GAO report raises concerns about dermatologists’ use of in-office labs

By Lisa Garner, MD

On July 15, the Government Accountability Office (GAO) issued a report that raised concerns that dermatologists, along with urologists and gastroenterologists, are inappropriately increasing utilization of pathology services when those services are provided within the office as opposed to being referred to an outside facility for analysis.

The report found that specialists who brought their pathology in-house during the study period immediately began referring more pathology to their own practices than they had previously been referring to outside reference labs — in aggregate, 918,000 more specimens were read in-house in 2010 by self-referrers than would have been referred out. After searching for any other explanation for this change, the GAO concluded that the financial incentives for physicians to self-refer pathology services within their own offices were a significant factor in whether physicians self-refer, contending that additional in-office pathology services cost Medicare an extra $69 million in 2010, along with additional co-pays made by patients. (Read a copy of the full report and a summary of its findings.)

As dermatologists we know the value of reading our own slides. The report does not acknowledge that biopsy procedures are minimally invasive, routine, and first-line dermatologic diagnostic intervention and are performed many times a day by most dermatologists with minimal complications. Nor does it acknowledge the unique pathology training we receive as part of our medical residency, which enables us to read our own specimens or work closely with a dermatopathologist within our practice to provide more timely, effective, and integrated care. The Academy expressed these and other concerns during our initial review of the report. However, they would not likely have substantially changed the conclusions the GAO arrived at. The report suggests that some among us are doing more biopsies and ordering more tests on those biopsies due to the financial incentives for doing so.

In response to the report, some have advocated closing the in-office ancillary services exception. The AADA is firmly against closing the exception, which would severely undermine the ability of dermatologists to provide the comprehensive care they were trained to provide. Removing the in-office ancillary services exception would severely limit if not wholly eliminate the ability to provide this service to our patients. 

Recognizing the value that integration of care provides to our patients, the AADA is committed to ensuring that our members remain focused on providing high quality, cost-effective patient care. The AADA took a strong stance against certain inappropriate dermatopathology arrangements at our March Board of Directors meeting and we will continue our strenuous work to promote the highest quality, most efficient care for our patients.

We MUST be vigilant stewards of the care we provide, and the AADA has taken a public stand toward this end. If we are not seen as stewards, policymakers will take it upon themselves to act, which will almost certainly have unintended consequences for our patients and our practices.

Dr. Garner is the vice president of the American Academy of Dermatology Association. She is a dermatologist in private practice in Garland, Texas, and serves as clinical professor of dermatology at UT Southwestern Medical School.

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