Bill Text: OR SB683 | 2013 | Regular Session | Introduced

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Relating to health care practitioner referrals to health care entities.

Spectrum: Committee Bill

Status: (Passed) 2013-07-03 - Effective date, January 1, 2014. [SB683 Detail]

Download: Oregon-2013-SB683-Introduced.html

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     77th OREGON LEGISLATIVE ASSEMBLY--2013 Regular Session

NOTE:  Matter within  { +  braces and plus signs + } in an
amended section is new. Matter within  { -  braces and minus
signs - } is existing law to be omitted. New sections are within
 { +  braces and plus signs + } .

LC 2625

                         Senate Bill 683

Sponsored by COMMITTEE ON GENERAL GOVERNMENT, CONSUMER AND SMALL
  BUSINESS PROTECTION

                             SUMMARY

The following summary is not prepared by the sponsors of the
measure and is not a part of the body thereof subject to
consideration by the Legislative Assembly. It is an editor's
brief statement of the essential features of the measure as
introduced.

  Prohibits health care practitioners from referring patients to
health care entities in which practitioner has beneficial
interest or with which practitioner has compensation arrangement,
subject to specified exceptions.
  Requires full disclosure of beneficial interests or
compensation arrangements of practitioner. Makes failure to
disclose interest or arrangement in conjunction with lawful
referral misdemeanor, punishable by fine not to exceed $5,000.
Prohibits billing for services improperly referred.
  Requires health care practitioner who refers patient for
physical therapy to provide unrestricted referral to physical
therapist of patient's choice.
  Authorizes Oregon Health Licensing Agency or health
professional regulatory board to investigate and discipline
violations of Act.

                        A BILL FOR AN ACT
Relating to health care practitioner referrals to health care
  entities; creating new provisions; amending ORS 688.125; and
  repealing ORS 441.098.
Be It Enacted by the People of the State of Oregon:
  SECTION 1.  { + As used in sections 1 to 6 of this 2013 Act:
  (1)(a) 'Beneficial interest' means ownership, through equity,
debt or other means, of any financial interest in a health care
entity.
  (b) 'Beneficial interest' does not include ownership, through
equity, debt or other means, of securities, including shares or
bonds, debentures or other debt instruments:
  (A) In a corporation that is traded on a national exchange or
over the counter on the national market system;
  (B) That at the time of acquisition were purchased at the same
price and on the same terms generally available to the public;
  (C) That are available to individuals who are not in a position
to refer patients to the health care entity on the same terms
that are offered to health care practitioners who may refer
patients to the health care entity;
  (D) That are unrelated to the past or expected volume of
referrals from the health care practitioner to the health care
entity; and

  (E) That are not marketed differently to health care
practitioners that may make referrals than they are marketed to
other individuals.
  (2)(a) 'Compensation arrangement' means any agreement or
practice involving any remuneration between a health care
practitioner or the immediate family member of the health care
practitioner and a health care entity.
  (b) 'Compensation arrangement' does not include:
  (A) Compensation or shares under a faculty practice plan or a
professional corporation affiliated with a teaching hospital and
composed of health care practitioners who are members of the
faculty of a university;
  (B) Amounts paid under a bona fide employment agreement between
a health care entity and a health care practitioner or an
immediate family member of the health care practitioner;
  (C) An arrangement between a health care entity and a health
care practitioner or the immediate family member of a health care
practitioner for the provision of any services, as an independent
contractor, if:
  (i) The arrangement is for identifiable services;
  (ii) The amount of the remuneration under the arrangement is
consistent with the fair market value of the services and is not
determined in a manner that takes into account, directly or
indirectly, the volume or value of any referrals by the referring
health care practitioner; and
  (iii) The compensation is provided in accordance with an
agreement that would be commercially reasonable even if no
referrals were made by the health care practitioner;
  (D) Compensation for health care services pursuant to a
referral from a health care practitioner and rendered by a health
care entity that employs or contracts with an immediate family
member of the health care practitioner, in which the immediate
family member's compensation is not based on the referral;
  (E) An arrangement for compensation that is provided by a
health care entity to a health care practitioner or the immediate
family member of the health care practitioner to induce the
health care practitioner or the immediate family member of the
health care practitioner to relocate to the geographic area
served by the health care entity in order to be a member of the
medical staff of a hospital, if:
  (i) The health care practitioner or the immediate family member
of the health care practitioner is not required to refer patients
to the health care entity;
  (ii) The amount of the compensation under the arrangement is
not determined in a manner that takes into account, directly or
indirectly, the volume or value of any referrals by the referring
health care practitioner; and
  (iii) The health care entity needs the services of the health
care practitioner to meet community health care needs and has had
difficulty in recruiting a practitioner;
  (F) Payments made for the rental or lease of office space if
the payments are:
  (i) At fair market value; and
  (ii) In accordance with an arm's length transaction;
  (G) Payments made for the rental or lease of equipment if the
payments are:
  (i) At fair market value; and
  (ii) In accordance with an arm's length transaction; or
  (H) Payments made for the sale of property or a health care
practice if the payments are:
  (i) At fair market value;
  (ii) In accordance with an arm's length transaction; and
  (iii) The remuneration is provided in accordance with an
agreement that would be commercially reasonable even if no
referrals were made.

