I 

114TH CONGRESS 

2D SESSION H. R. 5088 

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

and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

APRIL 28, 2016 

Ms. SPEIER (for herself, Mr. MCDERMOTT, 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 2016’’ or ‘‘PIMA of 2016’’. 

6 SEC. 2. FINDINGS; PURPOSES. 

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


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1 (1) Recent studies by the Government Account2 ability Office (GAO) examining self-referral practices 

3 in advanced diagnostic imaging and anatomic pa4 thology determined that financial incentives were the 

5 most likely cause of increases in self-referrals. 

6 (2) For advanced diagnostic imaging, GAO 

7 stated that ‘‘providers who self-referred made 

8 400,000 more referrals for advanced imaging serv9 ices than they would have if they were not self-refer10 ring’’, at a cost of ‘‘more than $100 million’’ in 

11 2010. 

12 (3) For anatomic pathology, GAO found that 

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

14 more anatomic pathology services’’ than they would 

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

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

17 self-referral was not permitted. 

18 (4) For radiation oncology, GAO found that in19 tensity modulated radiation therapy (IMRT) utiliza20 tion among self-referring groups increased by 356 

21 percent, with overall increases in IMRT utilization 

22 rates and spending due entirely to services per23 formed by limited-specialty groups. The GAO con24 cluded that ‘‘the higher use of IMRT by self-refer25 ring providers results in higher costs for Medicare 


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1 and beneficiaries. To the extent that treatment deci2 sions are driven by providers’ financial interest and 

3 not by patient preference, these increased costs are 

4 difficult to justify’’. 

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

6 the year a provider began to self-refer, physical ther7 apy service referrals increased at a higher rate rel8 ative to non-self-referring providers of the same spe9 cialty’’. 

10 (6) Noting the rapid growth of services covered 

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

12 and evidence that these services are sometimes fur13 nished inappropriately by referring physicians, the 

14 Medicare Payment Advisory Commission (MedPAC) 

15 stated that physician self-referral of ancillary serv16 ices creates incentives to increase volume under 

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

18 and the rapid volume growth contributes to Medi19 care’s rising financial burden on taxpayers and bene20 ficiaries. 

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

22 includes the change to remove the four services: ad23 vanced diagnostic imaging, anatomic pathology, radi24 ation oncology, and physical therapy from the IOAS 

25 exception to the Stark Law and cited the change as 


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

2 10 years. The nonpartisan Congressional Budget Of3 fice’s analysis of the President’s Fiscal Year 2017 

4 Budget listed the change as generating a savings of 

5 $3,300,000,000 over 10 years. 

6 (8) According to the Centers for Medicare & 

7 Medicaid Services, a key rationale for the IOAS ex8 ception was to permit physicians to provide ancillary 

9 services in their offices to better inform diagnosis 

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

11 initial office visit. 

12 (9) It is necessary, therefore, to distinguish be13 tween services and procedures that were intended to 

14 be covered by the IOAS exception, such as routine 

15 clinical laboratory services or simple x-rays that are 

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

17 other health care services which were clearly not en18 visioned to be covered by that exception because they 

19 cannot be performed during the patient’s initial of20 fice visit. 

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

22 less than 10 percent of CT, MRI, and Nuclear Medi23 cine scans take place on the same day as the initial 

24 patient office visit. 


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

2 urologists’ self-referrals for anatomic pathology serv3 ices of biopsy specimens is linked to increased use 

4 and volume billed along with a lower detection of 

5 prostate cancer. 

6 (12) According to an October 2011 Laboratory 

7 Economics report, there has been an increase in the 

8 number of anatomic pathology specimen units billed 

9 to the Medicare part B program from 2006 through 

10 2010, specifically for CPT Code 88305, and the rate 

11 of increase billed by physician offices for this service 

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

13 the provider segments. 

14 (13) According to a 2013 American Academy of 

15 Dermatology Pathology Billing paper, arrangements 

16 involving the split of the technical and professional 

17 components of anatomic pathology services among 

18 different providers may endanger patient safety and 

19 undermine quality of care. 

20 (14) In November 2012, Bloomberg News re21 leased an investigative report that scrutinized or22 deals faced by California prostate cancer patients 

23 treated by a urology clinic that owns radiation ther24 apy equipment. The report found that physician self25 referral resulted in a detrimental impact on patient 


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1 care and drove up health care costs in the Medicare 

2 program. The Wall Street Journal, the Washington 

3 Post, and the Baltimore Sun have also published in4 vestigations showing that urology groups owning ra5 diation therapy machines have utilization rates that 

6 rise quickly and are well above national norms for 

7 radiation therapy treatment of prostate cancer. 

