Objective: Federal law prohibits a physician from referring Medicare patients for procedures or services to health care entities in which the physician has a financial relationship. This law has exceptions which enable physicians to self-refer under certain conditions. This study evaluates the effects of self-referral on use rates of surgical pathology services performed in conjunction with prostate biopsies and whether such changes are linked to urologist self-referral arrangements. Data and Sample: A targeted market area case study design was employed to identify the sample from Medicare claims data. The sample included male beneficiaries who resided in geographically dispersed counties; were continuously enrolled in Medicare fee-for-service (FFS) during 2005-2007; and who met the criteria to be a potential candidate to undergo a prostate biopsy. Outcomes: Prostate biopsy procedures per 1000 male Medicare beneficiaries in each county; counts of surgical pathology specimens (jars) associated with prostate biopsy procedures per 1000 male Medicare beneficiaries in each county. Findings: Regression analysis shows the self-referral share (percentage) of total utilization was associated with significant increases in the use rate of prostate surgical pathology specimens (p<.01). The use rate of prostate surgical pathology specimens (jars) would be 41.5 units higher in a county where the self-referral share of total utilization was 50% compared to a county with no self-referral (share equals 0%). Conclusions: The findings show that urologist self-referral of prostate surgical pathology services results in increased utilization and higher Medicare spending. The results suggest that exceptions in federal and state self-referral prohibitions need to be reevaluated.