  (3) 'Direct supervision' means a health care practitioner is
present on the premises where the health care services are
provided and is available for consultation within the treatment
area.
  (4) 'Faculty practice plan' means a tax-exempt organization
established under Oregon law by or at the direction of a
university to accommodate the professional practice of members of
the faculty who are health care practitioners.
  (5) 'Group practice' means a group of two or more health care
practitioners legally organized as a partnership, professional
corporation, foundation, not-for-profit corporation, faculty
practice plan or similar association:
  (a) In which each health care practitioner who is a member of
the group provides substantially the full range of services that
the practitioner routinely provides through the joint use of
shared office space, facilities, equipment and personnel;
  (b) For which substantially all of the services of the health
care practitioners who are members of the group are provided
through the group and are billed in the name of the group, and
the amounts received are treated as receipts of the group; and
  (c) In which the overhead expenses of and the income from the
practice are distributed on an annual basis by members of the
group in accordance with methods previously agreed upon.
  (6) 'Health care entity' means a business entity that provides
health care services for the:
  (a) Testing, diagnosis or treatment of human disease or
dysfunction; or
  (b) Dispensing of drugs, medical devices, medical appliances or
medical goods for the treatment of human disease or dysfunction.
  (7) 'Health care practitioner' means a person who is licensed,
certified or otherwise authorized by a health professional
regulatory board as defined in ORS 676.160 to provide health care
services in the ordinary course of business or practice of a
profession.
  (8) 'Health care services' means medical procedures, tests and
services provided to a patient by or through a health care
entity.
  (9) 'Immediate family member' means a health care
practitioner's:
  (a) Spouse;
  (b) Child;
  (c) Child's spouse;
  (d) Parent;
  (e) Spouse's parent;
  (f) Sibling; or
  (g) Sibling's spouse.
  (10)(a) 'In-office ancillary services' means health care
services routinely performed by health care practitioners in
their offices.
  (b) Except for a radiologist group practice or an office
consisting solely of one or more radiologists, 'in-office
ancillary services' does not include:
  (A) Magnetic resonance imaging services;
  (B) Radiation therapy services; or
  (C) Computer tomography scan services.
  (11) 'Refer' means to make a referral.
  (12) 'Referral' means a suggestion or recommendation made by a
health care practitioner, either directly or as part of a
treatment plan, that a patient obtain health care services from
another health care practitioner or health care entity that is
outside the referring health care practitioner's office or group
practice. + }
  SECTION 2.  { + (1) Except as provided in subsection (4) of
this section, a health care practitioner may not refer a patient,
or direct an employee of or person under contract with the health
care practitioner to refer a patient, to a health care entity:
  (a) In which the health care practitioner or the practitioner
in combination with the practitioner's immediate family owns a
beneficial interest;
  (b) In which the health care practitioner's immediate family
owns a beneficial interest of three percent or greater; or
  (c) With which the health care practitioner, the practitioner's
immediate family or the practitioner in combination with the
practitioner's immediate family has a compensation arrangement.
  (2) A health care entity or a referring health care
practitioner may not present or cause to be presented to any
individual, third party payer or other person a claim, bill or
other demand for payment for health care services provided as a
result of a referral prohibited by this section.
  (3) Subsection (1) of this section applies to any arrangement
or scheme, including a cross-referral arrangement, that the
health care practitioner knows or should know has a principal
purpose of ensuring indirect referrals that would be in violation
of subsection (1) of this section if made directly.
  (4) The provisions of this section do not apply to:
  (a) A health care practitioner when treating a member of a
health maintenance organization as defined in ORS 750.005 if the
health care practitioner does not have a beneficial interest in
the health care entity;
  (b) A health care practitioner who refers a patient to another
health care practitioner in the same group practice as the
referring health care practitioner;
  (c) A health care practitioner with a beneficial interest in a
health care entity who refers a patient to that health care
entity for health care services, if the services are personally
performed by or under the direct supervision of the referring
health care practitioner;
  (d) A health care practitioner who refers in-office ancillary
services that are:
  (A) Personally furnished by:
  (i) The referring health care practitioner;
