88342 used in conjunction with 

the anatomic pathology services we studied.

a

The number of unique Medicare FFS beneficiaries refers to the number of unique beneficiaries that 

received at least one service from a provider.

b

Our analysis shows that, for two of the three specialties we reviewed, 

providers’ referrals for special stains substantially increased the year after 

they began to self-refer. Specifically, urologists and gastroenterologists 

that were “switchers”—those providers that did not self-refer in 2007 or 

2008 but began to self-refer in 2009 and continued to do so in 2010—saw 

larger increases in the number of special stain referrals they made 

relative to other providers (see table 7). Dermatologists in the switcher 

group had a 17.6 percent increase in the number of special stains 

referred from 2008 to 2010, but this was roughly equivalent to the 

increase for providers in the non-self-referring group and only slightly 

higher than the increase for providers in the self-referring group.

The relative rate of self-referring providers refers to the factor by which the average number of 

special stains referred by self-referring providers is greater or less than the average number of 

special stains referred by non-self-referring providers. For example, if the relative rate of self-referring 

providers is equal to 2, it would mean that, on average, self-referring providers referred twice as many 

special stains as non-self-referring providers.
Appendix I: Special Stains Used in 

Conjunction with Anatomic Pathology Services 

Paid under Medicare

Page 38 GAO-13-445 Medicare Self-Referral of Anatomic Pathology Services

Table 7: Change in Average Number of Medicare Special Stains Referred by Provider Specialty, 2008 and 2010

Special stainsa

Primary specialty Referral type

Number of 

providers

Average number of unique 

Medicare fee-for-service 

(FFS) beneficiaries, 2010 2008 2010

Percentage change 

2008 to 2010

Dermatology Switchers 130 478.2 31.2 36.7 17.6%

Self-referring 1,353 573.6 31.1 35.9 15.4

 Non-self-referring 2,361 424.4 31.9 37.6 17.9

Gastroenterology Switchers 195 335.5 125.9 219.3 74.2

Self-referring 438 380.9 204.6 271.4 32.6

Non-self-referring 4,833 365.1 99.3 119.0 19.8

Urology Switchers 215 619.1 36.7 56.5 54.0

Self-referring 498 626.8 27.5 38.8 41.1

Non-self-referring 3,192 473.6 28.8 31.7 10.1

Source: GAO analysis of CMS data.

Notes: Special stains refer specifically to services with HCPCS codes 88312, 88313, or 88342. We 

define switchers as those providers that did not self-refer in 2007 or 2008, but did self-refer in 2009 

and 2010.

a

The average number of special stains referred by self-referring providers, non-self-referring 

providers, and switchers are influenced in part by the average number of unique Medicare FFS 

beneficiaries seen by each referral type. For example, in 2008, both switchers—who did not self-refer 

in 2008—and non-self-referring urologists averaged approximately 0.06 anatomic pathology referrals 

per unique Medicare FFS beneficiary. However, switchers averaged more anatomic pathology 

referrals than non-self-referring providers in 2008 because they saw, on average, more unique 

Medicare FFS beneficiaries.
Appendix II: Scope and Methods

Page 39 GAO-13-445 Medicare Self-Referral of Anatomic Pathology Services

This section describes the scope and methodology used to analyze our 

three objectives: (1) trends in the number of and expenditures for selfreferred and non-self-referred anatomic pathology services from 2004 

through 2010, (2) how the provision of anatomic pathology services may 

differ for providers who self-refer when compared with other providers, 

and (3) the implications of self-referral for Medicare spending on anatomic 

pathology services. 

For all three objectives, we used the Medicare Part B Carrier File, which 

contains final action Medicare Part B claims for noninstitutional providers, 

such as physicians. Claims can be for one or more services or for 

individual service components.1

We limited our universe of services and service components for our study 

to certain anatomic pathology services. Specifically, we limited our 

universe to services with a HCPCS code of 88305, which are anatomic 

pathology services related to the examination of tissue taken through 

biopsy procedures. (We also studied services with HCPCS codes 88312, 

88313, and 88342—special stains—which were used in conjunction with 

these anatomic pathology services.)

