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 Com-
merce, and in addition to the Committee on Ways and Means, for a pe-
riod to be subsequently determined by the Speaker, in each case for con-
sideration of such provisions as fall within the jurisdiction of the com-
mittee concerned 
A BILL 
To prevent abusive billing of ancillary services to the 
Medicare program, and for other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Promoting Integrity 
in Medicare Act of 2016’’ or ‘‘PIMA of 2016’’. 
SEC. 2. FINDINGS; PURPOSES. 
(a) FINDINGS.—Congress finds the following: 
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(1) Recent studies by the Government Account-
ability Office (GAO) examining self-referral practices 
in advanced diagnostic imaging and anatomic pa-
thology determined that financial incentives were the 
most likely cause of increases in self-referrals. 
(2) For advanced diagnostic imaging, GAO 
stated that ‘‘providers who self-referred made 
400,000 more referrals for advanced imaging serv-
ices than they would have if they were not self-refer-
ring’’, at a cost of ‘‘more than $100 million’’ in 
2010. 
(3) For anatomic pathology, GAO found that 
‘‘self-referring providers likely referred over 918,000 
more anatomic pathology services’’ than they would 
have if they were not self-referring, costing Medicare 
approximately $69,000,000 more in 2010 than if 
self-referral was not permitted. 
(4) For radiation oncology, GAO found that in-
tensity modulated radiation therapy (IMRT) utiliza-
tion among self-referring groups increased by 356 
percent, with overall increases in IMRT utilization 
rates and spending due entirely to services per-
formed by limited-specialty groups. The GAO con-
cluded that ‘‘the higher use of IMRT by self-refer-
ring providers results in higher costs for Medicare 
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and beneficiaries. To the extent that treatment deci-
sions are driven by providers’ financial interest and 
not by patient preference, these increased costs are 
difficult to justify’’. 
(5) For physical therapy, GAO found that ‘‘in 
the year a provider began to self-refer, physical ther-
apy service referrals increased at a higher rate rel-
ative to non-self-referring providers of the same spe-
cialty’’. 
(6) Noting the rapid growth of services covered 
by the in-office ancillary services (IOAS) exception 
and evidence that these services are sometimes fur-
nished inappropriately by referring physicians, the 
Medicare Payment Advisory Commission (MedPAC) 
stated that physician self-referral of ancillary serv-
ices creates incentives to increase volume under 
Medicare’s current fee-for-service payment systems 
and the rapid volume growth contributes to Medi-
care’s rising financial burden on taxpayers and bene-
ficiaries. 
(7) The President’s Fiscal Year 2017 Budget 
includes the change to remove the four services: ad-
vanced diagnostic imaging, anatomic pathology, radi-
ation oncology, and physical therapy from the IOAS 
exception to the Stark Law and cited the change as 
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generating a savings score of $4,980,000,000 over 
10 years. The nonpartisan Congressional Budget Of-
fice’s analysis of the President’s Fiscal Year 2017 
Budget listed the change as generating a savings of 
$3,300,000,000 over 10 years. 
(8) According to the Centers for Medicare & 
Medicaid Services, a key rationale for the IOAS ex-
ception was to permit physicians to provide ancillary 
services in their offices to better inform diagnosis 
and treatment decisions at the time of the patient’s 
initial office visit. 
(9) It is necessary, therefore, to distinguish be-
tween services and procedures that were intended to 
be covered by the IOAS exception, such as routine 
clinical laboratory services or simple x-rays that are 
provided during the patient’s initial office visit, and 
other health care services which were clearly not en-
visioned to be covered by that exception because they 
cannot be performed during the patient’s initial of-
fice visit. 
(10) According to a 2010 Health Affairs study, 
less than 10 percent of CT, MRI, and Nuclear Medi-
cine scans take place on the same day as the initial 
patient office visit. 
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(11) According to a 2012 Health Affairs study, 
urologists’ self-referrals for anatomic pathology serv-
ices of biopsy specimens is linked to increased use 
and volume billed along with a lower detection of 
prostate cancer. 
(12) According to an October 2011 Laboratory 
Economics report, there has been an increase in the 
number of anatomic pathology specimen units billed 
to the Medicare part B program from 2006 through 
2010, specifically for CPT Code 88305, and the rate 
of increase billed by physician offices for this service 
is accelerating at a far greater pace than the rest of 
the provider segments. 
(13) According to a 2013 American Academy of 
Dermatology Pathology Billing paper, arrangements 
involving the split of the technical and professional 
components of anatomic pathology services among 
different providers may endanger patient safety and 
undermine quality of care. 
(14) In November 2012, Bloomberg News re-
leased an investigative report that scrutinized or-
deals faced by California prostate cancer patients 
treated by a urology clinic that owns radiation ther-
apy equipment. The report found that physician self- 
referral resulted in a detrimental impact on patient 
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care and drove up health care costs in the Medicare 
program. The Wall Street Journal, the Washington 
Post, and the Baltimore Sun have also published in-
vestigations showing that urology groups owning ra-
diation therapy machines have utilization rates that 
rise quickly and are well above national norms for 
radiation therapy treatment of prostate cancer. 
