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