HOUSE BILL REPORT

                  HB 1205

             As Reported By House Committee On:

                         Health Care

Title:  An act relating to physician referral.

Brief Description:  Modifying physician self‑referral provisions.

Sponsors:  Representative Dyer; by request of Department of Social and Health Services.

Brief History:

  Committee Activity:

Health Care:  2/2/95, 2/10/95 [DPS].

HOUSE COMMITTEE ON HEALTH CARE

Majority Report:  The substitute bill be substituted therefor and the substitute bill do pass.  Signed by 13 members:  Representatives Dyer, Chairman; Backlund, Vice Chairman; Hymes, Vice Chairman; Dellwo, Ranking Minority Member; Cody, Assistant Ranking Minority Member; Campbell; Casada; Conway; Crouse; Kessler; Morris; Sherstad and Skinner.

Staff:  Bill Hagens (786-7131).

Background:  Since 1979, laws governing medical assistance [Chapter 74.09 RCW] have made it illegal to receive any remuneration,  such as kickbacks, bribes, or rebate, in return for referring an individual to a person or organization for services, purchasing, leasing, etc., when payment is made for medical assistance [Medicaid] benefits.  Violation of this provision is a class C felony - up to five years in prison and a $25,000 fine.  As a condition of the 1993 federal Medicaid amendments, which take effect this year, states were specifically required to address prohibition from certain  physician referrals for certain services.

Summary of Substitute Bill:  Effective 90 days after the regular session of the Legislature, it shall be illegal, for physicians to self-refer any medical assistance client eligible for the following health services to a facility in which the physician or an immediate family member has a financial relationship:  clinical laboratory services;  physical therapy services; occupational therapy services; radiology or other diagnostic services; durable medical equipment; parenteral and enteral nutrients equipment and supplies; prosthetics, orthotics, and prosthetic devices; home health services; outpatient prescription drugs; and inpatient and outpatient hospital services.

Federal law  [42 U.S.C. 1395nn] exempts a number of services from this proscription, e.g.:

Permitting self-referral for physician services provided personally by the physician or another physician in the same group practice, including managed care arrangements;

Permitting self-referral for in-office ancillary services furnished by, or personally supervised by, the referring physician or another physician in the group;

Permitting rural physicians with financial interest in the facilities/services to refer Medicaid clients to the facilities; and

Permitting, under certain circumstances, self-referral for designated services to hospitals in which the referring physician has an ownership interest.

Substitute Bill Compared to Original Bill:  The substitute bill clarifies that physician referral prohibitions do not effect staff model health maintenance organizations.  The substitute bill also makes several technical changes.

Appropriation:  None.

Fiscal Note:  Available.

Effective Date of Substitute Bill:  Ninety days after adjournment of session in which bill is passed.

Testimony For:  The bill is needed to meet federal Medicaid requirements.

Testimony Against:  None

Testified:  Jane Beyer, Department of Social & Health Services, Medical Assistance (pro); and Ken Bertrand, Group Health (pro on substitute).