Each service or service component is 

identified on a claim by its Healthcare Common Procedure Coding 

System (HCPCS) code, which the Centers for Medicare & Medicaid 

Services (CMS) assigns to products, supplies, and services for billing 

purposes.

2

 

1

Services can have technical components (TC) and professional components (PC). The 

TC of a service is intended to cover the performance of a test, including the cost of 

equipment, supplies, and nonphysician staff. The PC of the service is intended to cover 

the physician’s time in interpreting an anatomic pathology service and writing a report on 

the findings. The TC and PC of a service can be billed together on the same claim—called 

a global claim—or billed separately.

CMS considers anatomic pathology 

services to be “designated health services”—services for which, in the 

absence of an exception, a physician may not make a referral to an entity 

2

For the purposes of this report “anatomic pathology” services refer to HCPCS 88305 

services, and “special stains” refer to HCPCS 88312, 88313, and 88342 services that 

were used in conjunction with these anatomic pathology services.

Appendix II: Scope and Methods
Appendix II: Scope and Methods

Page 40 GAO-13-445 Medicare Self-Referral of Anatomic Pathology Services

with which he or she has a financial relationship without implicating the 

Stark law.

3

Because there is no indicator or “flag” on the claim that identifies whether 

services were self-referred or non-self-referred, we developed a claimsbased methodology to identify services as either self-referred or non-selfreferred. Specifically, we classified services as self-referred if the provider 

that referred the beneficiary for an anatomic pathology service and the 

provider that performed the anatomic pathology service was identical or 

had a financial relationship. We used taxpayer identification number 

(TIN), an identification number used by the Internal Revenue Service, to 

determine providers’ financial relationships. The TIN could be that of the 

provider, the provider’s employer, or another entity to which the provider 

reassigns payment.4 In order to identify the associated TINs for the 

referring and performing providers, we created a crosswalk of the 

performing provider’s unique physician identification number or national 

provider identifier (NPI) to the TIN that appeared on the claim and used 

that to assign TINs to the referring and performing providers.5

 

3

Compliance with the physician self-referral law, commonly known as the Stark law, is 

outside the scope of this report. The Stark law prohibits physicians from making referrals 

for certain designated health services paid for by Medicare to entities with which the 

physicians or immediate family members have a financial relationship, unless the 

arrangement complies with a specified exception, such as in-office ancillary services. 

42 U.S.C. § 1395nn(b)(2).

4

Some providers may be associated with TINs with which they do not have a direct or 

indirect financial relationship and thus would not have the same incentives as other selfreferring providers. We anticipate that relatively few providers in our self-referring group 

meet this description but to the extent that they do, it may have limited the differences we 

found in utilization and expenditure rates between self-referring and non-self-referring 

providers.

5

The final rule implementing the Health Insurance Portability and Accountability Act 

established the standard for a unique health identifier for health care providers for use in 

the health care system and announced the adoption of the NPI as that standard. HIPAA 

Administrative Simplification: Standard Unique Health Identifier for Health Care Providers, 

69 Fed. Reg. 2424 (Jan. 23, 2004) (adding a new subpart D to 45 C.F.R. part 162). 

Performing physicians were required to include their NPI on any claim submitted to 

Medicare as of May 23, 2008. Prior to implementation of the NPI, Medicare required 

providers to submit another type of unique provider identifier called the unique physician 

identification number.Our methodology for identifying self-referred services was similar to 

the methodology we used for our study of physician self-referral of imaging services. See 

GAO, Medicare: Higher Use of Advanced Imaging Services by Providers Who Self-Refer 

Costing Medicare Millions, GAO-12-966 (Washington, D.C.: Sept. 28, 2012).
Appendix II: Scope and Methods

Page 41 GAO-13-445 Medicare Self-Referral of Anatomic Pathology Services

We considered global services and separately-billed TCs to be selfreferred if one or more of the TINs of the referring and performing 

provider matched. However, we did not consider separately-billed PCs to 

be self-referred, even if they met the same criterion. We did not count 

claims with PC only as self-referred because we could not reliably 

determine whether they corresponded to anatomic pathology services 

that were performed in a provider’s office or laboratory. Further, we 

excluded claims where a HCPCS code of 88305 was billed with another 

anatomic pathology service and a special stain, because we could not 

determine which service required the use of the special stain. As part of 

developing this claims-based methodology to identify self-referred 

services, we interviewed officials from CMS, provider groups, and other 

researchers.