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

9 3 percent of outpatient physical therapy services 

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

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

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

13 These services are not integral to the physician’s ini14 tial diagnosis and do not improve patient conven15 ience because patients must return for physical ther16 apy treatments. 

17 (16) Those services intended to be covered 

18 under the IOAS exception are not affected by this 

19 legislation. 

20 (17) The exception to the ownership or invest21 ment prohibition for rural providers in the ‘‘Stark’’ 

22 rule is not affected by this legislation. 

23 (b) PURPOSES.—The purposes of this Act are the fol24 lowing: 


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1 (1) Maintain the in-office ancillary services ex2 ception and preserve its original intent by removing 

3 certain complex services from the exception—specifi4 cally, advanced imaging, anatomic pathology, radi5 ation therapy, and physical therapy. 

6 (2) Protect patients from misaligned provider 

7 financial incentives. 

8 (3) Protect Medicare resources by saving bil9 lions of dollars. 

10 (4) Accomplish the purposes described in para11 graphs (1), (2), and (3) in a manner that does not 

12 alter the existing exception to the ownership or in13 vestment prohibition for rural providers. 

14 SEC. 3. LIMITATION ON APPLICATION OF PHYSICIANS’ 

15 SERVICES AND IN-OFFICE ANCILLARY SERV16 ICES EXCEPTIONS. 

17 (a) IN GENERAL.—Section 1877(b) of the Social Se18 curity Act (42 U.S.C. 1395nn(b)) is amended— 

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

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

21 1861(q))’’; and 

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

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

24 pumps)’’. 


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1 (b) INCREASE OF CIVIL MONEY PENALTIES.—Sec2 tion 1877(g) of the Social Security Act (42 U.S.C. 

3 1395nn(g)) is amended— 

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

5 such bill or claim included a bill or claim for a speci6 fied non-ancillary service, in which case the civil 

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

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

9 the first sentence; and 

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

11 $150,000 if such referrals are for specified non-an12 cillary services)’’ after ‘‘$100,000’’. 

13 (c) ENHANCED SCREENING OF CLAIMS.—Section 

14 1877(g) of the Social Security Act (42 U.S.C. 1395nn(g)) 

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

16 paragraph: 

17 ‘‘(7) COMPLIANCE REVIEW FOR SPECIFIED

18 NON-ANCILLARY SERVICES.— 

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

20 days after the date of the enactment of this 

21 paragraph, the Secretary, in consultation with 

22 the Inspector General of the Department of 

23 Health and Human Services, shall review com24 pliance with subsection (a)(1) with respect to 

25 referrals for specified non-ancillary services in 


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1 accordance with procedures established by the 

2 Secretary. 

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

4 Such procedures— 

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

6 types of entities that the Secretary deter7 mines represent a high risk of noncompli8 ance with subsection (a)(1) with respect to 

9 such billing for such specified non-ancillary 

10 services, apply different levels of review 

11 based on such type; and 

12 ‘‘(ii) may include prepayment reviews, 

13 claims audits, focused medical review, and 

14 computer algorithms designed to identify 

15 payment or billing anomalies.’’. 

16 (d) DEFINITION OF SPECIFIED NON-ANCILLARY

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

18 (42 U.S.C. 1395nn(h)) is amended by adding at the end 

19 the following new paragraphs: 

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

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

22 term ‘specified non-ancillary service’ means the 

23 following: 

24 ‘‘(i) Anatomic pathology services, as 

25 defined by the Secretary and including the 


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1 technical or professional component of the 

2 following: 

3 ‘‘(I) Surgical pathology. 

4 ‘‘(II) Cytopathology. 

5 ‘‘(III) Hematology. 

6 ‘‘(IV) Blood banking. 

7 ‘‘(V) Pathology consultation and 

8 clinical laboratory interpretation serv9 ices. 

10 ‘‘(ii) Radiation therapy services and 

11 supplies, as defined by the Secretary. 

12 ‘‘(iii) Advanced diagnostic imaging 

13 studies (as defined in section 

14 1834(e)(1)(B)). 

15 ‘‘(iv) Physical therapy services (as de16 scribed in paragraph (6)(B)). 

17 ‘‘(v) Any other service that the Sec18 retary has determined is not usually pro19 vided and completed as part of the office 

20 visit to a physician’s office in which the 

21 service is determined to be necessary. 

