BILL ANALYSIS �
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|Hearing Date:April 28, 2014 |Bill No:SB |
| |1215 |
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SENATE COMMITTEE ON BUSINESS, PROFESSIONS
AND ECONOMIC DEVELOPMENT
Senator Ted W. Lieu, Chair
Bill No: SB 1215Author:Hernandez
As Amended: April 10, 2014Fiscal: Yes
SUBJECT: Healing arts licensees: referrals.
SUMMARY: Applies the physician self-referral prohibition to advanced
imaging, anatomic pathology, radiation therapy, or physical therapy
for a specific patient that is performed within a licensee's office,
or the office of a group practice and that is compensated on a
fee-for-service basis, and defines "advanced imaging" for these
purposes.
Existing law:
1)Licenses and regulates various healing arts professionals under the
Business and Professions Code (BPC) by boards within the Department
of Consumer Affairs.
2)Makes it a crime (misdemeanor) for a physician and surgeon to refer a
person for laboratory, diagnostic nuclear medicine, radiation
oncology, physical therapy, physical rehabilitation, psychometric
testing, home infusion therapy, or diagnostic imaging goods or
services if the licensee or his or her immediate family has a
financial interest, as specified, with the person or entity that
receives the referral. (BPC � 650.01)
a) Defines "diagnostic imaging" to include: all X-ray, computed
axial tomography (CAT), magnetic resonance imaging (MRI) nuclear
medicine, positron emission tomography (PET), mammography, and
ultrasound goods and services. (BPC � 650.01 (b) (1))
b) Defines "financial interest" to include: any type of
ownership interest, debt, loan, lease, compensation,
remuneration, discount, rebate, refund, dividend, distribution,
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subsidy, or other form of direct or indirect payment, whether in
money or otherwise, to a physician or the physician's immediate
family from a health-related facility, as specified. (BPC �
650.01 (b) (2))
c) Prohibits a physician and surgeon from entering into a cross
referral arrangement for the purpose of ensuring referrals to a
particular entity that if the licensee made direct referrals to
that entity would be in violation of the self referral
prohibition. (BPC � 650.01 (c))
d) Prohibits a claim for payment from being presented for goods
or services furnished in violation of these provisions. (BPC �
650.01 (d))
e) Prohibits an insurer or other payer from paying for any goods
or services resulting in a referral in violation of these
provisions. (BPC � 650.01 (e))
f) Requires a physician who refers a person to, or seeks
consultation from, an organization in which the physician has a
specified financial interest that is not otherwise prohibited to
disclose that financial interest to the patient in writing at the
time of referral or request for consultation. (BPC � 6501.01
(f))
1)Provides certain exceptions to the referral prohibition, including:
a) Referral if the physician's regular practice is located where
there is no alternative provider of the service within 25 miles
or 40 minutes traveling time. (BPC � 650.02 (a))
b) Referral to a licensed health facility, or to any facility
owned or leased by the facility if the facility does not
compensate for the referral and any equipment lease arrangements
meet specified requirements. (BPC � 650.02 (c))
c) Referral within an integrated, non-profit corporation or group
practice when the referring licensee's compensation is an annual
fixed amount. (BPC � 650.02 (d))
d) Referral of university-employed licensees to university
facilities for a licensee service where the referral is not
compensated. (BPC � 650.02 (e))
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e) Referral for any service for a specific patient that is
performed within, or goods that are supplied by, a licensee's
office or the office of a group practice. (BPC � 650.02 (f))
f) Cardiac rehabilitation services if they are provided to
patients meeting the criteria for Medicare reimbursement for
services. (BPC � 650.02 (g))
g) Referrals made by the practitioner in the office of a group
practice to a "multispecialty clinic," as that term is defined in
Section 1206 (l) of the Health and Safety Code.
(BPC � 650.02 (h))
h) The prohibition does not apply for health care services
provided to an enrollee of a health care service plan licensed
under the Knox-Keene Health Care Service Plan Act of 1975 (HMO).
(BPC � 650.02 (i))
1) 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.)
