BILL ANALYSIS
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|Hearing Date:June 23, 2008 |Bill No:AB |
| |2794 |
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SENATE COMMITTEE ON BUSINESS, PROFESSIONS AND ECONOMIC
DEVELOPMENT
Senator Mark Ridley-Thomas, Chair
Bill No: AB 2794Author:Blakeslee
As Amended:June 19, 2008 Fiscal: Yes
SUBJECT: Diagnostic imaging services.
SUMMARY: Prohibits any licensed healing arts practitioner
from charging, billing, or soliciting payment from any
patient, client, customer, or third-party payer for the
performance of specified radiological services. Exempts
specified facilities from application of this bill.
Existing law:
1)Makes it 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 an immediate family has a
financial interest with the person or entity that receives the
referral. Defines diagnostic imaging to include but is not
limited to, all X-ray, computed axial tomography, magnetic
imaging nuclear medicine, positron emission tomography,
mammography, and ultrasound goods and services. Makes a
violation of these provisions a misdemeanor.
2)Prohibits a health care professional, as specified, from
charging, billing, or soliciting payment, directly or
indirectly, for anatomic pathology services, if those services
were not actually rendered by the health care professional or
any person under his or her supervision.
3)Makes it unlawful for any licensed person to charge, bill or
otherwise solicit payment from any patient, client, customer,
or third-party payer for cytologic services relating to the
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examination of gynecologic slides if those services were not
actually rendered by that person or under his or her direct
supervision.
4)Requires clinical laboratories performing cytologic
examinations of gynecologic slides to directly bill either the
patient or responsible third-party payer for the cytology
services. Prohibits billing a physician and surgeon for these
services. Exempts specified persons and facilities from this
requirement.
5)Specifies under federal regulations the levels of supervision
for the performance of diagnostic X-ray and other diagnostic
tests.
This bill:
1)Makes it unlawful for any licensed healing arts
practitioner to charge, bill, or otherwise solicit
payment from any patient, client, customer, or
third-party payer for the 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 licensee or a person under
his or her supervision.
2)Requires radiological facilities or imaging centers
performing the technical component of CT, PET, or MRI
diagnostic imaging services to directly bill either the
patient or the responsible third-party payer for such
services rendered by those facilities. Prohibits
radiological facilities or imaging centers from billing
the licensee who requests the services.
3)Exempts the following from the above provisions:
a) Any person who, or radiological facility or imaging
center that, contracts directly with a health care
service plan, as specified.
b) Any person who, or clinic that, provides diagnostic
imaging services without charge to the patient, or on
a sliding scale payment basis if the patient's charge
for services is determined by the patient's ability to
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pay.
c) Health care programs operated by public entities,
including, but not limited to, colleges and
universities.
d) Health care programs operated by private
educational institutions to serve the health care
needs of their students.
e) Any person who, or clinic that, contracts with an
employer to provide medical services to employees of
the employer if the diagnostic imaging services are
provided under the contract.
f) Diagnostic imaging services that are performed
within a physician and surgeon's office, as defined or
the office of a group practice, as defined.
4)States that this bill does not prohibit a licensee or a
physician entity from billing globally for professional
and technical components under either of the following
circumstances:
a) The imaging center is wholly owned and operated by
the licensee or physician entity.
b) The licensee or physician entity has a professional
services contract with the imaging center to provide
all of the professional interpretations at the imaging
center.
5)Defines the following terms:
a) "Physician entity" means a professional medical
corporation, as defined in existing law, or a general
partnership that consists entirely of physicians and
surgeons or professional medical corporations.
b) "Responsible third-party payer" means any person or
entity who is responsible to pay for CT, PET, or MRI
services provided to a patient.
c) "Supervision" means the referring licensee is
providing the level of supervision as defined by the
Code of Federal Regulations.
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d) "Technical component" includes services other than
those provided by a physician and surgeon for the CT,
PET, or MRI including personnel, materials, space,
equipment, and other facilities.
FISCAL EFFECT: According to the Assembly Appropriations
Committee, this bill would impose minor, if any,
nonreimbursable, local incarceration costs, as the bill would
expand an existing crime.
COMMENTS:
1)Purpose. According to the Author, while current law bans
a health care practitioner from making referrals based on
financial interest, there is a gray area in the law that
has facilitated the creation of questionable business
ventures involving lease arrangements between diagnostic
imaging vendors and physicians. The Author states that,
under these types of lease arrangements, an imaging
vendor bills a physician for imaging services at a low
cost, allowing a physician to add a mark-up for technical
services, before billing the patient or third-party
payer. The Author states that, through these types of
arrangements, imaging vendors benefit from larger patient
volume, thereby increasing their own profit, while
physicians benefit from adding additional charges as a
technical mark-up without providing any technical
services.
The Author cites two articles published in the Wall Street
Journal (WSJ), in 2005, which referenced investigations
by the Federal Department of Justice and the U.S.
