Over this period,  the number of self-referred PT services was generally flat, while the  number of non-self-referred PT services increased. Expenditures for Self- Referred PT Services Increased About 10 Percent; Expenditures for Non-Self-Referred Services Increased Nearly 60 Percent

Expenditures for both self-referred and non-self-referred PT services  grew from 2004 to 2010, but the increase was smaller for self-referred  services (see fig. PT Referral Patterns Differed on the Basis of Whether the Providers Self- Referred

The overall relationship between provider referral status and the average  number of PT services referred per provider was mixed and varied on the  basis of referring provider specialty, Medicare beneficiary practice size,  and geography. For example, self-referring family practice and internal  medicine providers in urban areas, on average, generally referred more  PT services in 2010 than their non-self-referring counterparts. In addition, self- referring providers generally referred more beneficiaries for PT services,  on average, than non-self-referring providers after accounting for  differences in provider specialty, Medicare beneficiary practice size, and  geography.fewer PT services per beneficiary than non-self-referring providers. Overall Relationship between Provider Referral Status and Average Number of PT Services Referred Was Mixed

In 2010, the relationship between provider referral status and number of  PT services referred across all beneficiaries differed on the basis of  geography, provider specialty, and Medicare beneficiary practice size. In 2010, Self-Referring Providers Generally Referred More Beneficiaries, on Average, but Referred Fewer PT Services per Beneficiary

Self-referring providers generally referred more beneficiaries for PT  services during 2010, on average, but referred fewer PT services per  beneficiary compared with non-self-referring providers. For example, the average number of beneficiaries referred by self- referring orthopedic surgeons was 13 to 29 percent higher than for their  non-self-referring counterparts, depending on the beneficiary practice size  category, while the average number of beneficiaries referred by self- referring family practice providers was approximately 43 to 87 percent  higher than for their non-self-referring counterparts, depending on the  beneficiary practice size category (see table 3). For example, in urban areas, beneficiaries referred by self- referring family practice providers received 12 to 28 percent fewer PT  services, on average, compared with beneficiaries referred by non-self- referring family practice providers, depending on the beneficiary practice  size category (see table 5). Providers’ Referrals for PT Services Increased the Year After They Began to Self-Refer

PT service referrals for providers in family practice, internal medicine, and  orthopedic surgery increased the year after they began to self-refer at a  higher rate relative to non-self-referring providers of the same specialty. The percentage increase in average PT service referrals  for switchers between 2008 and 2010 ranged from approximately   7 percent for orthopedic surgeons to 33 percent for family practice  providers. HHS thanked GAO for the opportunity to review the draft and  stated that it had no comments. This method allowed us to examine utilization and spending for each PT  service—self-referred and non-self-referred. According to APTA, our findings that self- referring providers referred more beneficiaries for PT services, and that  PT referrals for switchers in the three specialties we examined increased  relative to non-self-referring providers, are consistent with other studies  that found that providers have a financial interest to self-refer. Appendix I: Scope and Methodology

This appendix describes the scope and methodology used to analyze our  study objectives: (1) trends in the number of and expenditures for self- referred and non-self-referred Medicare physical therapy (PT) services  from 2004 through 2010, and (2) how provision of these services differs  among providers on the basis of whether they self-refer.
Why GAO Did This Study

Rising Medicare expenditures for PT services have long been of concern, and questions have been raised about the role of self-referral in this growth. Self-referral occurs when a provider refers patients to entities in which the provider or the provider's family members have a financial interest.
GAO was asked to examine self-referral for PT services and Medicare spending for these services. This report examines (1) trends in the number of and expenditures for self-referred and non-self-referred Medicare PT services and (2) how provision of these services differs among providers on the basis of whether they self-refer. GAO analyzed Medicare Part B claims data from 2004 through 2010 and examined three measures of PT referral for each referring provider: number of PT services referred, number of beneficiaries referred, and number of PT services provided per beneficiary. GAO compared PT referrals for self-referring and non-self-referring providers after accounting for referring provider specialty, Medicare beneficiary practice size, and geographic (urban or rural) location. GAO also compared selected characteristics of the beneficiaries referred by self-referring and non-self-referring providers.
The Department of Health and Human Services stated that it had no comments on a draft of this report.

What GAO Found

From 2004 to 2010, non-self-referred physical therapy (PT) services increased at a faster rate than self-referred PT services. During this period, the number of self-referred PT services per 1,000 Medicare fee-for-service beneficiaries was generally flat, while non-self-referred PT services grew by about 41 percent. Similarly, the growth rate in expenditures associated with non-self-referred PT services was also higher than for self-referred services.
The relationship between provider self-referral status and PT referral patterns was mixed and varied on the basis of referring provider specialty, Medicare beneficiary practice size, and geography. GAO examined three measures of PT referral for each referring provider for the three provider specialties that referred nearly 75 percent of PT services in 2010—family practice, internal medicine, and orthopedic surgery.
The overall relationship between provider referral status and the first measure of PT referrals—the average number of PT services referred per provider—was mixed. GAO found that self-referring family practice and internal medicine providers in urban areas, on average, generally referred more PT services than their non-self-referring counterparts. In contrast, self-referring orthopedic surgeons, on average, generally referred fewer PT services than non-self-referring orthopedic surgeons.
Self-referring providers in all three specialties that GAO examined generally referred more beneficiaries for PT services, on average, but for fewer PT services per beneficiary compared with non-self-referring providers. For these two measures of PT referrals, differences between self-referring and non-self-referring providers generally persisted after accounting for referring providers' specialty, Medicare beneficiary practice size, and geographic location, although the magnitude of these differences varied on the basis of these factors. For example, the average number of beneficiaries referred by self-referring family practice providers in urban areas was approximately 43 to 87 percent higher than for their non-self-referring counterparts, depending on Medicare practice size. In contrast, beneficiaries referred by self-referring family practice providers in urban areas received 12 to 28 percent fewer PT services, on average, depending on practice size, compared with their non-self-referring counterparts.
GAO also found that in the year a provider began to self-refer, PT service referrals increased at a higher rate relative to non-self-referring providers of the same specialty. For example, family practice providers that began self-referring in 2009 increased PT referrals 33 percent between 2008 and 2010. In contrast, non-self-referring family practice providers increased their PT service referrals 14 percent during this same period.