2) 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)
This bill:
1)Applies the physician self-referral prohibition to advanced imaging,
anatomic pathology, radiation therapy, or physical therapy for a
specific patient that is performed within a licensee's office or the
office of a group practice and that is compensated on a
fee-for-service basis.
a) Defines for these purposes, "advanced imaging," to mean
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magnetic resonance imaging (MRI) computerized tomography (CT),
and positron emission tomography (PET).
b) Specifies that "advanced imaging" does not include: X-ray,
ultrasound, fluoroscopy, or imaging services performed for
purpose of radiation therapy treatment planning or in conjunction
with an interventional radiological procedure or nuclear medicine
other than PET.
1)Makes the following legislative findings:
a) Recent studies by the Government Accountability Office (GAO)
have determined that financial incentives were the most likely
cause of increases in self-referrals of advanced diagnostic
imaging and anatomic pathology.
b) For advanced diagnostic imaging, the GAO stated: "providers
who self-referred made 400,000 more referrals for advanced
imaging services than they would have if they were not
self-referring," at a cost of "more than $100 million" in 2010.
c) For anatomic pathology, the GAO found that "self-referring
providers likely referred over 918,000 more anatomic pathology
services" than they would have if they were not self-referring,
costing Medicare approximately $69 million more in 2010, than if
self-referral was not permitted.
d) Cites published reports which note that for prostate cancer
patients treated by a urology clinic that owns radiation therapy
equipment, physician self-referral had a detrimental impact on
patient care and increased Medicare costs. Cites other
investigations indicating that urology groups owning radiation
therapy machines have utilization rates well above national norms
for radiation therapy treatment of prostate cancer.
FISCAL EFFECT: Unknown. This bill has been keyed "fiscal" by
Legislative Counsel.
COMMENTS:
1.Purpose. This bill is sponsored by the Author to remove specified
complex services (advanced imaging, anatomic pathology, radiation
therapy and physical therapy) from the in-office exception contained
in the current statutory prohibition on physician self-referral.
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The Author states the need for the bill as follows:
"The in-office exemption was originally created so that
physicians could render non-complex services like X-Rays and
routine blood tests within their office during a patient visit.
Yet in recent years, the in-office exemption has been utilized
to provide complex, costly, and often unnecessary advanced
imaging, anatomic pathology, radiation therapy and physical
therapy services. Rather than providing convenience for
patients, this loophole has created an incentive for
overutilization of services, has increased costs to public and
private payers, and may even result in patient harm,
particularly in the case of CT scans, which have been linked to
an increased risk of developing cancer. A GAO report titled
Higher Use of Advanced Imaging Services by Providers Who
Self-Refer Costing Medicare Millions indicates that:
Self-referral for advanced imaging services is costing
Medicare more than $109 million in unnecessary spending per
year. According to the GAO: "in 2010, providers who
self-referred likely made 400,000 more referrals for advanced
imaging services than they would have if they were not
self-referring."
Physician owned imaging machines have been used four
times more than those used by radiologists since 2000.
Self-referring non-radiologist physicians perform up to
eight times as many imaging studies as physicians who refer
their patients to radiologists.
Only about 10% of advanced imaging services are performed
on the same day as an office visit.
"California's health care payment policy should not incentivize
unnecessary tests that drive up costs and jeopardize the
well-being of patients. SB 1215 will protect patient's access to
essential services while preventing self-referrals by physicians
who abuse the system by eliminating specified complex services
from the in-office exemption loophole."
2.Background: Anti-Referral Laws. Existing law prohibitions on
compensation for patient referrals and procedures for billing of
services were adopted with the intent of preventing fraud. In
addition, federal and California anti-referral and anti-kickback
statutes were enacted to reflect the recognition that payments made
or accepted in return for the referral of patients could result in
actual or threatened patient harm, over utilization and increased
health care costs.
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a) Federal Ethics in Patient Referrals Act. In 1989, the federal
Ethics in Patient Referrals Act, also known as the Stark Law, was
enacted. The purpose of this law 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 and occupational therapy;
radiology and other diagnostic services; radiation therapy;
parenteral and enteral nutrients, equipment, and supplies; and
home health services. The law contains several exceptions,
including: physician services, in-office ancillary services,
ownership in publicly traded securities and mutual funds, rental
of office space and equipment, bona fide employment
relationships. The federal prohibition applies only to Medi-Cal
and Medicare patients.
