BILL ANALYSIS �
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|Hearing Date:July 8, 2013 |Bill No:AB |
| |1000 |
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SENATE COMMITTEE ON BUSINESS, PROFESSIONS
AND ECONOMIC DEVELOPMENT
Senator Ted W. Lieu, Chair
Bill No: AB 1000Author:Wieckowski
As Amended: June 24, 2013Fiscal: Yes
SUBJECT: Physical therapists: direct access to services:
professional corporations.
SUMMARY: Allows patients to self-refer to a physical therapist (PT)
and receive treatment for 45 calendar days or 12 visits, whichever
comes first, before being seen by a physician and receiving sign off
on the treatment plan initiated by a PT. Also permits specified
health professionals to be employed by a medical corporation.
NOTE : This measure was set for hearing in this Committee on July 1,
2013. Testimony was heard, but no vote was taken on the bill. The
author chose to bring the bill back to be reheard today in the same
form.
Existing law:
1) Establishes the Physical Therapy Act, which is enforced by the
Physical Therapy Board of California (PTB), to license and regulate
the practice of PTs. (Business and Professions Code (BPC) � 2600
et seq.)
2) Defines physical therapy as the art and science of physical or
corrective rehabilitation or of physical or corrective treatment of
any bodily or mental condition of any person by the use of the
physical, chemical and other properties of heat, light, water,
electricity, sound, massage and active, passive and resistive
exercise, and shall include physical therapy evaluation, treatment
planning, instruction and consultative services. (BPC � 2620)
3) Provides that the practice of physical therapy includes the
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promotion and maintenance of physical fitness to enhance the bodily
movement related health and wellness of individuals through the use
of physical therapy interventions. (BPC � 2620)
4) Specifies that the use of roentgen rays and radioactive materials,
for diagnostic and therapeutic purposes, and the use of electricity
for surgical purposes, including cauterization, are not authorized
under the term "physical therapy." (BPC � 2620)
5) Indicates that a physical therapy license does not authorize the
diagnosis of disease.
(BPC � 2620)
6) Provides that an applicant for a physical therapy license must be a
graduate of a professional degree program of an accredited
postsecondary institution/s approved by the PTB, and must complete
academic coursework and clinical internship in physical therapy.
(BPC � 2650)
7) Permits a PT to perform tissue penetration for the purpose of
evaluating neuromuscular performance upon specified authorization
of a physician and surgeon, but prohibits the PT from developing or
making diagnostic or prognostic interpretations from the data
obtained. (BPC � 2620.5)
8) Establishes the Moscone-Knox Professional Corporation Act which
regulates the formation and operation of professional corporations,
and defines a professional corporation as a corporation organized
under the general corporation law, as specified, or a corporation
that is engaged in rendering professional services in a single
profession. (Corporations Code (CC) � 13400 et seq.)
9) Specifies in the Moscone-Knox Professional Corporation Act that
certain licensed persons may be shareholders, officers, directors
or professional employees of professional corporations controlled
by licensed persons of a different profession so long as the sum of
all shares owned by those certain licensed persons does not exceed
49% of the total number of shares of the professional corporation,
and so long as the number of those certain licensed persons owning
shares in the professional corporation does not exceed the number
of persons licensed by the governmental agency regulating the
designated professional corporation. (CC � 13401.5)
10)Permits the payment or receipt of consideration for services other
than the referral of patients which is based on a percentage of
gross revenue or similar type of contractual arrangement as long as
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the consideration is commensurate with the value of the services
rendered or with the fair rental value of any premises or equipment
leased or provided by the recipient to the payer. (BPC � 650 (b))
11)Prohibits a professional corporation from forming that may violate
any law or any applicable rules and regulations relating to fee
splitting, kickbacks or other similar practices by physicians and
surgeons or psychologists, including, but not limited to BPC � 650.
