Don't Worry About the AARP's Ancillary Services Exception

AARP and Physical Therapy
January 12, 2015
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The American Association of Retired Persons (AARP) recently endorsed eliminating the in-office ancillary services exception for physical therapy, advanced imaging (MRI), radiation oncology and anatomic pathology.

While the AARP has generated some publicity and list serve buzz, we do not see a serious cause for concern for a number of reasons including:

  • Both CMS and the Medicare Payment Advisory Commission (MedPAC) have basically stated that, although they are concerned about potential overutilization of ancillaries, they do not want to discourage the integration of patient services, including imaging and therapy in physician groups, because this allows for better coordination of patient care and future cost savings
  • A recent U.S. General Accounting Office study of Medicare patients found that therapy provided by independent therapy practices was actually more expensive than therapy delivered within physician groups
  • There is no pending legislation in the House or the Senate to eliminate or even restrict the in-office ancillary services exception

In practice, Medicare and many other payers are (often successfully) attempting to control the cost of therapy and imaging by decreasing payment rates and increasing co-pays rather than restricting referrals.

In 2010, MedPac released a report entitled Addressing the Growth of Ancillary Services in Physicians’ Offices. This report specifically declined to support the removal of the in-office ancillary services exception and instead endorsed the idea that bundled payments or capitation would be a more appropriate method to control costs. Additionally, the report noted the importance of integrated care and the potential for issue for patients that would be forced to go to hospitals for therapy services.

Earlier this year, a group of 30 medical organizations, including the AMA, sent a letter to the U.S. Senate Finance Committee urging it not to eliminate the in-office ancillary services exception for tests and therapy.

In their letter, the organizations stated “ancillary services are essential tools used on a daily basis by practices seeking to provide comprehensive patient-centered services,” and if the administration’s proposal were accepted it would “force patients to receive ancillary services in a new and unfamiliar setting, increase inefficiencies, present significant barriers to appropriate screenings and treatments and make healthcare both less accessible and less affordable.”