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.
b) 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 in 2013 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
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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 physician incentives to refer for profit. In
2013, 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 nation $6.1 billion dollars if the
referral for profit practice is banned.
c) California Physician Ownership and Referral Act of 1993.
Enacted by AB 919 (Speier, Chapter 1237, Statutes of 1993)
California law made it a misdemeanor for a licensed physician,
psychologist, acupuncturist, optometrist, dentist, podiatrist and
chiropractic practitioner to refer a person for certain health
care services if the licensee or his or her immediate family has
a financial interest, as defined, with the person or in the
entity that receives the referral. As originally enacted, the
law made a number of exemptions from the referral prohibition,
including the current exemption for referral for any service for
a specific patient that is preformed, within or goods that are
supplied by, a licensee's office, or the office of a group
practice.
1.United States General Accountability Office (GAO) Reports. A
September 2012 GAO Report on advanced imaging services found that
from 2004 to 2010, the number of self-referred and non-self-
referred advanced imaging services (MRI and CT services) both
increased, with larger increases under self-referred services. GAO
found that providers' referrals of MRI and CT services substantially
increased the year after they began to self-refer. GAO estimated
that in 2010, providers' who self-referred likely made 400,000 more
referrals for advanced imaging services than they would have if they
were not self-referring. These additional referrals cost Medicare
about $109 million, according to GAO.
A June 2013 GAO Report on anatomic pathology services found that
self-referred anatomic pathology services increased at a faster rate
than non-self-referred services from 2004 to 2010. During this
period, the number of self- referred anatomic pathology services
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more than doubled, growing from 1.06 million services to about 2.26
million services, while non-self-referred services grew about 38
percent, from about 5.64 million services to about 7.77 million
services. Similarly, the growth rate of expenditures for
self-referred anatomic pathology services was higher than for
non-self-referred services. Three provider specialties-dermatology,
gastroenterology, and urology-accounted for 90 % of referrals for
self-referred anatomic pathology services in 2010. GAO estimates
that in 2010, self-referring providers likely referred over 918,000
more anatomic pathology services than if they had performed biopsy
procedures at the same rate and referred the same number of services
per biopsy procedure as non-self-referring providers. These
additional referrals for anatomic pathology services cost Medicare
about $69 million.
A July 2013 GAO Report on prostate cancer treatment by Medicare
providers found that the prostate cancer-related intensity-modulated
radiation therapy (IMRT) services performed by self-referring groups
increased rapidly, while declining for non-self-referring groups
from 2006 to 2010. Over this period, the number of prostate
cancer-related IMRT services performed by self-referring groups
increased from about 80,000 to 366,000. Consistent with that
growth, expenditures associated with these services and the number
of self-referring groups also increased. The growth in services
performed by self-referring groups was due entirely to
limited-specialty groups-groups comprised of urologists and a small
number of other specialties-rather than multispecialty groups.
Among all providers who referred a Medicare beneficiary diagnosed
with prostate cancer in 2009, those that self-referred were 53% more
likely to refer their patients for IMRT and less likely to refer
them for other treatments, especially a radical prostatectomy or
brachytherapy. The GAO indicates that analyses suggests that
financial incentives for self-referring providers-specifically those
in limited specialty groups-were likely a major factor driving the
increase in the percentage of prostate cancer patients referred for
IMRT.
2.Other Publications and Reports. In October 2013, The New England
Journal of Medicine (NEJM) published a comprehensive review of
Medicare claims for more than 45,000 patients from 2005 through 2010
which found that nearly all of the 146% increase in intensity-
modulated radiation therapy (IMRT) for prostate cancer among
urologists with an ownership interest in the treatment was due to
self-referral.
A January 2013 policy Report by the Henry J. Kaiser Family Foundation
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discussing ways to sustain Medicare for the future, raised the
option of narrowing the in-office ancillary services exception of
the self-referral regulation to group practices that assume
financial risk, stating: "Many physician practices have bought
advanced imaging and sophisticated radiation therapy equipment and
brought physical therapy services into their practice; as a result,
the volume of such services has grown sharply. Given the evidence
of substantially increasing volume, some have suggested narrowing
the exception." One option discussed would be to narrow the
in-office referral exception to group practices that assume
financial risk. An alternative option would be to adopt a prior
authorization program for practitioners who order a substantially
larger than average number of advanced imaging services, regardless
of whether they benefit financially through self-referral.