Also provides that a violation of any such provision is grounds
for the suspension or revocation of the certificate of registration
of the professional corporation. (CC � 13408.5)
This bill:
1) Requires a physician and surgeon, podiatrist or other referring
practitioner who refers a patient to receive services by a PT
employed by a professional corporation, to comply with existing law
regarding financial arrangements for referrals and requires the
referring practitioner to provide notice of the following to the
patient orally and in writing, in a least 14-point type and signed
by the patient:
a) That the patient may seek physical therapy treatment
services from a physical therapy provider of his or her choice
who may not necessarily be employed by the medical or podiatry
corporation; and,
b) If the patient chooses to be treated by an employed PT, any
financial interest the referring practitioner has in the
corporation.
2) Exempts a physician and surgeon, podiatrist or other referring
practitioner, who is in a medical group with a healthcare service
plan who exclusively contracts to provide professional medical
services for its enrollees, from providing the aforementioned
notice.
3) Permits a person to initiate physical therapy treatment directly
from a licensed PT if the treatment is within the scope of practice
of PTs and all of the following conditions are met:
a) If at any time the PT has reason to believe that the patient
has signs or symptoms of a condition that requires treatment
beyond the scope of practice of a PT, or the patient is not
progressing toward documented treatment goals as demonstrated by
objective, measurable or functional improvement, the PT shall
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refer the patient to a physician and surgeon, dentist,
podiatrist or chiropractor, as appropriate;
b) The PT shall comply with laws relating to his or her title,
as specified, and shall disclose to the patient any financial
interest he or she has in treating the patient and, if working
in a physical therapy corporation, shall comply with existing
law regarding financial arrangements for referrals, as
specified;
c) With the patient's written authorization, the PT shall
notify the patient's physician and surgeon, if any, that the PT
is treating the patient; and,
d) The PT shall not continue treating the patient beyond 45
calendar days or 12 visits, whichever occurs first, without
receiving from a physician and surgeon or a podiatrist, and
acting within his or her scope of practice, a dated signature on
the PT's plan of care indicating approval. Approval of the PT's
plan of care shall include an in-person patient examination and
evaluation of the patient's condition and, if indicated, testing
by the physician and surgeon or podiatrist.
4) States that the 45 calendar day or 12 visit conditions do not apply
to a PT when he or she is only providing wellness physical therapy
services to a patient, as specified.
5) Clarifies that this bill does not expand or modify the scope of
practice for PTs, including the prohibition on a physical therapist
diagnosing a disease.
6) States that this bill does not require a health care service plan
or insurer to provide coverage for services rendered to a patient
who directly accessed the services of a PT.
7) Requires a PT to provide the following notice to a person
initiating physical therapy treatment services directly but before
providing those services, orally and in writing, in at least
14-point type and signed by the patient:
"Direct Physical Therapy Treatment Services
"You are receiving direct physical therapy treatment services
from an individual who is a physical therapist licensed by the
Physical Therapy Board of California.
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"Under California law, you may continue to receive direct
physical therapy treatment services for a period of up to 45
calendar days or 12 visits, whichever occurs first, after which
time a physical therapist may continue providing you with
physical therapy treatment only after receiving, from a person
holding a physician and surgeon's certificate issued by the
Medical Board of California or by the Osteopathic Medical Board
of California, or from a person holding a certificate to
practice podiatric medicine from the California Board of
Podiatric Medicine and acting within his or her scope of
practice, a dated signature on the physical therapist's plan of
care indicating approval of the physical therapist's plan of
care and that an in-person patient examination and evaluation
was conducted by the physician and surgeon or podiatrist."
8) States that violation of these provisions constitutes
unprofessional conduct.
9) States that existing law which provides for the types of licensees
a professional corporation may employ as shareholders, officers,
directors or a professional employee, as specified, and does not
limit employment by a professional corporation to only those
professions specifically designated.
10)Adds licensed physical therapists to the list of health arts
practitioners who may be shareholders, officers or directors of a
medical corporation or a podiatric medical corporation.
11)Permits any person licensed under the Business and Professions
Code, the Chiropractic Act, or the Osteopathic Act to be employed
to render professional services by a professional corporation, as
specified.