To describe the trends in the number of and expenditures for self-referred 

anatomic pathology services from 2004 through 2010, we used the 

Medicare Part B Carrier file to calculate utilization and expenditures for 

self-referred and non-self-referred anatomic pathology services, both in 

aggregate and per beneficiary. We limited this portion of our analysis to 

global claims or claims for a separately-billed TC for anatomic pathology 

services, which indicates that the performance of the anatomic pathology 

service was billed under the physician fee schedule. As a result, the 

universe for this portion of our analysis is those anatomic pathology 

services performed in a provider’s office or in an independent clinical 

laboratory that both bill for the performance of an anatomic pathology 

service under the physician fee schedule. We focused on these settings 

because the financial incentive for providers to self-refer is most direct 

when the service is performed in a physician office. Further, we limited 

our analysis to self-referral of the preparation—as opposed to the 

interpretation—of these services, because we could determine the site of 

service as a physician’s office or laboratory. Accordingly, we did not 

examine self-referral of the interpretation of these services as we could 

not reliably determine their site of service. Approximately two-thirds of all 

anatomic pathology services billed under the physician fee schedule were 

performed in a physician’s office or clinical laboratory. To calculate the 

number of Medicare beneficiaries from 2004 through 2010 needed for per 

beneficiary calculations, we used the Denominator File, a database that 

contains enrollment information for all Medicare beneficiaries enrolled in a 

given year. We also examined the utilization for self-referred anatomic 

pathology services by provider specialty for 2004 and 2010.
Appendix II: Scope and Methods

Page 42 GAO-13-445 Medicare Self-Referral of Anatomic Pathology Services

To determine the extent to which the provision of anatomic pathology 

services differs for providers who self-refer when compared with other 

providers, we first classified providers based on the type of referrals they 

made. Specifically, we classified providers as self-referring if they selfreferred at least one beneficiary for an anatomic pathology service.6 We 

classified providers as non-self-referring if they referred a beneficiary for 

an anatomic pathology service, but did not self-refer any of the services.

We assigned to each provider the anatomic pathology services, including 

those for the performance of an anatomic pathology service and those for 

the interpretation of the anatomic pathology service result. If the TC and 

PC were billed separately for the same beneficiary, we counted these two 

components as one referred service. As a result, we counted all services 

that a provider referred, regardless of whether it was performed in a 

provider office, independent clinical laboratory, or other setting. We 

classified anatomic pathology services as being from the same biopsy 

procedure if the services were referred by the same provider for the same 

beneficiary on the same day.7

First, we compared the provision—that is, the number of referrals made—

of anatomic pathology services by self-referring providers and non-selfreferring providers in 2010, disaggregated by the number of Medicare 

beneficiaries seen by the provider, provider specialty, and geography 

(i.e., urban or rural) and patient characteristics. We used the number of 

unique Medicare fee-for-service (FFS) beneficiaries for which providers 

provided services in 2010 as a proxy for practice size, which we identified 

using 100 percent of providers’ claims from the Medicare Part B Carrier 

file. We defined urban settings as metropolitan statistical areas, a 

geographic entity defined by the Office of Management and Budget as a 

core urban area of 50,000 or more population. We used rural-urban 

commuting area codes—a Census tract-based classification scheme that 

utilizes the standard Bureau of Census Urbanized Area and Urban 

Cluster definitions in combination with work commuting information to 

characterize all of the nation’s Census tracts regarding their rural and 

urban status—to identify providers as practicing in metropolitan statistical 

We then performed two separate analyses.

 

6

Providers in our analysis that could self-refer include primarily physicians, but also could 

include other providers, such as nurse practitioners and physician assistants.

7

We use the term “biopsy procedure” to refer to the process of extracting tissue for 

analysis. Multiple tissue samples (sometimes also referred to as biopsies) can be 

extracted from a single biopsy procedure.
Appendix II: Scope and Methods

Page 43 GAO-13-445 Medicare Self-Referral of Anatomic Pathology Services

areas.8

Second, we determined the extent to which the number of anatomic 

pathology service referrals made by providers changed after they began 

to self-refer. Specifically, we identified a group of providers that began to 

self-refer anatomic pathology services in 2009.