  (ii) A health care practitioner in the same group practice as
the referring health care practitioner; or
  (iii) An individual who is employed and personally supervised
by the referring health care practitioner or a health care
practitioner in the same group practice as the referring health
care practitioner;
  (B) Provided in the same building where the referring health
care practitioner or a health care practitioner in the same group
practice as the referring health care practitioner furnishes
services; and
  (C) Billed by:
  (i) The health care practitioner performing or supervising the
services; or
  (ii) A group practice of which the health care practitioner
performing or supervising the services is a member;
  (e) A health care practitioner who has a beneficial interest in
a health care entity if, in accordance with rules adopted by the
Oregon Health Authority:
  (A) The authority determines that the health care
practitioner's beneficial interest is essential to finance the
health care entity; and
  (B) The authority approves a certificate of need for the
facility under ORS 442.315 or the authority, in conjunction with
the Department of Human Services, determines that the health care
entity is needed to ensure appropriate access for the community
to the services provided at the health care entity;
  (f) A health care practitioner employed by or affiliated with a
hospital who refers a patient to a health care entity that is
owned or controlled by a hospital or under common ownership or
control with a hospital if the health care practitioner does not
have a direct beneficial interest in the health care entity;
  (g) A health care practitioner or member of a single specialty
group practice, including any person employed by or affiliated
with a hospital who has a beneficial interest in a health care
entity that is owned or controlled by a hospital or under common
ownership or control with a hospital if:
  (A) The health care practitioner or other member of the single
specialty group practice provides the health care services to a
patient pursuant to a referral or in accordance with a
consultation requested by another health care practitioner who
does not have a beneficial interest in the health care entity; or
  (B) The health care practitioner or other member of the single
specialty group practice referring a patient to the facility,
service or entity personally performs or supervises the health
care services;
  (h) A health care practitioner with a beneficial interest in,
or compensation arrangement with, a hospital as defined in ORS
442.015 or a facility, service or other entity that is owned or
controlled by a hospital or related institution or under common
ownership or control with a hospital or related institution if:
  (A) The beneficial interest was held or the compensation
arrangement was in existence on January 1, 2013; and
  (B) Thereafter the beneficial interest or compensation
arrangement of the health care practitioner does not increase;
  (i) A health care practitioner when treating an enrollee of a
health care service contractor as defined in ORS 750.005 if the
health care practitioner is referring enrollees to an affiliated
health care provider of the health care service contractor;
  (j) A health care practitioner who refers a patient to a
dialysis facility if the patient has been diagnosed with end
stage renal disease, as defined by the Centers for Medicare and
Medicaid Services for purposes of the Medicare program; or
  (k) A health care practitioner who refers a patient to a
hospital in which the health care practitioner has a beneficial
interest if:
  (A) The health care practitioner is authorized to perform
health care services at the hospital; and
  (B) The ownership or investment interest is in the hospital
itself and not solely in a subdivision of the hospital.
  (5) A health care practitioner exempted from the provisions of
this section in accordance with subsection (4) of this section
shall be subject to the disclosure provisions of section 3 of
this 2013 Act. + }
  SECTION 3.  { + (1) Except as provided in subsection (3) of
this section, a health care practitioner making a lawful referral
shall disclose the existence of any beneficial interest or
compensation arrangement in accordance with provisions of this
section.
  (2) Prior to referring a patient to a health care entity in
which the health care practitioner, the practitioner's immediate
family or the practitioner in combination with the practitioner's
immediate family owns a beneficial interest, or with which the
health care practitioner, the practitioner's immediate family or
the practitioner in combination with the practitioner's immediate
family has a compensation agreement, the health care practitioner
shall:
  (a) Except if an oral referral is made by telephone, provide
the patient with a written statement that:
  (A) Discloses the existence of the ownership of the beneficial
interest or compensation arrangement;
  (B) States that the patient may choose to obtain the health
care services from another health care entity; and
  (C) Requires the patient to acknowledge in writing receipt of
