I 

115TH CONGRESS 

1ST SESSION H. R. 2066 

To prevent abusive billing of ancillary services to the Medicare program, 

and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

APRIL 6, 2017 

Ms. SPEIER (for herself and Ms. TITUS) introduced the following bill; which 

was referred to the Committee on Energy and Commerce, and in addition 

to the Committee on Ways and Means, for a period to be subsequently 

determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned 

A BILL 

To prevent abusive billing of ancillary services to the 

Medicare program, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Promoting Integrity 

5 in Medicare Act of 2017’’ or ‘‘PIMA of 2017’’. 

6 SEC. 2. FINDINGS; PURPOSES. 

7 (a) FINDINGS.—Congress finds the following: 

8 (1) Recent studies by the Government Account9 ability Office (GAO) examining self-referral practices 


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1 in advanced diagnostic imaging and anatomic pa2 thology determined that financial incentives were the 

3 most likely cause of increases in self-referrals. 

4 (2) For advanced diagnostic imaging, GAO 

5 stated that ‘‘providers who self-referred made 

6 400,000 more referrals for advanced imaging serv7 ices than they would have if they were not self-refer8 ring’’, at a cost of ‘‘more than $100 million’’ in 

9 2010. 

10 (3) For anatomic pathology, GAO found that 

11 ‘‘self-referring providers likely referred over 918,000 

12 more anatomic pathology services’’ than they would 

13 have if they were not self-referring, costing Medicare 

14 approximately $69,000,000 more in 2010 than if 

15 self-referral was not permitted. 

16 (4) For radiation oncology, GAO found that in17 tensity modulated radiation therapy (IMRT) utiliza18 tion among self-referring groups increased by 356 

19 percent, with overall increases in IMRT utilization 

20 rates and spending due entirely to services per21 formed by limited-specialty groups. The GAO con22 cluded that ‘‘the higher use of IMRT by self-refer23 ring providers results in higher costs for Medicare 

24 and beneficiaries. To the extent that treatment deci25 sions are driven by providers’ financial interest and 


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1 not by patient preference, these increased costs are 

2 difficult to justify’’. 

3 (5) For physical therapy, GAO found that ‘‘in 

4 the year a provider began to self-refer, physical ther5 apy service referrals increased at a higher rate rel6 ative to non-self-referring providers of the same spe7 cialty’’. 

8 (6) Noting the rapid growth of services covered 

9 by the in-office ancillary services (IOAS) exception 

10 and evidence that these services are sometimes fur11 nished inappropriately by referring physicians, the 

12 Medicare Payment Advisory Commission (MedPAC) 

13 stated that physician self-referral of ancillary serv14 ices creates incentives to increase volume under 

15 Medicare’s current fee-for-service payment systems 

16 and the rapid volume growth contributes to Medi17 care’s rising financial burden on taxpayers and bene18 ficiaries. 

19 (7) The President’s Fiscal Year 2017 Budget 

20 includes the change to remove the four services: ad21 vanced diagnostic imaging, anatomic pathology, radi22 ation oncology, and physical therapy from the IOAS 

23 exception to the Stark Law and cited the change as 

24 generating a savings score of $4,980,000,000 over 

25 10 years. The nonpartisan Congressional Budget OfVerDate Sep 11 2014 02:31 Apr 15, 2017 Jkt 069200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H2066.IH H2066

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1 fice’s analysis of the President’s Fiscal Year 2017 

2 Budget listed the change as generating a savings of 

3 $3,300,000,000 over 10 years. 

4 (8) According to the Centers for Medicare & 

5 Medicaid Services, a key rationale for the IOAS ex6 ception was to permit physicians to provide ancillary 

7 services in their offices to better inform diagnosis 

8 and treatment decisions at the time of the patient’s 

9 initial office visit. 

10 (9) It is necessary, therefore, to distinguish be11 tween services and procedures that were intended to 

12 be covered by the IOAS exception, such as routine 

13 clinical laboratory services or simple x-rays that are 

14 provided during the patient’s initial office visit, and 

15 other health care services which were clearly not en16 visioned to be covered by that exception because they 

17 cannot be performed during the patient’s initial of18 fice visit. 

19 (10) According to a 2010 Health Affairs study, 

20 less than 10 percent of CT, MRI, and Nuclear Medi21 cine scans take place on the same day as the initial 

22 patient office visit. 

