Issue Background

Maintain Physical Therapy in the In-Office Ancillary Services Exception

AAOE supports maintaining the IOAS exception for physical therapy services. Maintenance of the exception encourages patient choice and keeps physicians from ordering uneccessary physical therapy services for fear of being accused of abusing Medicare or Medicaid, something non-self-referring physicians and independently owned physical therapy practices do not worry about.

In 1993, Congress passed the Omnibus Budget Reconciliation Act of 1993 and included in the legislation a definition of "designated health services" that were and continue to be exempt from the Stark Law prohibition of physician self-referral. Physical and occupational therapy were included in this exception, now known as the In-Office Ancillary Services (IOAS) exception, because members of Congress recognized that in order to maintain continuity of care it is important for a patient to be given the choice of receiving their physical therapy services within the referring provider's practice.

Some groups wish to take away the IOAS exception and restrict patient choice and physician expertise by claiming that the exception abuses Medicare. Countless reports have shown these assertions to be false with the most recent GAO report on the subject reporting that non-self-referring physicians order more physical therapy services on average than self-referring physicians.

"... the Commission is concerned that limiting the IOAS exception could have unintended consequences, such as inhibiting the development of organizations that integrate and coordinate care within a physician practice. In addition, it could be difficult to craft a more limited IOAS exception that distinguishes between group practices that improve quality and coordination and those that use additional services of marginal clinical value. Therefore, we do not currently recommend that the exception be changed." - Medicare Payment Advisory Commission

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