(15) According to a 2010 MedPAC report, only 
3 percent of outpatient physical therapy services 
were provided on the same day as an office visit, 
only 9 percent within 7 days of an office visit, and 
only 14 percent within 14 days of an office visit. 
These services are not integral to the physician’s ini-
tial diagnosis and do not improve patient conven-
ience because patients must return for physical ther-
apy treatments. 
(16) Those services intended to be covered 
under the IOAS exception are not affected by this 
legislation. 
(17) The exception to the ownership or invest-
ment prohibition for rural providers in the ‘‘Stark’’ 
rule is not affected by this legislation. 
(b) PURPOSES.—The purposes of this Act are the fol-
lowing: 
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(1) Maintain the in-office ancillary services ex-
ception and preserve its original intent by removing 
certain complex services from the exception—specifi-
cally, advanced imaging, anatomic pathology, radi-
ation therapy, and physical therapy. 
(2) Protect patients from misaligned provider 
financial incentives. 
(3) Protect Medicare resources by saving bil-
lions of dollars. 
(4) Accomplish the purposes described in para-
graphs (1), (2), and (3) in a manner that does not 
alter the existing exception to the ownership or in-
vestment prohibition for rural providers. 
SEC. 3. LIMITATION ON APPLICATION OF PHYSICIANS’ 
SERVICES AND IN-OFFICE ANCILLARY SERV-
ICES EXCEPTIONS. 
(a) IN GENERAL.—Section 1877(b) of the Social Se-
curity Act (42 U.S.C. 1395nn(b)) is amended— 
(1) in paragraph (1), by inserting ‘‘, other than 
specified non-ancillary services,’’ after ‘‘section 
1861(q))’’; and 
(2) in paragraph (2), by inserting ‘‘, specified 
non-ancillary services,’’ after ‘‘(excluding infusion 
pumps)’’. 
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(b) INCREASE OF CIVIL MONEY PENALTIES.—Sec-
tion 1877(g) of the Social Security Act (42 U.S.C. 
1395nn(g)) is amended— 
(1) in paragraph (3), by inserting ‘‘, unless 
such bill or claim included a bill or claim for a speci-
fied non-ancillary service, in which case the civil 
money penalty shall be not more than $25,000 for 
each such service’’ before the period at the end of 
the first sentence; and 
(2) in paragraph (4), by inserting ‘‘(or 
$150,000 if such referrals are for specified non-an-
cillary services)’’ after ‘‘$100,000’’. 
(c) ENHANCED SCREENING
OF CLAIMS.—Section 
1877(g) of the Social Security Act (42 U.S.C. 1395nn(g)) 
is further amended by adding at the end the following new 
paragraph: 
‘‘(7) COMPLIANCE
REVIEW
FOR
SPECIFIED 
NON-ANCILLARY SERVICES.— 
‘‘(A) IN
GENERAL.—Not later than 180 
days after the date of the enactment of this 
paragraph, the Secretary, in consultation with 
the Inspector General of the Department of 
Health and Human Services, shall review com-
pliance with subsection (a)(1) with respect to 
referrals for specified non-ancillary services in 
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accordance with procedures established by the 
Secretary. 
‘‘(B) FACTORS IN COMPLIANCE REVIEW.— 
Such procedures— 
‘‘(i) shall, for purposes of targeting 
types of entities that the Secretary deter-
mines represent a high risk of noncompli-
ance with subsection (a)(1) with respect to 
such billing for such specified non-ancillary 
services, apply different levels of review 
based on such type; and 
‘‘(ii) may include prepayment reviews, 
claims audits, focused medical review, and 
computer algorithms designed to identify 
payment or billing anomalies.’’. 
(d) DEFINITION
OF
SPECIFIED
NON-ANCILLARY 
SERVICES.—Section 1877(h) of the Social Security Act 
(42 U.S.C. 1395nn(h)) is amended by adding at the end 
the following new paragraphs: 
‘‘(8) SPECIFIED NON-ANCILLARY SERVICES.— 
‘‘(A) Subject to subparagraph (B), the 
term ‘specified non-ancillary service’ means the 
following: 
‘‘(i) Anatomic pathology services, as 
defined by the Secretary and including the 
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technical or professional component of the 
following: 
‘‘(I) Surgical pathology. 
‘‘(II) Cytopathology. 
‘‘(III) Hematology. 
‘‘(IV) Blood banking. 
‘‘(V) Pathology consultation and 
clinical laboratory interpretation serv-
ices. 
‘‘(ii) Radiation therapy services and 
supplies, as defined by the Secretary. 
‘‘(iii) Advanced diagnostic imaging 
studies 
(as 
defined 
in 
section 
1834(e)(1)(B)). 
‘‘(iv) Physical therapy services (as de-
scribed in paragraph (6)(B)). 
‘‘(v) Any other service that the Sec-
retary has determined is not usually pro-
vided and completed as part of the office 
visit to a physician’s office in which the 
service is determined to be necessary. 