23 (11) According to a 2012 Health Affairs study, 

24 urologists’ self-referrals for anatomic pathology serv25 ices of biopsy specimens is linked to increased use 


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1 and volume billed along with a lower detection of 

2 prostate cancer. 

3 (12) According to an October 2011 Laboratory 

4 Economics report, there has been an increase in the 

5 number of anatomic pathology specimen units billed 

6 to the Medicare part B program from 2006 through 

7 2010, specifically for CPT Code 88305, and the rate 

8 of increase billed by physician offices for this service 

9 is accelerating at a far greater pace than the rest of 

10 the provider segments. 

11 (13) According to a 2013 American Academy of 

12 Dermatology Pathology Billing paper, arrangements 

13 involving the split of the technical and professional 

14 components of anatomic pathology services among 

15 different providers may endanger patient safety and 

16 undermine quality of care. 

17 (14) In November 2012, Bloomberg News re18 leased an investigative report that scrutinized or19 deals faced by California prostate cancer patients 

20 treated by a urology clinic that owns radiation ther21 apy equipment. The report found that physician self22 referral resulted in a detrimental impact on patient 

23 care and drove up health care costs in the Medicare 

24 program. The Wall Street Journal, the Washington 

25 Post, and the Baltimore Sun have also published inVerDate Sep 11 2014 02:31 Apr 15, 2017 Jkt 069200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H2066.IH H2066

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1 vestigations showing that urology groups owning ra2 diation therapy machines have utilization rates that 

3 rise quickly and are well above national norms for 

4 radiation therapy treatment of prostate cancer. 

5 (15) According to a 2010 MedPAC report, only 

6 3 percent of outpatient physical therapy services 

7 were provided on the same day as an office visit, 

8 only 9 percent within 7 days of an office visit, and 

9 only 14 percent within 14 days of an office visit. 

10 These services are not integral to the physician’s ini11 tial diagnosis and do not improve patient conven12 ience because patients must return for physical ther13 apy treatments. 

14 (16) Those services intended to be covered 

15 under the IOAS exception are not affected by this 

16 legislation. 

17 (17) The exception to the ownership or invest18 ment prohibition for rural providers in the ‘‘Stark’’ 

19 rule is not affected by this legislation. 

20 (b) PURPOSES.—The purposes of this Act are the fol21 lowing: 

22 (1) Maintain the in-office ancillary services ex23 ception and preserve its original intent by removing 

24 certain complex services from the exception—specifiVerDate Sep 11 2014 02:31 Apr 15, 2017 Jkt 069200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H2066.IH H2066

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1 cally, advanced imaging, anatomic pathology, radi2 ation therapy, and physical therapy. 

3 (2) Protect patients from misaligned provider 

4 financial incentives. 

5 (3) Protect Medicare resources by saving bil6 lions of dollars. 

7 (4) Accomplish the purposes described in para8 graphs (1), (2), and (3) in a manner that does not 

9 alter the existing exception to the ownership or in10 vestment prohibition for rural providers. 

11 SEC. 3. LIMITATION ON APPLICATION OF PHYSICIANS’ 

12 SERVICES AND IN-OFFICE ANCILLARY SERV13 ICES EXCEPTIONS. 

14 (a) IN GENERAL.—Section 1877(b) of the Social Se15 curity Act (42 U.S.C. 1395nn(b)) is amended— 

16 (1) in paragraph (1), by inserting ‘‘, other than 

17 specified non-ancillary services,’’ after ‘‘section 

18 1861(q))’’; and 

19 (2) in paragraph (2), by inserting ‘‘, specified 

20 non-ancillary services,’’ after ‘‘(excluding infusion 

21 pumps)’’. 

22 (b) INCREASE OF CIVIL MONEY PENALTIES.—Sec23 tion 1877(g) of the Social Security Act (42 U.S.C. 

24 1395nn(g)) is amended— 


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1 (1) in paragraph (3), by inserting ‘‘, unless 

2 such bill or claim included a bill or claim for a speci3 fied non-ancillary service, in which case the civil 

4 money penalty shall be not more than $25,000 for 

5 each such service’’ before the period at the end of 

6 the first sentence; and 

7 (2) in paragraph (4), by inserting ‘‘(or 

8 $150,000 if such referrals are for specified non-an9 cillary services)’’ after ‘‘$100,000’’. 