FISCAL EFFECT: According to the Assembly Appropriations Committee
Analysis dated May 8, 2013, there are "?potentially significant costs
to the state as well as to other employers and their insurers,
including the State Compensation Insurance Fund (SCIF), for worker's
compensation claims. These costs are difficult to project, but direct
referral to PTs could increase costs for worker's compensation for
state employees well in excess of $150,000. In addition, this bill
specifies it does not require direct access to PT to be covered by a
health insurers or plans. There are instances where an enrollee or
insured self-refers outside a health plan's gatekeeper system and,
depending on the circumstances, an enrollee could be reimbursed." The
analysis also identifies "Potential minor, absorbable fee-supported
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special fund enforcement costs to the Physical Therapy Board of
California."
COMMENTS:
1. Purpose. The bill is sponsored by the California Physical Therapy
Association . According to the author, "Direct access to physical
therapist services will help streamline health care delivery in
California. In a time of severe physician shortage, patients with
chronic conditions will not be taking up valuable time of or
incurring the cost of seeing additional healthcare providers." In
addition, the author notes, "Clarification of corporate practice is
necessary to allow full employment opportunities to licensed
professionals by professional corporations. This will provide
certainty for health care entrepreneurs who choose to use
incorporation as the manner in which they organize their business."
2. Background.
a) The Physical Therapy Act (PT Act). The PT Act defines the
practice of physical therapy as the art and science of physical
or corrective rehabilitation or of physical or corrective
treatment of any bodily or mental condition of any person by the
use of the physical, chemical, and other properties of heat,
light, water, electricity, sound, massage, and active, passive,
and resistive exercise and shall include physical therapy
evaluation, treatment planning, instruction and consultative
services. Furthermore, the practice of physical therapy
includes the promotion and maintenance of physical fitness to
enhance the bodily movement related health and wellness of
individuals through the use of physical therapy interventions.
However, the use of roentgen rays and radioactive materials, for
diagnostic and therapeutic purposes, and the use of electricity
for surgical purposes, including cauterization, are not
authorized under the term "physical therapy." The PT Act
provides that a physical therapy license does not authorize the
diagnosis of disease. Additionally, the PT Act indicates that a
physical therapist, upon specified authorization of a physician
and surgeon, may perform tissue penetration for the purpose of
evaluating neuromuscular performance as part of the practice of
physical therapy, provided that the physical therapist is
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certified by the PT Board to perform the tissue penetration and
evaluation and the physical therapist does not develop or make
diagnostic or prognostic interpretations of data produced. To
obtain licensure, a physical therapy applicant must be a
graduate of a professional degree program of an accredited
postsecondary institution/s approved by the PT Board, and must
complete academic coursework and clinical internship in physical
therapy.
b) 1965 Attorney General Opinion on Diagnosis. To access
physical therapy treatment, an initial diagnosis for a medical
condition must be made by a physician and surgeon or another
practitioner who is authorized to diagnose. This current
practice was echoed by a 1965 Attorney General Opinion which
reviewed the validity of a statute that allowed a physical
therapist to conduct specified methods of treatment but
prohibits him/her from making a diagnosis. The issue was
whether this statute was invalid because it was indefinite and
uncertain. In upholding the statute, the AG Opinion indicated
that the practice of medicine consists of three parts:
diagnosis, prescription and treatment. The AG opinion pointed
out that although it is impossible to treat a bodily or mental
condition without first ascertaining the condition, this does
not imply that the one rendering the treatment must also have
performed the diagnosis. However, the AG opinion was clear that
a licensed physical therapist is not authorized to diagnose, and
that the AG perceived no conflicts, ambiguities or uncertainties
in limiting the practice of licensed physical therapists to
treating ailments diagnosed by those found to be qualified and
authorized by law to diagnose. Therefore, a licensed physical
therapist may only treat an ailment basing his treatment upon a
physician's diagnosis.
c) Coverage of Physical Therapy Services. The federal Medicare
Program covers physical therapy services but limits how much is
covered for medically-necessary outpatient physical therapy.
The outpatient therapy limits for 2011 was $1,870 for physical
therapy and speech language pathology combined. There are
certain exceptions to these limits if the services are medically
necessary. Medicare coverage for physical therapy requires that
a patient must be under the care of a physician, the services
must be furnished under a plan of care and the plan of care must
be certified/recertified periodically by a physician (usually
every 30 days).
d) Patient Referrals. In 1989, the Ethics in Patient Referrals
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Act, also known as the Stark Law, was enacted. This purpose was
to prohibit referrals by a physician to a clinical laboratory in
which the physician had a financial interest. A 1994 amendment
included other services and equipment such as physical therapy.
