States Pick Up Anti-Self Referral Cause

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Is anti-self referral legislation too controversial for 2006? Representatives of the American College of Radiology (ACR) and the National Coalition for Quality Diagnostic Imaging Services (NCQDIS) have set their lobbying priorities for this year and at the top of the agenda is reversing the cuts in the Deficit Reduction Act of 2005 (DRA) and preventing further cuts in the future. To do that they are adopting what NCQDIS calls a “Big Tent” strategy, which means putting controversial issues, like anti-self referral advocacy, on the back burner in order to get other medical specialties, such as cardiology, to join them in the fight against broad-based diagnostic imaging service cuts. However, that does not mean the anti-self referral is a dead issue. Among radiologists there is little doubt that the field needs to decrease the negative attention it gets from payors and the public due to what some think is a runaway increase in use of diagnostic imaging services fueled by the very real financial motive some physicians have for prescribing such services. As national lobbying focuses on the DRA, a couple of states are picking up the anti-self referral cause. California Takes on ‘Per-Click’ “I understand completely what the ACR is doing and why,” said Bob Achermann, executive director of the California Radiological Society. “This is not easy.” However, Achermann’s society members are very concerned about increased utilization driven by financial arrangements that encourage physicians to prescribe more scans than may be medically necessary. “It was impacting them locally and they said we should try to get this resolved,” he said. With his marching orders in hand, Achermann and the California Radiological Society are supporting assembly bill (AB) 2805, which was introduced on February 24. The bill has some things in common with AB 516, a bill from 2005 that would have barred nonradiologists in most circumstances from providing in-office, high-end imaging services to their own patients. However AB 2805 is more narrowly focused on a specific type of self-referral arrangement, and Achermann hoped it will therefore have more success than AB 516, which died in committee without ever coming up for a vote before the full California legislature. “[AB 516] was kind of the whole enchilada approach,” Achermann said. In contrast, AB 2805 focuses specifically on what Achermann called “sham lease arrangements” between physicians and imaging facilities. These arrangements, which are sometimes also called “per-click” arrangements, let physicians refer patients to imaging facilities where they or their physician groups lease time on diagnostic imaging equipment. The physicians can then bill payors for both the technical and professional component of the services, even though they do nothing more than refer the patients. In such an arrangement, Achermann adds, the “lease” fees function more like a discounted rate for using the equipment and the physicians can then pocket the difference between this rate and the higher technical component reimbursement they get from payors. Plus, by only leasing time and not the equipment itself, the physicians avoid assuming any of the financial risk that is involved in investing in expensive diagnostic imaging equipment directly. “We think these arrangements are nothing more than a way to circumvent the self-referral prohibition,” Achermann said. If passed, AB 2805 would prohibit physicians from using the in-office exception to the state’s version of the federal Ethics in Patient Referrals Act (better known as the Stark law) when they lease time on equipment outside their offices that they do not own themselves or lease on a full-time basis. Currently, the bill has been referred to both the Assembly Business and Professions Committee and the Assembly Health Committee. Achermann expected that it would receive a hearing in the Assembly Business and Professions Committee on April 18. “It remains to be seen whether we will be successful in moving the opposition,” Achermann said. Time is limited because AB 2805 is a “1-year” bill, which means that under California law it has only a year to be passed before it will expire. Furthermore, the bill faces opposition from some big groups, such as the California Medical Association, that are inclined to oppose any strengthening of Stark laws because they fear it can be the proverbial slippery slope that opens the door to future limitations on physician business practices. Blue Cross of California has voiced support for the bill and Achermann is attempting to marshal support from other payors and the business community. A Victim-less Crime The other challenge, should the bill even pass, is enforcement. The penalties for violating the law would be the same as for violations of the state’s Stark law and could include revocation of a physician’s medical license in California. However, the California medical board, which handles such cases, is more focused on issues that could cause direct patient harm, such as removing physicians who are accused of negligence, substance abuse, and inappropriate relationships with patients, Achermann said. “[Self-referral] is not an emphasis for them.” In a sense, some see self-referral violations as victim-less crimes because the risk of any harm coming to a patient due to an unnecessary scan is so low. With an MRI, there is not even a risk of radiation exposure, said Mark Stein, MD, a radiologist who divides his time between offices in Irvine and Santa Ana, Calif, and who has joined the California Radiological Association in lobbying for AB 2805. “[With an MRI] you cannot harm the patient at all,” he said. “It is not like doing unnecessary surgery, and I got the impression that some of these [state legislative] aids had not really thought about it in that vein.” Payors May Decide Issue The real hope for the future, Achermann said, may be if payors become involved in the enforcement process, as they are the ones most directly hurt by self-referral situations that drive up diagnostic imaging utilization. “Ultimately, it may be the payors that control resolution of this issue, and that may be more effective than trying to legislate,” Achermann said. “We are beginning to see this play out on the national level with [the Medicare Payment Advisory Committee or MedPAC] and Congress, as well as with individual payors that are adopting policies that attempt to address this issue, such as Highmark [Blue Cross] of Pennsylvania and other payors who are beginning to establish criteria as to who can do imaging.” In California there are five payors who control the lion’s share of the health care market. “As they begin to take action, which we think they will, it may negate the need to have legislation,” Achermann added. “But we need to keep the focus on this issue and make people aware, especially in the