10 (c) ENHANCED SCREENING OF CLAIMS.—Section 

11 1877(g) of the Social Security Act (42 U.S.C. 1395nn(g)) 

12 is further amended by adding at the end the following new 

13 paragraph: 

14 ‘‘(7) COMPLIANCE REVIEW FOR SPECIFIED

15 NON-ANCILLARY SERVICES.— 

16 ‘‘(A) IN GENERAL.—Not later than 180 

17 days after the date of the enactment of this 

18 paragraph, the Secretary, in consultation with 

19 the Inspector General of the Department of 

20 Health and Human Services, shall review com21 pliance with subsection (a)(1) with respect to 

22 referrals for specified non-ancillary services in 

23 accordance with procedures established by the 

24 Secretary. 


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1 ‘‘(B) FACTORS IN COMPLIANCE REVIEW.— 

2 Such procedures— 

3 ‘‘(i) shall, for purposes of targeting 

4 types of entities that the Secretary deter5 mines represent a high risk of noncompli6 ance with subsection (a)(1) with respect to 

7 such billing for such specified non-ancillary 

8 services, apply different levels of review 

9 based on such type; and 

10 ‘‘(ii) may include prepayment reviews, 

11 claims audits, focused medical review, and 

12 computer algorithms designed to identify 

13 payment or billing anomalies.’’. 

14 (d) DEFINITION OF SPECIFIED NON-ANCILLARY

15 SERVICES.—Section 1877(h) of the Social Security Act 

16 (42 U.S.C. 1395nn(h)) is amended by adding at the end 

17 the following new paragraphs: 

18 ‘‘(8) SPECIFIED NON-ANCILLARY SERVICES.— 

19 ‘‘(A) Subject to subparagraph (B), the 

20 term ‘specified non-ancillary service’ means the 

21 following: 

22 ‘‘(i) Anatomic pathology services, as 

23 defined by the Secretary and including the 

24 technical or professional component of the 

25 following: 


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1 ‘‘(I) Surgical pathology. 

2 ‘‘(II) Cytopathology. 

3 ‘‘(III) Hematology. 

4 ‘‘(IV) Blood banking. 

5 ‘‘(V) Pathology consultation and 

6 clinical laboratory interpretation serv7 ices. 

8 ‘‘(ii) Radiation therapy services and 

9 supplies, as defined by the Secretary. 

10 ‘‘(iii) Advanced diagnostic imaging 

11 studies (as defined in section 

12 1834(e)(1)(B)). 

13 ‘‘(iv) Physical therapy services (as de14 scribed in paragraph (6)(B)). 

15 ‘‘(v) Any other service that the Sec16 retary has determined is not usually pro17 vided and completed as part of the office 

18 visit to a physician’s office in which the 

19 service is determined to be necessary. 

20 ‘‘(B) The term ‘specified non-ancillary 

21 service’ does not include the following: 

22 ‘‘(i) Any service that is furnished— 

23 ‘‘(I) in an urban area (as defined 

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1 vidual who resides in a rural area (as 

2 defined in such section); and 

3 ‘‘(II) to such individual in its en4 tirety on the same day as the day on 

5 which, with respect to the condition 

6 for which the service is furnished, the 

7 initial office visit of the individual for 

8 such condition occurs. 

9 ‘‘(ii) Any service that is furnished— 

10 ‘‘(I) by a provider of services or 

11 supplier participating in an account12 able care organization that partici13 pates in the shared savings program 

14 established under section 1899; and 

15 ‘‘(II) to a Medicare fee-for-serv16 ice beneficiary (as defined in section 

17 1899(h)(3)) assigned to such account18 able care organization. 

19 ‘‘(iii) Any service that is furnished by 

20 a provider or supplier pursuant to the par21 ticipation of the provider or supplier in a 

22 payment and service delivery model se23 lected under section 1115A(a). 

24 ‘‘(iv) Any service that is provided by 

25 an integrated health care delivery system. 


