BILL ANALYSIS Ó
AB 2744
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Date of Hearing: April 19, 2016
ASSEMBLY COMMITTEE ON BUSINESS AND PROFESSIONS
Rudy Salas, Chair
AB 2744
(Gordon) - As Amended April 11, 2016
SUBJECT: Healing arts: referrals.
SUMMARY: Provides that payment or receipt of consideration for
advertising for prepaid services, offered by a licensed healing
arts practitioner, does not constitute a referral of those
services and specifies that if the prepaid service is not
appropriate for the purchaser, the licensee must provide a full
price refund to the purchaser, as specified.
EXISTING LAW:
1)States that the offer, delivery, receipt, or acceptance by any
licensed healing arts practitioner, as specified, of any
rebate, refund, commission, preference, patronage dividend,
discount, or other consideration, whether in the form of money
or otherwise, as compensation or inducement for referring
patients, clients, or customers to any person, irrespective of
any membership, proprietary interest, or coownership in or
with any person to whom these patients, clients, or customers
are referred is unlawful. (Business and Professions Code
(BPC) Section 650(a))
2)States that the payment or receipt of consideration for
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services other than the referral of patients which is based on
a percentage of gross revenue or similar type of contractual
arrangement is not unlawful if the consideration is
commensurate with the value of any premises or equipment
leased or provided by the recipient to the payer. (BPC
Section 650(b))
3)States that it is unlawful for a licensee 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 with the person or
in the entity that receives the referral. (BPC Section
650.01(a))
THIS BILL:
1)Specifies that the payment or receipt of consideration for
advertising, wherein a licensee offers or sells services on an
internet platform does not constitute a referral of patients.
2)Specifies that to the extent that the licensee determines,
after consultation with the purchaser of the service, that the
service is not appropriate for the purchaser, the purchaser
will receive a full refund of the purchase price.
3)Specifies that 1 and 2 above do not apply to basic health care
services under a health care service plan or essential health
benefits under the Patient Protection and Affordable Care Act
(PPACA), as specified.
4)Requires the entity providing the advertising to be able to
demonstrate that the licensee consented in writing to the
provisions of this bill.
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FISCAL EFFECT: Unknown. This bill is keyed fiscal by the
Legislative Counsel.
COMMENTS:
Purpose. This bill seeks to clarify that the purchase of
professional services from licensed healing arts professionals
through an online advertising website does not constitute a
referral for those services from the online advertisement
originator. This bill is sponsored by the Internet Association .
According to the author, "in the past, if a healthcare
professional wanted to advertise for his or her services, [he or
she] could take out an advertisement in the yellow pages or a
newspaper, purchase space on a billboard, or run a commercial on
radio or television.
In each of these instances, the advertisement could also include
a coupon or special offer for readers/ listeners. Technology
has now made it possible for a healthcare professional to
advertise online and provide opportunities to purchase vouchers
for services in online marketplaces such as Groupon, Living
Social, and others.
[This bill] would recognize that online advertising involving
the purchase of vouchers for services offered by a healthcare
professional is just another form of advertising and clarify
that it is not an impermissible referral."
Background. Under existing law, BPC Section 650(a), specifies
that a licensed healing arts professional may not accept any
type of compensation for referring an individual to any other
person for services. This prohibition on the payment of a
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healthcare provider for a referral of services was intended to
protect patients and consumers from providers receiving payments
or "kickbacks" for sending patients to certain providers.
Anti-kickback laws were enacted to help ensure that healthcare
decisions are made in the best interest of the consumer. In
California, a violation of the no-referral laws by a licensee is
unprofessional conduct and cause for disciplinary action.
Internet Platform Services. There are a variety of advertised
healthcare-related services that individuals may purchase
through an Internet platform including, laser toenail fungus
removal, nonsurgical facelifts, spider vein treatments,
counseling, and integrative manual therapy sessions. A great
number of healthcare related services offered through an
Internet platform include elective procedures. As currently
drafted, this bill clarifies that only specified healthcare
services that are purchased through an internet platform will
not be considered as a referral of those services. This bill
specifies that "basic health care services" as defined under HSC
Section 1345 and "essential health benefits" as defined in HSC
Section 1367.005 and INS Section 10112.27 that are purchased
through an internet platform will still be subject to current
BPC Section 650(a), which prohibits payment or any other
consideration for a referral of services.