business community, of what this is doing to the cost of health care.” Keeping up the anti-self referral pressure at the state level is especially important as lobbying at the federal level focuses on reimbursement cuts. “The state levels are relatively low level and may be one way for us to fight this battle,” Stein added. “I think it is something radiologist in other states could possibly do.” From West to East In fact, on the other side of the country, that is exactly what is happening. While the California Radiological Society fights for AB 2805 in Sacramento, another battle is brewing in Massachusetts. Legislators there are considering House Bill 2711, which would ban physicians and physician groups from referring patients to nonhospital-based health care facilities for PET scans, MRIs, or linear accelerator treatment if the physician or the group has any type of ownership or investment interest in the facility. Written by state representative Paul Kujawski, the bill exempts radiologists and physicians employed by a hospital or hospital affiliate, as well as facilities that were providing these services prior to June 15, 2004. If passed, the Massachusetts Department of Public Health would enforce the law and violations could result in fines of $25,000 to $100,000. However, few Massachusetts bills pass in the very first legislative session in which they are introduced. Each 2-year session, around 8,000 bills are filed in Massachusetts, a lobbyist familiar with the issue said. HB 2711 was one of those 8,000 filed at the beginning of 2005, and it got a big boost in November of that year when it received a hearing. It is currently under consideration by the Committee on Public Health. However, to become law, it must be referred out of the committee and put up for a vote before July 31, when the formal state legislative session ends. This is a bit of a long shot, but the lobbying currently being done on the bill’s behalf by the Massachusetts Radiological Society will increase knowledge about the issue and build a good foundation for future efforts, the lobbyist said. In Massachusetts, a bill will expire if it is not passed in the same legislative session as it is introduced in, but it can be reintroduced in the next legislative session. Eric J. Sax, MD, MBA, president of the Massachusetts Radiological Society, is determined to keep up the fight, even if HB 2711, like most bills, does not pass in the first legislative session it is introduced in. There are 35 other states with similar legislation, Sax said, and it is time that Massachusetts gets on board. When self-referral arrangements — such as physicians leasing time on imaging equipment owned by an imaging center — drive up utilization, costs go up and the conversion factor for Medicare is lowered. This, in Sax’s opinion, hurts everyone. “I find [self-referral] unethical,” Sax says. “You cannot drive up utilization for your own financial gain. The whole system suffers when you do that.” Opposing the bill at the moment are several large physician groups in the state that have MRI services. “They are very big providers, so unless they support this bill, I don’t think it is going to go anywhere,” Sax said. The Massachusetts Radiological Society is therefore working with these groups and the legislators involved to create a carve-out or exception for not-for-profit organizations where no physician will directly benefit from ordering an MRI scan. Also opposed to the bill is the Massachusetts’ Medical Society, which, like many groups that represent physicians, does not want to see its members’ business options limited in any way. “I think they want the opportunity to get involved in this market,” Sax said. “There is a lot of money to be made, there really is. But that should not be the motivation. The motivation should be to provide the best care to the patient, and they are actually doing a disservice to the patient if they get a cheap, low-end product in their offices and disguise it as convenience for the patient….We really don’t see eye-to-eye on that. I wish they would realize that if things keep going they way they are going in imaging, something is going to be done [by payors] that is going to affect everybody’s reimbursement.” In DC, Waiting Game Continues Meanwhile, at the Federal level, organized radiology is still waiting for a Congressional bill to which it can try to add a provision to reverse, or at least moderate, the diagnostic imaging service cuts written into the DRA that are scheduled to go into effect on January 1, 2007. The most likely candidate is a budget bill, but the House is stalled in its effort to come up with a compromise budget in committee, and on April 6 the House Republican leadership decided to delay action on the Fiscal Year 2007 Budget Resolution until after the Easter recess. “There is a lot of trepidation on Capitol Hill as to whether both Houses will agree to a budget resolution,” said Josh Cooper, senior director of government relations for the ACR. “It might sit there in conference forever.” What is encouraging is that both the House and Senate have rejected making budget cuts as great as those requested by the White House, Cooper added. “It does hold out a possibility that there will be some type of Medicare action, which we of course are going to need because, if they do not provide a Medicare legislative vehicle, it does not matter how many people we convince that the DRA imaging provisions were a poor idea,” he said. “If there is no legislative vehicle, we can’t pass anything.” While waiting, the radiology field is circulating a “Dear Colleague” letter in the House written by Joe Pitts (R, Pa), Rep Sam Johnson (R, Tex), and Rep Jim Gerlach (R, Pa). Cooper hopes 40 to 50 Republicans will sign on to it by the end of April. Currently it has received 17 to 18 signatures including those of the original three co-sponsors. “The goal of the dear colleague letter is to raise the profile of the issue, both with Republican members of Congress and the Speaker of the House,” he explained. (The support of Democrats is also important, but Cooper and others are concentrating on gathering Republican signatures since they represent the majority party and the Democrats had already voted against the DRA cuts back in January.) While Cooper could not say how many dear colleague letters typically lead to legislative provisions being introduced, it is a traditional first step in getting legislation passed. “We are hoping this will be our first positive step in getting [the DRA cuts] changed,” he said. The ACR is encouraging members and non-members alike to contact their House and Senate Republican legislators and ask them to sign on to the Dear Colleague letter. But while fighting the DRA nationally, remember your state options, too. As Stein, whose first trip to lobby in Sacramento was for AB 2805, said: “[The state legislators] are potentially more responsive than I had ever realized.”