‘‘(B) The term ‘specified non-ancillary 
service’ does not include the following: 
‘‘(i) Any service that is furnished— 
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‘‘(I) in an urban area (as defined 
in section 1886(d)(2)(D)) to an indi-
vidual who resides in a rural area (as 
defined in such section); and 
‘‘(II) to such individual in its en-
tirety on the same day as the day on 
which, with respect to the condition 
for which the service is furnished, the 
initial office visit of the individual for 
such condition occurs. 
‘‘(ii) Any service that is furnished— 
‘‘(I) by a provider of services or 
supplier participating in an account-
able care organization that partici-
pates in the shared savings program 
established under section 1899; and 
‘‘(II) to a Medicare fee-for-serv-
ice beneficiary (as defined in section 
1899(h)(3)) assigned to such account-
able care organization. 
‘‘(iii) Any service that is furnished by 
a provider or supplier pursuant to the par-
ticipation of the provider or supplier in a 
payment and service delivery model se-
lected under section 1115A(a). 
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‘‘(iv) Any service that is provided by 
an integrated health care delivery system. 
‘‘(9) INTEGRATED
HEALTH
CARE.—The term 
‘integrated health care delivery system’ means a 
group practice, as defined by the Secretary, that— 
‘‘(A) consists of at least— 
‘‘(i) primary care physicians who pro-
vide primary care services (as defined in 
section 1842(i)(4)); and 
‘‘(ii) seven or more different and dis-
tinct physician specialties (not including 
subspecialties) which are practiced by phy-
sicians who are board certified in the phy-
sician specialty associated with the services 
that they provide; 
‘‘(B) is governed by a governing body that 
has made a determination (and has documented 
such determination) that the system is focused 
on— 
‘‘(i) promoting accountability for the 
quality, cost, and overall care for individ-
uals entitled to benefits under part A or 
enrolled in part B, including by managing 
and coordinating care for such individuals; 
and 
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‘‘(ii) encouraging investment in infra-
structure and redesigned care processes for 
high quality and efficient service delivery 
for patients, including individuals described 
in clause (i); and 
‘‘(C) meets, with respect to the program 
under this title, such cost reduction and quality 
goals as the Secretary determines appro-
priate.’’. 
(e) CONSTRUCTION.—Nothing in this section (or the 
amendments made by this section) shall be construed to 
affect the authority of the Secretary of Health and Human 
Services to waive under section 1899 of the Social Security 
Act (42 U.S.C. 1395jjj) the requirements imposed under 
the provisions of this section (or such amendments) or to 
affect the authority of the Secretary to implement the pro-
visions under section 1848(q) of such Act (42 U.S.C. 
1395w–4(q)) (relating to the eligible professionals Merit- 
Based Incentive Payment System under the Medicare pro-
gram) or section 1833(z) of such Act (42 U.S.C. 1395l(z)) 
(relating to incentive payments for participation in eligible 
alternative payment models under such program). 
(f) EFFECTIVE DATE.—The amendments made by 
this section shall apply to items and services furnished on 
or after the first day of the first month beginning more 
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than 12 months after the date of the enactment of this 
Act. 
SEC. 4. CLARIFICATION OF CERTAIN ENTITIES SUBJECT TO 
STARK RULE AND ANTI-MARKUP RULE. 
Section 1877(h) of the Social Security Act (42 U.S.C. 
1395nn(h)) is further amended by adding at the end the 
following new paragraph: 
‘‘(9) CLARIFICATION
OF
CERTAIN
ENTITIES 
SUBJECT TO ANTI-MARKUP RULE.—In applying this 
section, the term ‘entity’ shall include a physician’s 
practice when it bills under this title for the tech-
nical component or the professional component of a 
specified non-ancillary service, including when such 
service 
is 
billed 
in 
compliance 
with 
section 
1842(n)(1).’’. 
SEC. 5. CLARIFICATION OF SUPERVISION OF TECHNICAL 
COMPONENT 
OF 
ANATOMIC 
PATHOLOGY 
SERVICES. 
Section 1861(s)(17) of the Social Security Act (42 
U.S.C. 1395x(s)(17)) is amended— 
(1) by striking ‘‘and’’ at the end of subpara-
graph (A); 
(2) by redesignating subparagraph (B) as sub-
paragraph (C); and 
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(3) by inserting after subparagraph (A) the fol-
lowing new subparagraph: 
‘‘(B) with regard to the provision of the 
technical component of anatomic pathology 
services, meets the applicable supervision re-
quirements for laboratories certified in the sub-
specialty of histopathology, pursuant to section 
353 of the Public Health Service Act; and’’. 
SEC. 6. EXEMPTION FROM BUDGET NEUTRALITY UNDER 
PHYSICIAN FEE SCHEDULE. 
Section 1848(c)(2)(B)(v) of the Social Security Act 
(42 U.S.C. 1395w–4(c)(2)(B)(v)) is amended by adding 
at the end the following new subclause: 
‘‘(VIII) CHANGES
TO
LIMITA-
TIONS ON CERTAIN PHYSICIAN REFER-
RALS.—Effective for fee schedules es-
tablished beginning with 2017, re-
duced expenditures attributable to the 
Promoting Integrity in Medicare Act 
of 2016.’’. 
Æ 
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