Earlier this month, on April 9, 2014, the U.S. Centers for Medicare and
Medicaid Services released data on Medicare payments made to doctors
and Medicare providers in 2012. As reported by bloomburg.com,
Medicare paid almost 4,000 doctors and medical providers more than
$1 million apiece in 2012, including seven who received more than
$10 million. The article continues, "The data could bring more
scrutiny on doctors who engage in self-referral -- ordering up tests
and procedures that are performed in their own clinics or in those
in which they have a financial interest."
More recently, on April 17, 2014, a digitaljournal.com article
reported: "The Congressional Budget Office (CBO) today released a
new assessment of the significant costs associated with physician
self-referral abuse, estimating that closing the self-referral law's
loophole would save Medicare approximately $3.4 billion over a
10-year budget window. CBO's new savings estimate - nearly double
its previous estimate - adds additional weight to the existing
mountain of evidence that the in-office ancillary services (IOAS)
loophole results in potentially inappropriate patient care and
substantial costs to the Medicare program."
3.Current Federal Legislation. In August 2013, Congresswoman Jackie
Speier and Congressman Jim McDermott introduced HR 2914, the
"Promoting Integrity in Medicare Act of 2013." Much the same as SB
1215, this federal legislation seeks to close "the Medicare
self-referral loophole" for radiation therapy, advanced imaging,
anatomic pathology and physical therapy services, to protect
patients from misaligned provider financial incentives, thereby
realizing substantial healthcare savings. This legislation has been
referred to Committee, but no action has been taken on the proposal.
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4.2014 Federal Budget Proposal. The 2014 Federal Budget proposal by
the Obama Administration proposes to exclude certain services from
the in-office ancillary services exception. The US Department of
Health and Human Services (HHS) Budget summary states the following:
"The in-office ancillary services exception was intended to allow
physicians to self-refer quick turnaround services. While there
are many appropriate uses for this exception, certain services,
such as advanced imaging and outpatient therapy, are rarely
performed on the same day as the related physician office visit.
Additionally, evidence suggests that this exception may have
resulted in overutilization and rapid growth of certain services.
Effective calendar year 2015, this proposal would seek to
encourage more appropriate use of select services by excluding
radiation therapy, therapy services, and advanced imaging from
the in-office ancillary services exception to the prohibition
against physician self-referrals (Stark law), except in cases
where a practice meets certain accountability standards, as
defined by the Secretary."
The Budget summary goes on to estimate that the federal savings of
this change to be
$6.1 billion in savings over 10 years.
5.Advanced Imaging. This bill applies the physician referral
prohibition to advanced imaging and other services performed within
a physician's office or the office of a group practice and that is
compensated on a fee-for-service basis. The bill further defines
"advanced imaging," to mean magnetic resonance imaging (MRI)
computerized tomography (CT), and positron emission tomography
(PET).
a) CT scan - is an X-ray procedure which combines many x-ray
images, with the aid of a computer, to generate cross-sectional
views and, if needed, three-dimensional images, of the internal
organs and structures of the body. CT scans are used to define
normal and abnormal structures in the body, and/or to assist in
procedures by helping to accurately guide the placement of
instruments or treatments.
b) PET scan - is a diagnostic examination that involves an
imaging test that can help a doctor see how the tissues and
organs inside the body are functioning. Before the examination
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begins, a radioactive substance is administered to the patient,
which, when localized in the appropriate areas of the body, can
be detected by the PET scan. The PET scan shows images
containing areas of more or less intense color to provide
information about chemical activity within certain organs and
tissues. PET scans can be used to determine neurological
conditions, heart disease, and the spread of cancer.
c) MRI - is a medical imaging technique used to visualize the
structure and function of the body. It provides detailed images
of the body in any plane, and provides clear contrast between
different soft tissues of the body, making it especially useful
in brain, musculoskeletal, cardiovascular, and cancer imaging.