These provisions were enacted to ensure medical professionals
make judgments about rendering services uninfluenced by their
own financial interests, as well as to protect consumers from
fraud or unnecessary and excessive health care expenses.
e) In Office Ancillary Services Exception (IOAS). Despite the
statutory ban on receiving compensation for self-referral, there
are several studies that assert physicians have abused the IOAS
exception of the Ethics in Patient Referrals Act. The IOAS
exception allows physicians to bill the Medicare program for
self-referred designated health services in many circumstances.
Although proponents of integrated clinical services models say
that the IOAS improves efficiency and continuity of care,
critics argue that the IOAS creates financial incentives for
physicians to increase the volume of ancillary services ordered.
For example, the Alliance for Integrity in Medicare and a
recent article in the New England Journal of Medicine purport
that many physicians avoid the law's prohibitions by,
"structuring arrangements to meet the technical requirements,
but circumventing the intent of the exception." This sentiment
was echoed this year when the United States Department of Health
and Human Services (HHS) noted that there are "many appropriate
uses" for the IOAS exception, which the agency describes as
designed to allow physicians to "self-refer quick turnaround
services." However, the agency cautioned, some physicians have
relied on the exception for certain services, such as advanced
imaging and outpatient therapy that "are rarely performed on the
same day as the related office visit." Additionally, HHS
claims, evidence suggests that the exception may have spurred
"overutilization and rapid growth" of these services.
In addition, recent reports including the 2013 Kaiser Health
Foundation Recommendations, the Government Accountability Office
Study and a study cited in the 2013 Health Affairs Journal
raised questions about physicians' incentives to refer for
profit. This year, the Simpson-Bowles Federal Deficit
Commission recommended closing physician self-referral
loopholes. Further, in April of 2013, President Obama's
proposed budget recommended banning payment for physician-owned
physical therapy, imaging and radiation therapy services due to
information from the Center for Medicare Services which cited
ineffectiveness, substandard care and the potential to save the
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nation $6.1 billion dollars if the referral for profit practice
is banned.
f) Billing Practices. There have been concerns raised
regarding physicians who submitted improper billing for physical
therapy services. In 2002, the Office of Inspector General
examined Medicare payments for physical therapy services and
submitted a report to the United States Department of Health and
Human Services. The report indicated, "Based on a simple random
sample of 70 physical therapy line items billed by physicians
and rendered in the first 6 months of 2002, we found that 91
percent of physical therapy [services] billed by physicians and
allowed by Medicare did not meet program requirements, resulting
in $136 million in improper payments."
g) Professional Corporations. A professional corporation is an
organization made up of individuals of the same trade or
profession. The Moscone-Knox Professional Corporations Act of
1968 authorized the formation of professional corporations to
obtain certain benefits of the corporate form of doing business,
such as limited legal liability. At that time, only medical,
law and dental professional corporations were envisioned. There
are now 15 authorized healing arts professional corporations.
Current law specifies which healing arts licensees may be
shareholders, officers, directors or professional employees of
professional corporations controlled by a differing profession
so long as the sum of all shares owned by those licensed persons
does not exceed 49% of the total number of shares of the
professional corporation. For example, a professional medical
corporation may have up to 49% of its shares owned by any of 11
different healing arts professions (such as registered nurses or
acupuncturists) as long as at least 51% of shares are owned by
licensed physicians.
h) Medical Corporations. PTs are not currently included in the
list of healing arts professionals authorized to be
shareholders, officers, directors or professional employees of
medical corporations. Prior to 2010, PTs worked in medical
corporations under guidance from the PT Board that the
designated professions in statute were not exhaustive, and that
therefore PTs could practice within a professional medical
corporation.