the statement;
  (b) Except if an oral referral is made by telephone, insert in
the medical record of the patient a copy of the written
acknowledgement;
  (c) Place on permanent display a written notice that is in a
typeface that is large enough to be easily legible to the average
person from a distance of eight feet, that is in a location that
is plainly visible to the patients of the health care
practitioner and that discloses all of the health care entities:
  (A) In which the health care practitioner, the practitioner's
immediate family or the practitioner in combination with the
practitioner's immediate family owns a beneficial interest, or
with which the health care practitioner, the practitioner's
immediate family or the practitioner in combination with the
practitioner's immediate family has a compensation agreement; and
  (B) To which the health care practitioner refers patients; and
  (d) Document in the medical record of the patient that:
  (A) A valid medical need exists for the referral; and
  (B) The health care practitioner has disclosed the existence of
the beneficial interest or compensation agreement to the patient.
  (3) The provisions of this section do not apply to a health
care practitioner:
  (a) When treating a member of a health maintenance organization
as defined in ORS 750.005 and the health care practitioner does
not have a beneficial interest in or compensation agreement with
the health care entity;
  (b) Who refers a patient:
  (A) To another health care practitioner in the same group
practice as the referring health care practitioner;
  (B) For in-office ancillary services; or
  (C) For health care services provided through or by a health
care entity owned or controlled by a hospital; or
  (c) Referring an enrollee of a health care service contractor
as defined in ORS 750.005 to an affiliated health care provider
of the health care service contractor. + }
  SECTION 4.  { + (1) A health care practitioner shall disclose
the name of a referring health care practitioner on each request
for payment or bill submitted to a third party payer, including
nonprofit health plans and fiscal intermediaries and carriers,
that may be responsible for payment, in whole or in part, of the
charges for a health care service, if the health care
practitioner knows or has reason to believe:
  (a) There has been a referral by a health care practitioner;
and
  (b) The referring health care practitioner has a beneficial
interest in or compensation arrangement with the health care
entity that is prohibited under section 2 of this 2013 Act.
  (2) A health care practitioner who knows or should have known
of the requirement to disclose the name of a referring health
care practitioner and fails to comply with the provisions of this
section shall be subject to disciplinary action by the Oregon
Health Licensing Agency or the appropriate health professional
regulatory board in accordance with section 7 of this 2013
Act. + }
  SECTION 5.  { + (1) If a referring health care practitioner,
health care entity or other person furnishing health care
services collects any amount of money that was billed in
violation of section 4 of this 2013 Act and the referring health
care practitioner, health care entity or other person knew or
should have known of the violation, the referring health care
practitioner, health care entity or other person is jointly and
severally liable to the payer for any amounts collected.
  (2) If a claim, bill or other demand or request for payment for
health care services is denied or a payment is required to be
refunded under subsection (1) of this section, the referring
health care practitioner, health care entity or other person
furnishing the health care services may not submit a claim, bill
or other demand or request for payment to the person who received
the health care services. + }
  SECTION 6.  { + (1) As used in this section:
  (a) 'Anatomic pathology services' means:
  (A) Histopathology or surgical pathology;
  (B) Cytopathology;
  (C) Hematology;
  (D) Subcellular pathology and molecular pathology; or
  (E) Blood-banking services performed by pathologists.
  (b) 'Clinical laboratory' means a facility that provides
anatomic pathology services.
  (c)(A) 'Cytopathology' means the microscopic examination of
cells from fluids, aspirates, washings, brushings or smears.
  (B) 'Cytopathology' includes the microscopic examination of
cells in a Pap smear examination performed by a physician or
under the direct supervision of a physician.
  (d) 'Hematology' means:
  (A) The microscopic evaluation of bone marrow aspirates and
biopsies performed by a physician or under the direct supervision
of a physician; or
  (B) Review of a peripheral blood smear if a physician or
technologist requests that a pathologist review a blood smear.
  (e) 'Histopathology or surgical pathology' means gross and
microscopic examination of organ tissue performed by a physician
or under the direct supervision of a physician.
  (f)(A) 'Referring laboratory' means a clinical laboratory that
sends a specimen to another clinical laboratory for histologic
processing or anatomic pathology consultation.
