APTA is very encouraged by the proposal within President Obama's Fiscal Year 2014 budget, released yesterday, to exclude therapy services, including physical therapy, along with radiation therapy and advanced imaging, from the in-office ancillary services (IOAS) exception of the Stark self-referral laws. APTA has long supported and worked to advocate for exclusion of physical therapy from the IOAS exception, and we consider this a significant step in the right direction.

The spirit of the Stark self-referral IOAS exception is intended for the delivery of services that could be quickly administered for patient convenience, such as routine lab tests or x-rays. The expansive use of the IOAS exception by physicians in a manner not originally contemplated by the law undercuts its very purpose and substantially increases costs to the Medicare program and its beneficiaries. The Office of Management and Budget concluded that closing the loophole for these services would provide a savings of $6.1 billion over the standard 10-year budget window, providing further evidence that these self-referral arrangements lead to overutilization of Medicare services and should be addressed by Congress.

APTA is a founding member of the Alliance for Integrity in Medicare (AIM), a consortium of organizations that advocates for Congress to address the IOAS loophole. For many years, APTA has had a presence on Capitol Hill, working to overturn policies that allow self referral to continue. More recently, the Association and its AIM Coalition partners have advocated for the better part of 18 months to encourage the identification of cost savings associated with closing the loophole. APTA agrees with the Administration's proposal on physician self-referral and believes this issue should be addressed as part of any fundamental delivery system reform.

APTA and its AIM partners continue to be gravely concerned about the ongoing misapplication of the IOAS exception to the physician self-referral law, believing this loophole results not only in increased spending, but also in unnecessary use of medical services, and, more important, potentially compromised patient choice and care. Studies published by the New England Journal of Medicine, Health Affairs, and the Government Accountability Office, among others, have highlighted abuses that result from physician self-referral. These ongoing issues serve only to erode the integrity of the Medicare program and undermine patient care.

We strongly urge Congress to follow the recommendations laid out in the Administration's budget and pass legislation to remove physical therapy, advanced diagnostic imaging, anatomic pathology, and radiation therapy from the IOAS exception in the 113th Congress.