The costs of CT, MRI, and PET scans are comprised of both technical
and professional components. The technical component is made up of
a variety of costs, including those relating to the scanning
equipment, materials, facility space, and the services of
technologists who are generally certified to perform imaging
services. The professional component is made up of the physician
interpretation of the imaging results. It is generally held that 80
to 85 percent of the total charge for a CT, MRI, or PET scan are
charges for the technical component.
1.Related Legislation. AB 1000 (Wieckowski, Chapter 620, Statutes of
2013) allowed 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.
SB 736 (Speier, 2006) prohibited, with exceptions, a physician from
charging, billing, or otherwise soliciting payment from, any
patient, client, customer, or third-party payor for performance of
the technical component of CT, PET, or MRI diagnostic imaging
services if those services were not actually rendered by the
physician or a member of his or her group practice, under his or her
direct supervision, or by an employee of the physician.
( Status : AB 736 failed passage in Assembly Appropriations Committee.)
AB 2794 (Blakeslee, Chapter 469 of the Statutes of 2008) prohibited a
healing art practitioner from billing a patient or third-party payer
for performance of the technical component of computerized
tomography (CT), positron emission tomography (PET), or magnetic
resonance imaging (MRI) diagnostic imaging services if he or she did
not perform or supervise the services, and required a radiological
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facility or imaging center performing CT, PET, or MRI diagnostic
imaging services to directly bill either the patient or the
responsible third-party payer for the services.
SB 661 (Maldonado, Chapter 656 of the Statutes of 2007) Required
"direct billing" of patients or 3rd-party payers by clinical
laboratories providing anatomic pathology services, and expressly
prohibits a healing arts practitioner from charging, billing, or
otherwise soliciting payment for anatomic pathology services, if
those services were not actually rendered by the practitioner or
under his/her direct supervision, except as specified.
SB 1369 (Maldonado, 2006) prohibited specified health care
professionals, including physicians, from charging, billing or
soliciting payment for anatomic pathology services on specimens
originating in California, if that health care professional did not
render or supervise the services. The bill required clinical
laboratories to directly bill patients, third-party payers,
hospitals or clinics for anatomic pathology services, and required
licensed persons ordering tests to include billing information to
enable the laboratory to properly bill the patient or third-party
payer for its services. ( Status : SB 1369 died in the Assembly
Health Committee.)
SB 736 (Speier, 2006) prohibited, with exceptions, a physician from
charging, billing, or otherwise soliciting payment from, any
patient, client, customer, or third-party payor for performance of
the technical component of computerized tomography (CT), positron
emission tomography (PET), or magnetic resonance imaging (MRI)
diagnostic imaging services if those services were not actually
rendered by the physician or a member of his or her group practice,
under his or her direct supervision, or by an employee of the
physician. ( Status : SB 736 failed passage in Assembly
Appropriations Committee.)
AB 2805 (Blakeslee, 2005) required a lease agreement between health
care providers to meet additional requirements in order to be exempt
from the prohibition against a healing arts licensee referring a
patient for certain health care services, if the licensee has a
financial interest with the person or entity that receives the
referral. ( Status : The relevant provisions were deleted from the
bill and replaced with new, unrelated provisions.)
AB 919 (Speier, Chapter 1237, Statutes of 1993) the "Physician
Ownership and Referral Act of 1993" generally banned, with specified
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exceptions, patient referrals by physicians and other specified
health care providers for specified types of medical services or
goods at facilities in which the physician or health care provider
has a "financial interest."
2.Arguments in Support. The California Radiological Society (CRS)
states that the current provision for in-house referrals allows a
physician to purchase expensive advanced imaging or radiation
machines, or bring pathology services or physical therapists in
house because with a fee for service payment system, they know that
they are big prophet drivers. CRS argues that the evidence of
increased utilization through self-referral is overwhelming.
Radiologists and radiation oncologists compete for referrals of
patients from physicians based upon competency, quality and the
availability of multiple diagnostic modalities. Opponents claim
that this practice occurs due to patient convenience or no
alternative location for services. Neither argument has merit,
according to CRS, since few (less than 10%) of these services are
provided at the time of the office visit, and freestanding imaging
centers are in every community and are a convenient and cost
effective alternative to the hospital setting.