Attorney's office into a chain of medical imaging centers
in Florida that allegedly offered kickbacks to doctors
who referred patients to their imaging centers, an
investigation by the Louisiana Medical Board into imaging
referral arrangements between doctors and imaging
centers, and a whistleblower lawsuit that alleged
kickbacks which were facilitated through the use of lease
arrangements. The Author also cites testimony to
Congress on March 17, 2005, by the Medicare Payment
Advisory Commission which stated that one factor
contributing to the overuse of imaging services is the
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practice by physicians of supplementing their
professional fees with diagnostic revenue.
The Author states that this bill would address these
questionable business practices by prohibiting a
physician from billing for the technical component of
diagnostic imaging services he or she did not perform,
and by requiring the actual provider of the service to
directly bill the patient, or third-party payer, rather
than the physician who referred the patient.
2)Background. 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.
A 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 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.
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
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interpretation of the imaging results. According to the
California Radiological Society (CRS), typically, 80 to
85 percent of the total charge for a CT, MRI, or PET scan
are charges for the technical component.
3)Anti-Referral and Anti-Kickback Statutes. Existing law
prohibitions on compensation for patient referrals and
procedures for billing of services such as cytologic and
anatomic pathology services were adopted with the intent
of preventing fraud. In addition, federal and California
anti-kickback and anti-referral 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. Section 1128(B)(b) of the
Social Security Act, commonly referred to as the
anti-kickback statute, makes it a criminal offense to
knowingly and willfully offer, pay, solicit, or receive
any remuneration to induce referrals of items or services
reimbursable by federal health care programs. The
statute imposes liability on parties on both sides of an
impermissible "kickback" transaction. Remuneration under
the Act includes the transfer of anything of value, in
cash or in-kind, directly or indirectly, covertly or
overtly. Violation of this statute constitutes a felony
punishable by a maximum fine of $25,000, imprisonment of
up to five years, or both. Conviction also leads to
automatic exclusion from federal health care programs,
including Medicare and Medicaid. In addition,
physicians are prohibited from referring Medicare and
Medicaid patients for certain designated health services
to any facility or entity with whom the referring
physician or an immediate family member has any financial
relationship, unless an exception set forth in statute or
regulation is satisfied. This prohibition is violated by
the mere fact that a financial relationship exists. The
intent of the referring physician is irrelevant.
California Business and Professions Code Section 650
prohibits the offer, delivery, receipt, or acceptance of
compensation to induce the referral of patients. A first
conviction under this section is punishable by
imprisonment in the county jail for not more than one
year, or by imprisonment in the state prison, or by a
fine not exceeding $50,000, or both imprisonment and
fine. Medi-Cal law prohibits the solicitation or receipt
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of any remuneration, including kickbacks, in return for
the referral of any individual to a person for furnishing
any service or merchandise which is paid for by Medi-Cal.
A first conviction of this law is punishable by
imprisonment in the county jail for no longer than one
year, or state prison, or by a fine not exceeding
$10,000, or by both imprisonment and fine.
4)Prior legislation.
SB 661 (Maldonado), Chapter 656 of the Statutes of 2007,
prohibited a healing arts practitioner from billing for
anatomic pathology services if those services were not
actually rendered by the practitioner or a person under
his or her direct supervision, with exceptions.
SB 1369 (Maldonado) of 2006 contained provisions similar to
those in
SB 661. SB 1369 died in the Assembly.
SB 736 (Speier) of 2006 contained provisions similar to
those presented in this bill. This bill was held in
Assembly Appropriations.
AB 2805 (Blakeslee) of 2005 also contained provisions
similar to those presented in this bill. These
provisions were deleted from the bill and replaced with
new, unrelated provisions.
AB 474 (Tanner) Chapter 295 of the Statutes of 1991
prohibited healing arts practitioners from directly
billing for cytologic services relating to the
examination of gynecological slides if they did not
perform or directly supervise the services.
5)Arguments in Support. The California Radiological
Society (CRS) states that this bill would address sham
lease arrangements by requiring the actual provider of
technical CT, PET, and MRI services to directly bill the
patient or third-party payer, rather than the physician
who referred the patient. The CRS states that some lease
arrangements allow the imaging facility to charge the
referring physician a low technical fee, thus allowing
the physician to bill the patient or third-party payer at
a substantially higher rate, sometimes $200 - $500 per
scan. The referring physician is not providing any
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service other than referring the patients, seizing an
opportunity to profit on each scan, which creates a
financial incentive to refer more patients. The CRS
states that this bill will not prohibit a physician from
billing for their professional interpretation services,
but, instead, would remove financial incentives for
referrals, and ensure that imaging providers are chosen
based upon the quality of their equipment and service.
6)Arguments in Opposition. The California Academy of
Family Physicians states that this bill further fragments
the delivery of patient care and is unnecessary, given
the existing prohibition on physician charges for
services not directly provided by them.
NOTE : Double-referral to Health Committee. This bill
passed out of the Senate Health Committee on a 9-0 vote
when it was heard on June 18, 2008.
SUPPORT AND OPPOSITION:
Support: California Radiological Society
Opposition: California Academy of Family Physicians
Consultant:Rosielyn Pulmano