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1 ‘‘(9) INTEGRATED HEALTH CARE.—The term 

2 ‘integrated health care delivery system’ means a 

3 group practice, as defined by the Secretary, that— 

4 ‘‘(A) consists of at least— 

5 ‘‘(i) primary care physicians who pro6 vide primary care services (as defined in 

7 section 1842(i)(4)); and 

8 ‘‘(ii) seven or more different and dis9 tinct physician specialties (not including 

10 subspecialties) which are practiced by phy11 sicians who are board certified in the phy12 sician specialty associated with the services 

13 that they provide; 

14 ‘‘(B) is governed by a governing body that 

15 has made a determination (and has documented 

16 such determination) that the system is focused 

17 on— 

18 ‘‘(i) promoting accountability for the 

19 quality, cost, and overall care for individ20 uals entitled to benefits under part A or 

21 enrolled in part B, including by managing 

22 and coordinating care for such individuals; 

23 and 

24 ‘‘(ii) encouraging investment in infra25 structure and redesigned care processes for 


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1 high quality and efficient service delivery 

2 for patients, including individuals described 

3 in clause (i); and 

4 ‘‘(C) meets, with respect to the program 

5 under this title, such cost reduction and quality 

6 goals as the Secretary determines appro7 priate.’’. 

8 (e) CONSTRUCTION.—Nothing in this section (or the 

9 amendments made by this section) shall be construed to 

10 affect the authority of the Secretary of Health and Human 

11 Services to waive under section 1899 of the Social Security 

12 Act (42 U.S.C. 1395jjj) the requirements imposed under 

13 the provisions of this section (or such amendments) or to 

14 affect the authority of the Secretary to implement the pro15 visions under section 1848(q) of such Act (42 U.S.C. 

16 1395w–4(q)) (relating to the eligible professionals Merit17 Based Incentive Payment System under the Medicare pro18 gram) or section 1833(z) of such Act (42 U.S.C. 1395l(z)) 

19 (relating to incentive payments for participation in eligible 

20 alternative payment models under such program). 

21 (f) EFFECTIVE DATE.—The amendments made by 

22 this section shall apply to items and services furnished on 

23 or after the first day of the first month beginning more 

24 than 12 months after the date of the enactment of this 

25 Act. 


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1 SEC. 4. CLARIFICATION OF CERTAIN ENTITIES SUBJECT TO 

2 STARK RULE AND ANTI-MARKUP RULE. 

3 Section 1877(h) of the Social Security Act (42 U.S.C. 

4 1395nn(h)) is further amended by adding at the end the 

5 following new paragraph: 

6 ‘‘(9) CLARIFICATION OF CERTAIN ENTITIES

7 SUBJECT TO ANTI-MARKUP RULE.—In applying this 

8 section, the term ‘entity’ shall include a physician’s 

9 practice when it bills under this title for the tech10 nical component or the professional component of a 

11 specified non-ancillary service, including when such 

12 service is billed in compliance with section 

13 1842(n)(1).’’. 

14 SEC. 5. CLARIFICATION OF SUPERVISION OF TECHNICAL 

15 COMPONENT OF ANATOMIC PATHOLOGY 

16 SERVICES. 

17 Section 1861(s)(17) of the Social Security Act (42 

18 U.S.C. 1395x(s)(17)) is amended— 

19 (1) by striking ‘‘and’’ at the end of subpara20 graph (A); 

21 (2) by redesignating subparagraph (B) as sub22 paragraph (C); and 

23 (3) by inserting after subparagraph (A) the fol24 lowing new subparagraph: 

25 ‘‘(B) with regard to the provision of the 

26 technical component of anatomic pathology 


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1 services, meets the applicable supervision re2 quirements for laboratories certified in the sub3 specialty of histopathology, pursuant to section 

4 353 of the Public Health Service Act; and’’. 

5 SEC. 6. EXEMPTION FROM BUDGET NEUTRALITY UNDER 

6 PHYSICIAN FEE SCHEDULE. 

7 Section 1848(c)(2)(B)(v) of the Social Security Act 

8 (42 U.S.C. 1395w–4(c)(2)(B)(v)) is amended by adding 

9 at the end the following new subclause: 

10 ‘‘(VIII) CHANGES TO LIMITA11 TIONS ON CERTAIN PHYSICIAN REFER12 RALS.—Effective for fee schedules es13 tablished beginning with 2018, re14 duced expenditures attributable to the 

15 Promoting Integrity in Medicare Act 

16 of 2017.’’. 

Æ 


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