California Society of Pathologists (CSP) believes there is clear
evidence that providers with a financial incentive are more apt to
over-utilize services. CSP further indicates that the GAO pointed
out in 3 separate studies that overutilization of anatomic pathology
and other services
increases the risk of medical complications to Medicare patients who
are most likely not aware of the financial interests their provider
has in these services.
California Physical Therapy Association (CPTA) supports the bill
arguing that the physician self-referral in-office exemption poses
an inherent conflict of interest, removes choice for the consumer,
and runs counter to studies showing that self-referral by physicians
to services in which they have an ownership interest often results
in unnecessary and inadequate care and higher costs for both
consumers and payers.
Independent Physical Therapists of California (IPTCA) states that it
has been constantly opposed to physician referral for profit, not
only in physical therapy, but in all healthcare services.
California has led the way in minimizing profit as a driving factor
in physician referral decisions, according to IPTCA, and affirms
that as the Affordable Care Act is implemented, California's
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healthcare system will be inextricably linked to the ACA, and the
state will be increasingly responsible for paying the medical costs
for the underinsured.
Consumer Attorneys of California writes that California law grants and
exception to the rule against physician self referral for services
provided in their own offices, and states: "Recently this exception
has been misused and instead allows physicians to advise their
patients to undergo complex, costly, and often unnecessary services
in their offices. Instead of providing convenience for patients,
this loophole created an unintended incentive for overutilization of
service which results in increased health care costs."
Alliance for Integrity in Medicare (AIM), representing the American
Clinical Laboratory Association , American College of Radiology ,
American Physical Therapy Association , American Society for Clinical
Pathology , American Society for Radiation Oncology , Association for
Quality Imaging , College of American Pathologists , Radiology
Business Management Association , writes in support: "The
overly-broad application of the in-office exception within the
California physician self-referral law compromises patient care by
incentivizing inappropriate utilization of medical services.
Furthermore, the use of the exception should be for routine
diagnostic procedures, such as x-rays and blood tests, not for
advanced procedures like physical therapy, advanced diagnostic
imaging, radiation therapy, or anatomic pathology... We believe
Senate Bill 1215 will protect patients from unnecessary services and
provide savings to the health care system in California. There is
clear and extensive evidence that providers with a financial
incentive are more apt to over-utilize services that leads to the
increase of health care costs."
Quest Diagnostics states that as a matter of convenience and
efficiency, the law allows physicians to self-refer non-complex,
ordinary services, such as routine blood tests and
x-rays. However, this exception is being used to provide complex
services such as anatomic pathology, advanced imaging, radiation
therapy, and physical therapy services.
California Association of Health Plans (CAHP) supports that bill in
concept, stating that it is encouraged by the focus on legislation
that attempts to control the rising cost of health care. CAHP
points out that the U.S. spends $2.7 trillion per year on health
care, outpacing both inflation and economic growth - and spending is
expected to nearly double in 2014. CAHP states, "We strongly agree
that health payment policies should not incentivize unnecessary
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tests or treatments." CAHP continues, "Legislation seeking to stop
inappropriate referrals should maintain existing efficiencies in the
system where they exist and protect consumer convenience and choice.
To this end, health plans should be allowed to maintain a reasonable
level of flexibility in the referral process - through
prior-authorization requirements and other management tools - and
help keep costs affordable.
3.Arguments in Opposition. California Medical Association (CMA) argues
that improving healthcare requires more coordination and
integration; not less, stating that "referrals for services and
goods within a physician's practice or group practice promotes
continuity of care in a setting that costs less and is more
convenient to the patient.... Eliminating the in-office exception
would force patients to receive ancillary services in a different
setting than their doctor's office, increasing inefficiencies,
present significant barriers to appropriate screenings and
treatments, and make healthcare less accessible and affordable."
CMA believes that prohibiting integrated practice groups from
offering ancillary services will effectively drive this care into
the more expensive hospital setting.
California Society of Dermatology and Dermatologic Surgery (CalDerm)
argues that dermatologists diagnose and treat more than 3,000
diseases, including skin cancer, eczema, infections, psoriasis,
immunologic diseases and many genetic disorders. The ability to
diagnose diseases in the dermatologists office, and thereby give the
patient immediate and accurate results, and discuss clinical
implications, is not only integral to the practice of dermatology
but also offers significant benefit to patients. CalDerm further
states that the bill would "dis-integrate" this key component of
dermatologic care, and require doctors to refer anatomic samples to
an outside laboratory, which would require more coordination of care
and a less "patient-centric" benefit. CalDerm further states that
the GAO rejected the recommendation to limit exceptions to
self-referral, and that the Medicare payment Advisory Commission
recommended against limiting ancillary service exceptions citing
possible unintended consequences, such as inhibiting the development
of organizations that integrate and coordinate care within a
physician practice."