We considered all other settings to be rural. We identified 

providers’ specialties on the basis of the specialties listed on the claims. 

These specialty codes include physician specialties, such as dermatology 

and urology, and nonphysician provider types, such as nurse practitioners 

and physician assistants. We also examined the extent to which the 

characteristics of the patient populations served by self-referring and nonself-referring providers differed. We used CMS’s risk score file to identify 

average risk score, which serves as a proxy for beneficiary health status. 

Information on additional patient characteristics, such as age and sex, 

came from the Medicare Part B Carrier file claims.

9

 

8

We considered a location with a rural-urban commuting area code of 1.0, 1.1, 2.0, 2.1, or 

3.0 to be a metropolitan statistical area.

We refer to this group of 

providers as “switchers” because it represents providers that did not selfrefer in 2007 or 2008, but did self-refer in 2009 and 2010. We then 

calculated the change in the number of anatomic pathology referrals 

made from 2008 (i.e., the year before the switchers began self-referring) 

to 2010 (i.e., the year after they began self-referring). We compared the 

change in the number of referrals made by these providers to the change 

in the number of referrals made over the same time period by providers 

who did not change whether or not they self-referred anatomic pathology 

services. Specifically, we compared the change in the number of referrals 

made by switchers to those made by (1) self-referring providers—

providers that self-referred in years 2007 through 2010, and (2) non-selfreferring providers—providers that did not self-refer in years 2007 through 

2010. For each provider, we also identified the most common TIN to 

which they referred anatomic pathology services. If the TIN was the same 

for all 4 years, we assumed that they remained part of the same practice 

for all 4 years. We calculated the number of referrals in 2008 and 2010 

separately for providers that met this criterion.

9

We used 4 years of experience (2007 through 2010) to categorize providers even though 

we compared referrals in 2008 to 2010 because we wanted to ensure that providers that 

began self-referring in 2009 did not self-refer for at least the 2 prior years.
Appendix II: Scope and Methods

Page 44 GAO-13-445 Medicare Self-Referral of Anatomic Pathology Services

To determine the implications of self-referral for Medicare spending on

anatomic pathology services, we summed the number of and 

expenditures for all anatomic pathology services performed in 2010 

across the three provider specialties we reviewed. We then calculated the 

number of and expenditures for anatomic pathology services if selfreferring providers performed biopsy procedures at the same rate as and 

referred the same number of services per biopsy procedure as non-selfreferring providers of the same provider size and specialty. We repeated 

this analysis incorporating an approximation of the payment reduction for 

anatomic pathology services that became effective in 2013.

We took several steps to ensure that the data used to produce this report 

were sufficiently reliable. Specifically, we assessed the reliability of the 

CMS data we used by interviewing officials responsible for overseeing 

these data sources, including CMS and Medicare contractor officials. We 

also reviewed relevant documentation, and examined the data for obvious 

errors, such as missing values and values outside of expected ranges. 

We determined that the data were sufficiently reliable for the purposes of 

our study, as they are used by the Medicare program as a record of 

payments to health care providers. As such, they are subject to routine 

CMS scrutiny.

We conducted this performance audit from January 2012 through June

2013 in accordance with generally accepted government auditing 

standards. Those standards require that we plan and perform the audit to 

obtain sufficient, appropriate evidence to provide a reasonable basis for 

our findings and conclusions based on our audit objectives. We believe 

that the evidence obtained provides a reasonable basis for our findings 

and conclusions based on our audit objectives.
Appendix III: Average Number of Medicare 

Anatomic Pathology Services per Biopsy 

Procedure for Most Common Diagnoses

Page 45 GAO-13-445 Medicare Self-Referral of Anatomic Pathology Services

Table 8: Average Number of Medicare Anatomic Pathology Services per Biopsy Procedure for Most Common Diagnoses 

Referred by Self-referring and Non-self-referring Dermatologists in 2010

Average number of anatomic 

pathology services per biopsy 

procedure

Provider specialty and most common diagnoses, including 

International Classification of Diseases, Ninth Revision, Clinical 

Modification (ICD-9-CM) diagnostic code

Self-referring 

providers

Non-self-referring 

providers

Percentage 

difference 

Neoplasm of uncertain behavior of skin (238.2) 1.8 1.6 13%

Other malignant neoplasm of skin of other and unspecified parts of face (173.3) 1.6 1.4 14