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

23 service’ does not include the following: 

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


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1 ‘‘(I) in an urban area (as defined 

2 in section 1886(d)(2)(D)) to an indi3 vidual who resides in a rural area (as 

4 defined in such section); and 

5 ‘‘(II) to such individual in its en6 tirety on the same day as the day on 

7 which, with respect to the condition 

8 for which the service is furnished, the 

9 initial office visit of the individual for 

10 such condition occurs. 

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

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

13 supplier participating in an account14 able care organization that partici15 pates in the shared savings program 

16 established under section 1899; and 

17 ‘‘(II) to a Medicare fee-for-serv18 ice beneficiary (as defined in section 

19 1899(h)(3)) assigned to such account20 able care organization. 

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

22 a provider or supplier pursuant to the par23 ticipation of the provider or supplier in a 

24 payment and service delivery model se25 lected under section 1115A(a). 


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

2 an integrated health care delivery system. 

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

4 ‘integrated health care delivery system’ means a 

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

6 ‘‘(A) consists of at least— 

7 ‘‘(i) primary care physicians who pro8 vide primary care services (as defined in 

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

10 ‘‘(ii) seven or more different and dis11 tinct physician specialties (not including 

12 subspecialties) which are practiced by phy13 sicians who are board certified in the phy14 sician specialty associated with the services 

15 that they provide; 

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

17 has made a determination (and has documented 

18 such determination) that the system is focused 

19 on— 

20 ‘‘(i) promoting accountability for the 

21 quality, cost, and overall care for individ22 uals entitled to benefits under part A or 

23 enrolled in part B, including by managing 

24 and coordinating care for such individuals; 

25 and 


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1 ‘‘(ii) encouraging investment in infra2 structure and redesigned care processes for 

3 high quality and efficient service delivery 

4 for patients, including individuals described 

5 in clause (i); and 

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

7 under this title, such cost reduction and quality 

8 goals as the Secretary determines appro9 priate.’’. 

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

11 amendments made by this section) shall be construed to 

12 affect the authority of the Secretary of Health and Human 

13 Services to waive under section 1899 of the Social Security 

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

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

16 affect the authority of the Secretary to implement the pro17 visions under section 1848(q) of such Act (42 U.S.C. 

18 1395w–4(q)) (relating to the eligible professionals Merit19 Based Incentive Payment System under the Medicare pro20 gram) or section 1833(z) of such Act (42 U.S.C. 1395l(z)) 

21 (relating to incentive payments for participation in eligible 

22 alternative payment models under such program). 

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

24 this section shall apply to items and services furnished on 

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


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

2 Act. 

3 SEC. 4. CLARIFICATION OF CERTAIN ENTITIES SUBJECT TO 

4 STARK RULE AND ANTI-MARKUP RULE. 

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

6 1395nn(h)) is further amended by adding at the end the 

7 following new paragraph: 

8 ‘‘(9) CLARIFICATION OF CERTAIN ENTITIES

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

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

11 practice when it bills under this title for the tech12 nical component or the professional component of a 

13 specified non-ancillary service, including when such 

14 service is billed in compliance with section 

15 1842(n)(1).’’. 

16 SEC. 5. CLARIFICATION OF SUPERVISION OF TECHNICAL 

17 COMPONENT OF ANATOMIC PATHOLOGY 

18 SERVICES. 

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

20 U.S.C. 1395x(s)(17)) is amended— 

21 (1) by striking ‘‘and’’ at the end of subpara22 graph (A); 

23 (2) by redesignating subparagraph (B) as sub24 paragraph (C); and 


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1 (3) by inserting after subparagraph (A) the fol2 lowing new subparagraph: 

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

4 technical component of anatomic pathology 

5 services, meets the applicable supervision re6 quirements for laboratories certified in the sub7 specialty of histopathology, pursuant to section 

8 353 of the Public Health Service Act; and’’. 

9 SEC. 6. EXEMPTION FROM BUDGET NEUTRALITY UNDER 

10 PHYSICIAN FEE SCHEDULE. 

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

12 (42 U.S.C. 1395w–4(c)(2)(B)(v)) is amended by adding 

13 at the end the following new subclause: 

14 ‘‘(VIII) CHANGES TO LIMITA15 TIONS ON CERTAIN PHYSICIAN REFER16 RALS.—Effective for fee schedules es17 tablished beginning with 2017, re18 duced expenditures attributable to the 

19 Promoting Integrity in Medicare Act 

20 of 2016.’’. 

Æ 


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