California Integrated Physician Practice Coalition (CIPPC) opposes this
measure stating that the bill seeks to eliminate a critical
healthcare delivery option for millions of Californians in need of
such services as comprehensive cancer treatment by prohibiting
physicians from referring these patients to their integrated,
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high-quality and cost efficient office-based medical group practice.
As California implements the ACA, which is predicated on an
integrated healthcare delivery model, now is not the time to delay
patient access to care and unintentionally increase the cost of that
care. CIPPC enumerates several real-world negative consequences if
this bill were enacted:
A cancer patient who requires both chemotherapy and radiation
therapy would no longer be able to choose to receive both forms
of treatment from a group practice in which medical oncologists
and radiation oncologists team together to provide coordinated
cancer care.
A man with prostate cancer (the second leading cause of cancer
death in American men) would no longer be able to choose to
receive radiation therapy at a group practice specialized cancer
center in which radiation oncologists team with urologists and
uropathologists to diagnose and treat prostate cancer.
A patient who has a biopsy done by a gastroenterologist or
urologist would no longer be able to choose to have the pathology
specimens prepared and examined by pathologists who work in
specialized labs that have been integrated into the
gastroenterology or urology practices.
A patient who needs a magnetic resonance imaging (MRI) or
computed tomography (CT) scan to diagnose an injury or illness,
would no longer be able to choose to have that diagnostic test
furnished in his or her own physician's medical office or group
practice - whether that be an orthopaedic surgery,
gastroenterology, urology, oncology or cardiology group practice.
A patient with a serious knee, shoulder, or back injury who
has had surgery or faces the prospect of surgery would no longer
be able to choose to have physical therapy provided by a physical
therapist who works in the same group practice as the orthopaedic
surgeon who ordered the physical therapy.
CIPPC contends that the recent studies by the GAO examining referral
practices actually leads to the exact opposite conclusion than that
presented by SB 1215, and argues that the GAO did not recommend any
such change to federal law.
Ambulatory Surgery Center Association (ASCA) argues that eliminating
the in-office exception would force patients to leave their
physician's office to receive ancillary services in a different
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location, thereby increasing inefficiency, presenting significant
barriers to appropriate screenings and treatments and making
healthcare less accessible, convenient and affordable. Rather than
moving healthcare delivery toward more coordination of care, the
legislation would lead to even greater fragmentation. In addition,
the bill will severely undermine the ability of thousands of
physician practices to provide outpatient services and negatively
impact patients' ability to access care in a timely manner.
Contrary to the bill's assertions, the increase in self-referrals
has reflected the shift of non-emergency health care services from
the hospital to the outpatient setting, according to ASCA.
California Orthopaedic Association argues, "Just last year, the
Legislature approved and the Governor signed AB 1000, which
clarified that medical corporations may employ physical therapists
and other providers licensed under the Business and Professions
Code. The bill was enacted in recognition of the importance of
physicians being able to deliver the most appropriate care in an
integrated, comprehensive care setting. For the same reason,
California's self-referral prohibition has always contained an
exception for in-office services. SB 1215 would disrupt the
integrated care setting and require patients to go elsewhere for
diagnostic tests and immediate therapy. The resulting delays could
worsen the patient's condition-in many soft tissue conditions and
injuries, the orthopaedist must diagnose and treat quickly. For
example, if a patient has a rotator cuff tear, delays in diagnosis
are particularly detrimental because the injured tendon may contract
and become irreparable. Early diagnosis makes repair easier and
improves outcomes."
California Chapter of the American College of Cardiology (CA-ACC)
believes providing in office imaging tests provides significant
benefits to patients and results in lower overall healthcare costs.