Actinic keratosis (702.0) 1.7 1.5 13

Inflamed seborrheic keratosis (702.11) 1.6 1.4 14

Other malignant neoplasm of skin of upper limb, including shoulder (173.6) 1.6 1.4 14

Other seborrheic keratosis (702.19) 1.6 1.4 14

Other malignant neoplasm of skin of trunk, except scrotum (173.5) 1.6 1.5 7 

Other malignant neoplasm of scalp and skin of neck (173.4) 1.6 1.5 7 

Benign neoplasm of skin of trunk, except scrotum (216.5) 1.6 1.4 14

Neoplasm of unspecified nature of bone, soft tissue, and skin (239.2) 1.8 1.7 6 

Scar conditions and fibrosis of skin ( 709.2) 1.6 1.4 14

Other malignant neoplasm of skin of lower limb, including hip (173.7) 1.6 1.4 14

Benign neoplasm of skin of other and unspecified parts of face (216.3) 1.6 1.4 14

Other malignant neoplasm of skin of ear and external auditory canal (173.2) 1.6 1.4 14

Contact dermatitis and other eczema unspecified cause (692.9) 1.4 1.2 17

Unspecified disorder of skin and subcutaneous tissue (709.9) 1.6 1.7 -6 

Other malignant neoplasm of skin, site unspecified (173.9) 1.6 1.4 14

Benign neoplasm of skin, site unspecified (216.9) 1.6 1.4 14

Carcinoma in situ of skin of other and unspecified parts of face (232.3) 1.8 1.5 20

Viral warts, unspecified (078.10) 1.5 1.3 15

Other dyschromia (709.09) 1.6 1.4 14

Carcinoma in situ of skin of upper limb, including shoulder (232.6) 1.8 1.5 20

Source: GAO analysis of CMS data. 

Note: All diagnoses that represent at least 1 percent of the principal diagnoses listed on the claims of 

self-referring dermatologists are included. Diagnoses are presented in order of the most to least 

common.

Appendix III: Average Number of Medicare 

Anatomic Pathology Services per Biopsy

Procedure for Most Common Diagnoses
Appendix III: Average Number of Medicare 

Anatomic Pathology Services per Biopsy 

Procedure for Most Common Diagnoses

Page 46 GAO-13-445 Medicare Self-Referral of Anatomic Pathology Services

Table 9: Average Number of Medicare Anatomic Pathology Services per Biopsy Procedure for Most Common Diagnoses 

Referred by Self-referring and Non-self-referring Gastroenterologists in 2010

Average number of anatomic 

pathology services per biopsy 

procedure

Provider specialty and most common diagnoses, including 

International Classification of Diseases, Ninth Revision, 

Clinical Modification (ICD-9-CM) diagnostic code

Self-referring 

providers

Non-self-referring 

providers

Percentage 

difference 

Benign neoplasm of colon (211.3) 2.2 1.9 16% 

Atrophic gastritis, without mention of hemorrhage (535.10) 2.2 1.9 16

Unspecified gastritis and gastroduodenitis, without mention of 

hemorrhage (535.50) 2.7 2.0 35

Other specified gastritis, without mention of hemorrhage (535.40) 2.3 1.9 21

Barrett’s esophagus (530.85) 2.5 2.0 25

Benign neoplasm of stomach (211.1) 2.8 2.1 33

Benign neoplasm of rectum and anal canal (211.4) 1.9 1.6 19

Other and unspecified noninfectious gastroenteritis and colitis (558.9) 2.5 2.2 14

Diarrhea (787.91) 2.5 2.0 25

Unspecified disorder of stomach and duodenum (537.9) 2.3 2.1 10

Esophageal reflux (530.81) 2.6 2.0 30

Reflux esophagitis (530.11) 2.4 2.0 20

Esophagitis, unspecified (530.10) 2.0 1.8 11

Acute gastritis, without mention of hemorrhage (535.00) 2.3 2.0 15

Other specified disorders of stomach and duodenum (537.89) 2.3 1.9 21

Dysphagia, unspecified (787.20) 2.3 1.7 35

Anal and rectal polyp (569.0) 1.9 1.5 27

Other specified disorders of intestine (569.89) 2.3 1.8 28

Duodenitis, without mention of hemorrhage (535.60) 3.0 2.5 20

Source: GAO analysis of CMS data. 