  (B) 'Referring laboratory' does not include a laboratory of a
physician's office or a group practice that collects a specimen
and orders, but does not perform, anatomic pathology services for
patients.
  (2) Nothing in this section may be construed to:
  (a) Mandate the assignment of benefits for anatomic pathology
services; or
  (b) Prohibit a health care practitioner who performs or
supervises anatomic pathology services and is a member of a group
practice from reassigning the right to bill for anatomic
pathology services to the group practice if the billing complies
with the requirements of subsection (3) of this section.
  (3) A clinical laboratory, a health care practitioner or a
group practice located in this state or in another state that
provides anatomic pathology services for a patient in this state
shall present, or cause to be presented, a claim, bill or demand
for payment for the services to:
  (a) The patient directly unless otherwise prohibited by law;
  (b) A responsible insurer or other third party payer;
  (c) A hospital, public health clinic or nonprofit health clinic
ordering the services;
  (d) A referring laboratory;
  (e) On behalf of the patient, a governmental agency or its
public or private agent, agency or organization; or
  (f) A health care practitioner who orders but does not
supervise or perform an anatomic pathology service on a Pap smear
specimen, provided the health care practitioner is in compliance
with subsection (5)(b) of this section.
  (4) Except as provided in subsection (5) of this section, a
health care practitioner licensed by a health professional
regulatory board may not directly or indirectly charge, bill or
otherwise solicit payment for anatomic pathology services unless
the services are performed:
  (a) By the health care practitioner or under the direct
supervision of the health care practitioner; and
  (b) In accordance with the provisions of the federal Public
Health Service Act for the preparation of biological products by
a provider of anatomic pathology services.
  (5) This section does not prohibit:
  (a) A referring laboratory from billing for anatomic pathology
services or histologic processing if the referring laboratory
must send a specimen to another clinical laboratory for
histologic processing or anatomic pathology consultation; and
  (b) A health care practitioner who takes a Pap smear specimen
from a patient and who orders but does not supervise or perform
an anatomic pathology service on the specimen, from billing a
patient or third party payer for the service, provided the health
care practitioner complies with:
  (A) The disclosure requirements of section 4 of this 2013 Act;
and
  (B) The ethics policies of the American Medical Association
that relate to a referring physician billing for laboratory
services.
  (6) A patient, insurer, third party payer, hospital, public
health clinic or nonprofit health clinic is not required to
reimburse a health care practitioner who violates the provisions
of this section. + }
  SECTION 7.  { + (1) A health care practitioner who fails to
comply with the provisions of sections 1 to 6 of this 2013 Act
shall be subject to disciplinary action by the Oregon Health
Licensing Agency or by the appropriate health professional
regulatory board as defined in ORS 676.160.
  (2) The Oregon Health Licensing Agency or the appropriate
health professional regulatory board may investigate a claim
under sections 1 to 6 of this 2013 Act in accordance with the
investigative authority granted under ORS 676.165. + }
  SECTION 8. ORS 688.125 is amended to read:
  688.125. In order to ensure that physical therapy treatment of
a patient is based solely on the needs  { + and personal health
choices + } of a patient, any health care practitioner licensed
by a health professional regulatory board as defined in ORS
676.160 who owns, in part or in whole,   { - a physical therapy
practice, or who - }  { +  an outpatient physical therapy
practice, either individually or as a shareholder, member or
partner of a legal entity that is separate from the health care
practitioner's practice, who + } employs a physical therapist
 { - , - }   { + or who is an employee of or contracts with an
entity that owns or operates an outpatient physical therapy
practice, + } shall communicate the facts of that ownership or
employment relationship to patients for whom physical therapy is
prescribed and inform the patient that alternative sources of
physical therapy treatment are available.
  SECTION 9.  { + Violation of section 3 of this 2013 Act is a
misdemeanor punishable, upon conviction, by a fine not exceeding
$5,000. + }
  SECTION 10.  { + ORS 441.098 is repealed January 2, 2017. + }
  SECTION 11.  { + Sections 1 to 7 and 9 of this 2013 Act, the
amendments to ORS 688.125 by section 8 of this 2013 Act and the
repeal of ORS 441.098 by section 10 of this 2013 Act apply to
referrals made by health care practitioners to health care
entities, clinical laboratories or outpatient physical therapists
on or after the effective date of this 2013 Act. + }
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