i. 2010 Legislative Counsel Opinion on Medical
Corporations' Employment of PTs. On September 29, 2010,
Legislative Counsel issued a written opinion that PTs could
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not work in a medical corporation because they were not
specifically included among the permissible healing arts
licensees under the Moscone-Knox Act. Legislative Counsel
viewed medical corporations' employment of PTs as related to
the ban on the corporate practice of medicine, which was
intended to protect the public from inappropriate corporate
influence over professional health care decision-making. The
opinion further indicated that since the Act provides that it
is unprofessional conduct to violate, attempt to violate,
aid, abet or conspire to violate any provisions of the Act
itself, the Moscone-Knox Act, or any related regulations,
physical therapists employed by medical corporations could be
subject to discipline by PTB. In the same manner, since a
medical corporation is not authorized to employ PTs to
provide physical therapy services, a medical corporation
doing so would be unlawfully engaging in the practice of
physical therapy.
ii. 2011 DCA Opinion on Medical Corporations' Employment
of PTs. On February 28, 2011, the Department of Consumer
Affairs (DCA) issued an opinion on the same issue and reached
the same conclusion as Legislative Counsel did in the 2010
opinion. Additionally, DCA pointed out that since
naturopathic doctor corporations includes physical therapists
in the list of licensed professionals who could serve as
shareholders, directors, officers or professional employees
of a naturopathic corporations, only naturopathic
corporations are authorized to employ physical therapists.
a) Other States That Provide Direct Physical Therapy Access.
Unlike California, there are several other states that allow for
patients to directly access physical therapy treatment.
According to the Federation of State Physical Therapy Boards
(FSPTB), an organization of state physical therapy licensing
authorities or boards, there are 17 jurisdictions that have
unlimited direct access to physical therapy, 30 jurisdictions
with limited direct access and 6 jurisdictions that have no
direct access. For example, California's neighboring states of
Nevada and Arizona have unlimited direct access. On the other
hand, the FSPTB indicates that Washington is a "limited"
jurisdiction, where a consultation and periodic review by an
authorized health care practitioner is not required for
treatment of neuromuscular or musculoskeletal conditions, but
requires that referrals must be made if there is reasonable
cause to believe symptoms or conditions are present which
require services beyond the scope of the physical therapist's
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practice, or for which physical therapy is contraindicated.
Additionally, there are states that require notification to
physicians and surgeons while providing direct access. For
example, Kansas allows for physical therapists to evaluate and
treat a patient for no more than 30 consecutive calendar days
without a referral under specified conditions. New Jersey
requires a physical therapist to refer any individual who has
failed to demonstrate reasonable progress within 30 days of the
date of initial treatment to a licensed health care
professional.
3. Prior Related Legislation. SB 924 (Price, Steinberg, and Walters,
2012) would have allowed PTs to treat patients without a diagnosis
from a physician for 30 business days, and thereafter under
specified conditions, and specified who may be shareholders,
officers, directors, or professional employees of medical
corporations, podiatry corporations, chiropractic corporations, and
physical therapy corporations. ( Status : SB 924 was held in the
Assembly Rules Committee.)
AB 783 (Hayashi, 2011) would have added licensed PTs and
occupational therapists to the list of healing arts practitioners
who may be shareholders, officers, directors or professional
employees of a medical corporation, podiatric medical corporation,
or chiropractic corporation, as specified. ( Status : AB 783 was
held in Senate Business, Professions and Economic Development
Committee.)
AB 721 (Nava, 2009) would have provided direct access to services
by PTs. ( Status : AB 721 was held in the Assembly Business and
Professions Committee.)
AB 1444 (Emmerson, 2008) would have revised the definition of
physical therapy and authorized a physical therapist to initiate
treatment of conditions within the scope of practice of a physical
therapist, as specified. ( Status : AB 1444 was held in the Assembly
Business and Professions Committee.)
4. Arguments in Support. The California Physical Therapy Association
(CPTA) writes in support. In their letter they note, "CPTA
continues to disagree with some elements of the amended bill, in
particular the corporate employment issue and the required
physician visit: however, on the whole, AB 1000 represents an
important step forward in ensuring that patients can directly
access physical therapist services. Direct access to physical
therapist services will help streamline health care delivery in
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California?and would grant the same rights to California patients
that patients in other states already enjoy."