Note: All diagnoses that represent at least 1 percent of the principal diagnoses listed on the claims of 

self-referring gastroenterologists are included. Diagnoses are presented in order of the most to least 

common.
Appendix III: Average Number of Medicare 

Anatomic Pathology Services per Biopsy 

Procedure for Most Common Diagnoses

Page 47 GAO-13-445 Medicare Self-Referral of Anatomic Pathology Services

Table 10: Average Number of Medicare Anatomic Pathology Services per Biopsy Procedure for Most Common Diagnoses 

Referred by Self-referring and Non-self-referring Urologists in 2010

Average number of anatomic 

pathology services per biopsy 

procedure

Provider specialty and most common diagnoses, including 

International Classification of Diseases, Ninth Revision, 

Clinical Modification (ICD-9-CM) diagnostic code

Self-referring 

providers

Non-self-referring 

providers

Percentage 

difference 

Elevated prostate specific antigen (790.93) 12.5 8.5 47% 

Malignant neoplasm of prostate (185) 8.5 6.1 39

Malignant neoplasm of bladder, part unspecified (188.9) 1.8 1.7 6 

Hyperplasia of prostate, unspecified, without urinary obstruction and other 

lower urinary symptoms (LUTS) (600.90) 5.0 3.2 56

Other chronic cystitis (595.2) 1.8 1.7 6 

Hypertrophy (benign) of prostate without urinary obstruction and other 

lower urinary tract symptom (LUTS) (600.00) 5.3 2.6 104

Hypertrophy (benign) of prostate with urinary obstruction and other lower 

urinary tract symptoms (LUTS) (600.01) 3.1 2.3 35

Benign neoplasm of prostate (222.2) 9.4 6.6 42

Hematuria, unspecified (599.70) 1.9 1.4 36

Carcinoma in situ of prostate (233.4) 11.5 7.6 51

Nodular prostate without urinary obstruction (600.10) 7.6 5.0 52

Chronic prostatitis (601.1) 6.1 4.4 39

Cystitis, unspecified (595.9) 1.8 1.6 13

Source: GAO analysis of CMS data. 

Note: All diagnoses that represent at least 1 percent of the principal diagnoses listed on the claims of 

self-referring urologists are included. Diagnoses are listed in order of the most to least common.
Appendix IV: Age and Sex of Medicare 

Beneficiaries for Select Provider Specialties by 

Practice Size in 2010

Page 48 GAO-13-445 Medicare Self-Referral of Anatomic Pathology Services

Table 11: Average Age of Medicare Beneficiaries for Select Provider Specialties by 

Practice Size in 2010

Average age (in years) of beneficiaries

Provider specialty and number of 

unique Medicare FFS beneficiaries

Self-referring 

providers a Non-self-referring 

providers

Dermatology

1 to 250 73 73

251 to 500 74 74

> 500 74 74

Gastroenterology

1 to 250 67 70

251 to 500 70 71

> 500 71 71

Urology

1 to 250 70 71

251 to 500 72 73

> 500 74 73

Source: GAO analysis of CMS data.

a

The number of unique Medicare FFS beneficiaries refers to the number of unique beneficiaries that 

received at least one service from a provider.

Appendix IV: Age and Sex of Medicare 

Beneficiaries for Select Provider Specialties 

by Practice Size in 2010
Appendix IV: Age and Sex of Medicare 

Beneficiaries for Select Provider Specialties by 

Practice Size in 2010

Page 49 GAO-13-445 Medicare Self-Referral of Anatomic Pathology Services

Table 12: Average Percentage of Medicare Beneficiaries Who Are Female for Select 

Provider Specialties by Practice Size in 2010

Average percentage of beneficiaries 

female

Provider specialty and number of 

unique Medicare FFS beneficiaries

Self-referring 

providers a Non-self-referring providers

Dermatology

1 to 250 51 53 

251 to 500 51 52

> 500 51 52

Gastroenterology

1 to 250 58 57 

251 to 500 57 57

> 500 57 58

Urology

1 to 250 30 30

251 to 500 28 28

> 500 25 25

Source: GAO analysis of CMS data.