Essential health benefits and basic health care services.
Basic health care services are specified under the Knox-Keene
Health Care Service Plan Act of 1975 (BPC § 1340), and EHBs are
specified under the federal PPACA. This bill seeks to clarify
that those services considered essential health benefits and
basic health care services are not applicable to the
authorization provided by this bill.
BPC Section 650(b) specifies that 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 is not unlawful, unless specified conditions are
met. It is the intent of the author that services offered
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through an Internet platform would permit those services.
Online Advertising and Sales of Service. This bill clarifies
that a licensed healing arts professional, who utilizes an
online service provider to offer prepaid services to the general
public, does not constitute a "referral" of those services.
Online sales and advertising forums will charge a fee to the
service provider to display the sale of services, where an
individual interested in those services will purchase those
services directly from the online service provider. According
to the author, "the following describes how online voucher
advertising operates, the healthcare professional decides
whether to advertise and what service to make available for
purchase, the cost for the service, how many vouchers to offer,
and for how long. The healthcare professional pays the online
advertising network for making the offer available, generally a
percentage of the price of the purchased service. Once a
consumer purchases a voucher through this form of online
advertising, the consumer contacts the healthcare professional
to set an appointment, just as they would if responding to any
other form of advertisement.
After purchasing, the consumer decides whether a particular
service is right for him or herself only after consulting with
the healthcare professional. If the consumer decides not to
receive the service, or if the professional decides the service
is not warranted, the consumer receives a full refund and incurs
no financial penalty."
Pending Attorney General Opinion. Currently, the Attorney
General's Opinion Unit is in the process of researching and
drafting a formal opinion on the question of whether a
healthcare professional may offer online discounts for their
services through a third-party internet marketer. The opinion
request, 13-1203, is currently pending completion in the AG's
office. At this time, the completion date is unknown. This
bill aims to clarify that those services offered via and
internet platform, does not constitute a referral of services in
violation of BPC Section 650(a). This bill does not change the
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existing prohibition against licensed healthcare professionals
receiving a payment or any other consideration, monetary or
otherwise for referring an individual to another person for
professional services.
ARGUMENTS IN SUPPORT:
The Internet Association writes in support, "The bill would
clarify existing law to confirm that healing arts professionals
may use Internet-based advertising platforms to market their
services without running afoul of statutes designed to prohibit
paid patient referrals. Current law generally prohibits a
licensed healing arts professional from paying or receiving
compensation for the referral of a patient. This law was
designed to prevent patients referral based on financial
motives-which were frequently undisclosed-rather than the
patient's best interests. Internet advertising is not a patient
referral, any more than traditional advertising, such as an ad
in the Yellow Pages or Penny Save. Nor does internet
advertising implicate the policy concerns underlying
California's prohibition on paid patient referrals.
Nonetheless, questions have been raised about whether
California's patient referral statute [BPC] Section 650, sweeps
in Internet advertising. This potential ambiguity raises
concerns for healing arts professionals, who may fear that
online advertising platforms could subject them to professional
discipline. [This bill] would remove this potential ambiguity
and resulting uncertainty by clarifying that licensed health
arts professionals may use Internet advertising services."
ARGUMENTS IN OPPOSITION:
None on file.
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POLICY ISSUES FOR CONSIDERATION:
This bill specifies that after a consultation with the purchaser
of the service, if it is determined that the service is not
appropriate, the purchaser will receive a full refund of the
purchase price. As currently drafted, this bill does not
specify who would be responsible for reimbursing the purchaser.
REGISTERED SUPPORT:
The Internet Association (sponsor)
Groupon
REGISTERED OPPOSITION:
None on file.
Analysis Prepared by:Elissa Silva / B. & P. / (916) 319-3301
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