The California Medical Association also supports the bill. In
their letter they state, "AB 1000 is a common sense measure that
provides an appropriate amount of direct access to consumers for
physical therapists, protects patient safety, preserves the status
of patient care and protects the jobs of hundreds of health care
practitioners."
The California Orthopaedic Association shares their support when
they write, "The bill will address the issue of direct access to
physical therapy treatment services, and also clarify that any
person licensed under the Business and Professions Code,
Osteopathic Act or Chiropractic Act, may be employed by a
professional corporation."
The Doctor of Physical Therapy Program at Mount St. Mary's College
point out in their letter, "At this moment graduates of California
physical therapy programs can move to 36 other states and practice
with direct access with no change in licensure requirements.
Graduates of California physical therapy programs should be able to
live in California and practice with direct access."
5. Arguments in Opposition. The Independent Physical Therapists of
California opposes the bill. "Our group is very concerned with
access to cost-effective health care and consumer protection. We
are also concerned with avoidable conflicts of interest in
healthcare and taxpayer protection, particularly when considering
health care expenditures are 18% of gross domestic product?It is
not legal for California medical corporations to employ physical
therapists. Nevertheless, our research indicates 200-250 physical
therapists are currently employed by physician-owned physical
therapy services (POPTS) in California?If POPTS real motive was to
employ PTs in order to improve coordination of care with physical
therapists, then they would allow their physical therapists to
continue working at the same location in a different legal business
model without receiving financial remuneration from their
professional services."
The Physical Therapy Business Alliance also opposes AB 1000. In
their letter they state, "?it is widely known that the proverbial
health care 'train gets off the track' rather quickly when patients
with musculoskeletal conditions initially access care via a
physician who might be inclined to order expensive tests, drugs,
surgery, and imaging that patients frequently may not need, instead
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of directly accessing lower cost, high quality physical therapist
services?We should not underestimate the trickle down effects of
agreeing to the legalization of physician self-referral in
California. It would send the wrong signal during a pivotal time
of health care reform?Our point is not to suggest that direct
access (and more importantly, education to change consumer
behavior) is not a priority?it very much is! However, pursuing it
at any expense (in this case, the legalization of physician
self-referral) makes little sense."
A letter of opposition was also received from the American College
of Physicians . In their letter they assert, "AB 1000 is the fourth
measure in the last few years which attempts to authorize direct
access?The sponsor of these measures has yet to articulate a
compelling argument as to why physical therapists should be allowed
to initiate a regimen of rehabilitation services on a patient who
has not been seen and evaluated by a physician. A physical
therapist cannot order or interpret X-rays, MRI scans, or blood
tests, and consequently a physical therapist's ability to assess a
patient's condition is severely limited."
6. Oppose Unless Amended. The California Chiropractic Association
opposes the bill unless amended. They write, "CCA respectfully
requests an amendment adding doctors of chiropractic to the
providers who can approve the plan of care. Frequently the patient
being seen by the physical therapist has a doctor of chiropractic
as their primary treating provider. This amendment would allow for
continuity of care for the patient with the primary provider of
their choice."
7. Policy Issue for Consideration. Current law establishes that
physical therapists do not have the authority to diagnose. The
current practice is for a physician or surgeon to diagnose a
patient and refer them to a physical therapist for treatment. The
physical therapist is then able to utilize a diagnostic code and
send to the patient's insurance company for reimbursement for
services.
Under this bill, patients would be able to directly access physical
therapy service for 45 days or 12 visits before a diagnosis is
established by a physician, surgeon or podiatrist. As such, it
leads one to ask the following question: If a patient is seen for
less than 12 visits or 45 days, is it legal for a physical
therapist to utilize a diagnostic code in order to bill an
insurance company for the services provided? This question should
be considered by proponents of this legislation.
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SUPPORT AND OPPOSITION:
Support:
California Physical Therapy Association (Sponsor)
California Medical Association
California Orthopaedic Association
Mount St. Mary's College Doctor of Physical Therapy Program
Over 80 individuals
Opposition:
American College of Physicians
California Board of Chiropractic Examiners
Independent Physical Therapists of California
Physical Therapy Business Alliance
1061 individuals
Oppose Unless Amended:
California Chiropractic Association
Consultant:Le Ondra Clark, Ph.D.