a

The number of unique Medicare FFS beneficiaries refers to the number of unique beneficiaries that 

received at least one service from a provider.
Appendix V: Average Number of Medicare 

Anatomic Pathology Referrals by Provider 

Self-Referral and Urban-Rural Status in 2010

Page 50 GAO-13-445 Medicare Self-Referral of Anatomic Pathology Services

Source: GAO analysis of CMS data.

Notes: Anatomic pathology services refer specifically to Healthcare Common Procedure Coding 

System (HCPCS) code 88305. Providers were considered to be self-referring if they self-referred 

anatomic pathology services for at least one biopsy procedure. Of the 29,502 providers represented 

above that referred at least one beneficiary for an anatomic pathology service in 2010, 7,109 were 

self-referring and 22,393 were non-self-referring.

a

The number of unique Medicare FFS beneficiaries refers to the number of unique beneficiaries that 

received at least one service from a provider.

Appendix V: Average Number of Medicare 

Anatomic Pathology Referrals by Provider 

Self-Referral and Urban-Rural Status in 2010

Average number of anatomic 

pathology services

Geographic 

designation

Provider specialty and number of 

unique Medicare fee-for-service 

(FFS) beneficiaries

Self-referring 

providers a Non-self-referring 

providers

Relative rate of selfreferring providers

Urban

b

Dermatology

1 to 250 168.7 142.5 1.18

251 to 500 538.0 445.1 1.21

>500 1,532.1 1,019.4 1.50

Gastroenterology

1 to 250 174.9 139.0 1.26

251 to 500 414.9 344.2 1.21

>500 800.5 628.6 1.27

Urology

 1 to 250 96.9 74.4 1.30

251 to 500 250.4 171.9 1.46

>500 472.8 299.3 1.58

Rural Dermatology

1 to 250 183.0 166.2 1.10

251 to 500 570.7 510.7 1.12

 >500 1,863.3 939.0 1.99

Gastroenterology

1 to 250 114.3 185.9 0.61

251 to 500 478.8 403.1 1.19

>500 963.4 726.3 1.33

Urology

1 to 250 142.5 83.5 1.71

251 to 500 206.3 188.2 1.10

>500 373.9 316.2 1.18
Appendix V: Average Number of Medicare 

Anatomic Pathology Referrals by Provider 

Self-Referral and Urban-Rural Status in 2010

Page 51 GAO-13-445 Medicare Self-Referral of Anatomic Pathology Services

b

The relative rate of self-referring providers refers to the factor by which the average number of 

services referred by self-referring providers is greater or less than the average number of services 

referred by non-self-referring providers. For example, if the relative rate of self-referring providers is 

equal to 2, it would mean that, on average, self-referring providers referred twice as many anatomic 

pathology services as non-self-referring providers.
Appendix VI: Comments from the Department 

of Health and Human Services

Page 52 GAO-13-445 Medicare Self-Referral of Anatomic Pathology Services

Appendix VI: Comments from the 

Department of Health and Human Services
Appendix VI: Comments from the Department 

of Health and Human Services

Page 53 GAO-13-445 Medicare Self-Referral of Anatomic Pathology Services
Appendix VI: Comments from the Department 

of Health and Human Services

Page 54 GAO-13-445 Medicare Self-Referral of Anatomic Pathology Services
Appendix VII: GAO Contact and Staff 

Acknowledgments

Page 55 GAO-13-445 Medicare Self-Referral of Anatomic Pathology Services

James C. Cosgrove, (202) 512-7114 or cosgrovej@gao.gov

In addition to the contact named above, Thomas Walke, Assistant 

Director; Todd D. Anderson; Manuel Buentello; Krister Friday; 

Gregory Giusto; Brian O’Donnell; and Daniel Ries made key contributions 

to this report.

Appendix VII: GAO Contact and Staff 

Acknowledgments 

GAO Contact

Staff 

Acknowledgments 

(290973)
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