CA-ACC argues that by prohibiting in office imaging tests this bill
will make health care less accessible, increase inefficiencies and
present significant barriers to appropriate screenings and
treatments, and states: "It would result in delays in treatment and
a severing of the attending physician from the actual interpretation
of the test. In addition, elimination of this exception would drive
patients to more expensive facilities, such as hospitals, to receive
these needed services. Not only would this reduce access, but it
will also increase costs to not only the health care system but also
to the patients themselves as hospitals are paid significantly
higher fees for these services than the same performed in a
physician's office."
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American Society of Neuroimaging states: "There is widespread
agreement that improving the U.S. health care system will require
more care coordination, not less. The in-office exception
recognizes that referrals within a group practice promotes
continuity of care in a setting that is lower cost, more convenient,
and familiar to the patient. Those providers who want to increase
their market share of advanced imaging, radiation therapy, anatomic
pathology, and physical therapy are calling for the elimination of
this exception."
American Society for Dermatologic Surgery Association (ASDSA) states
"[We agree] with the GAO and MedPAC experts. Repealing the
exception, as proposed in SB 1215, would be harmful to dermatologic
surgeons and their patients. Comprehensive services, such as those
provided by dermatologic surgeons trained and able to read their own
pathology slides while furnishing Mohs surgery, are necessary for
delivering life saving care to skin cancer patients."
American College of Surgeons (ACS) states it has been supportive of
the goal of moving the nation's health care system to a system that
rewards the provision of high quality, efficient health care, but
indicates that this bill would make it more difficult to provide
this kind of integrated care, forcing patients to receive services
in a new setting, fragmenting care and increasing inefficiencies.
California Society of Industrial Medicine and Surgery ; California
Society of Physical Medicine and Rehabilitation ; and the California
Neurology Society believe the bill is a solution in search of a
problem, stating that California has enacted extensive legislation
in both general healthcare and workers' compensation arenas to
strike a balance between self-referral and the expeditious and
efficient delivery of medical services.
Several opponents of this measure, including the Coalition for
Patient Centered Imaging , have pointed out that on April 1, 2014
President Obama signed into law H.R.4302 (P.L. 113-93), which
promotes appropriate use criteria for advanced imaging services
provided in the office, hospital outpatient department and
ambulatory surgery centers. Under Section 118 of the law, beginning
Jan. 1, 2017, professionals who furnish an advanced imaging test
must document the ordering professional's consultation of
appropriate use criteria in order to be paid for the service. The
bill also directs the Centers for Medicare and Medicaid Services to
require prior authorization for advanced imaging services by
ordering professionals who are determined to be outliers with
respect to adherence to appropriate use criteria. Opponents have
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suggested that this approach ensures medical necessity while not
restricting physicians access to the tools and technologies that are
required for them to effectively diagnose and treat their patients
in the office setting.
SUPPORT AND OPPOSITION:
Support:
Alliance for Integrity in Medicare
American Physical Therapy Association
California Association of Health Plans
California Labor Federation
California Physical Therapy Association
California Professional Firefighters
California Radiological Society
California Society of Pathologists
CALPIRG
Consumer Attorneys of California
Independent Physical Therapists of California
Local Health Plans of California
Pacific Business Group on Health
Physical Therapy Business Alliance
PTPN
Quest Diagnostics
Sharp Healthcare
Unite Here
Numerous individuals
Opposition:
Ambulatory Surgery Center Association
American Academy of Dermatology Association
American College Of Mohs Surgery
American College of Surgeons
American Society for Dermatologic Surgery Association
American Society of Neuroimaging
American Society of Nuclear Cardiology
American Urological Association
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Association of Northern California Oncologists
California Ambulatory Surgery Association
California Chapter of the American College of Cardiology
California Integrated Physician Practice Coalition
California Medical Association
California Neurology Society
California Occupational Medicine Physicians
California Orthopaedic Association
California Society of Anesthesiologists
California Society of Dermatology and Dermatologic Surgery
California Society of Industrial Medicine and Surgery
California Society of Physical Medicine and Rehabilitation
California Urological Association
Coalition for Patient Centered Imaging
Intersocietal Accreditation Commission
Medical Imaging & Technology Alliance
Southern California Orthopedic Institute
Webster Orthopedics
Zero - The End of Prostate Cancer
Numerous individuals
Consultant:G. V. Ayers