Health Authority Buckles to Hospital Pressure on Rules for Self-Referral Law

A bipartisan law designed to ensure that patients know their choices during a referral has not taken full effect more than a year after it passed because the Oregon Health Authority has allowed opponents of the law to exert control over the administrative process.

The Oregon Health Authority has caved to pressure from Providence Health System and others and has prevented a 2013 law designed to offer patients greater knowledge of their choices for referrals from taking full effect.

Senate Bill 683 was designed to ensure patients know they have choice in referrals and stop Providence and others from canceling referrals if a patient opts to take their business outside the health system.

But nearly two years after Sen. Chip Shields, D-Portland and Sen. Larry George, R-Sherwood, worked together to pass SB 683, the health authority has refused to implement the law according to Shields’ wishes and has allowed the hospitals themselves to dictate most of the rules for the law’s implementation.

Frustrated with the health authority’s actions, Shields called interim health authority director Suzanne Hoffman and the agency’s lobbyist, Courtney Westling, to the stand of the Senate Consumer Protection Committee on Tuesday. He was joined in his complaints by Republicans, including Rep. Kim Thatcher, R-Keizer:

“It makes sense to keep true choice for patients,” Thatcher said. “It seems like we’re going backwards. We need to make sure that the patients know they have a choice. I’m disappointed that’s being backpedaled.”

While some of the law, particularly around direct self-interest and the canceling of referrals, was put into statute by the Legislature, many of the details of how the law would be implemented, including the manner in which physicians and nurse practitioners are to notify patients of their referral rights, was left to the administration of the health authority.

The health authority hosted a rules advisory committee, inviting lobbyists and lawyers from major hospitals and the Oregon Medical Association as well as independent physical therapists and radiologists to hammer out the details. Shields and George also attended at least one of the meetings.

The committee met for nearly a year and never came to a consensus -- not surprising considering that the alleged unethical behavior of the hospitals and some physician-owned clinics were the very reason that Shields and George pushed for the law.

Hospitals and clinics have a financial incentive to refer patients for MRIs or physical therapy provided by their own employees, a service that often costs much more than an independent provider, even when both options are covered on an insurance plan. The hospitals have been able to gouge insurance plans with higher rates for sometime, but the problem’s now hitting patients more directly in the age of high-deductible insurance, where many patients pay for their care out-of-pocket.

Bud Herigstad, a physical therapist from Newberg, said he had a patient who delayed care rather than pay the $615 quoted for a hospital-owned physical therapy service. Herigstad charged half that price for the same number of hours. Beyond his own service, he said another patient was going to be charged $1,489 for a hospital MRI, but he found an independent MRI clinic nearby that only charged $400.

Shields had wanted all patients to be notified of their rights orally, but he and George agreed to give up this requirement in the name of compromise with the opponents of the law, particularly the Oregon Medical Association, and the additional oral requirement was left out of the rules set by the Oregon Health Authority in June.

Those rules required physicians to post a sign in their office about patient referral rights, notify patients of their rights to referral when they first see a patient, and notify them again when they first make a referral for a service. The direct notifications can be made either orally or in writing, and they can be made by a doctor’s staff as well as the provider.

Now even that compromise has been thrown out.

Under further pressure from the opponents of the law, the Oregon Health Authority rescinded the SB 683 rules a month after they took effect. A “temporary rule” -- which has no requirement at all that physicians notify a patient of their rights -- was put in place in July. Hoffman conceded to Shields that the original rule was rescinded after the complaints of the opponents of the law; the proponents of the law were not consulted.

The rules governing the cancellation of referrals remain in effect, and the statute says physicians do have to give patients notice of their rights to choice -- but the current rule no longer gives any instruction on how or when to give the notice. The health authority is now reconvening the sharply divided advisory group and planning to hash out a final rule on patient notification by January.

“We might unfortunately have to reopen this can of worms with more legislation,” said Shields. Even if he has less clout than the hospital association when it comes to the Oregon Health Authority’s administrative activities, the Legislature could write more specific rules itself by statute and the health authority would be bound by law to follow it.

On Tuesday, opponents of the law, including Providence and Sen. Laurie Monnes Anderson, D-Gresham, said they wanted the notification to be minimized to cut back on the administrative burden, and suggested that the notice be given at the same time as HIPAA privacy forms. Opponents conceded that most patients do not read the HIPAA material. Such a notice might also be given to the patient years before the actual referral is needed.

Hospitals Spend Big on Kitzhaber

Whether election-year politics played a role is unclear, but the Oregon Association of Hospitals & Health Systems has been a large campaign contributor for Gov. John Kitzhaber. While the rule-making process for SB 683 was playing out, the hospitals gave Kitzhaber $5,000 on June 4, which followed $15,000 in May, $10,000 in March and $10,000 in January, for a total of $40,000 designed to provide political quid pro quo.

The law was crafted through some odd political maneuvering, with Shields forced to outflank Monnes Anderson, a strong ally of the hospital association. She killed a similar bill in the Senate Health Committee -- Shields passed SB 683 by bypassing her on the Senate Consumer Protection Committee and working with the Republican George.

SB 683 first passed the Senate 24-5, with more Democrats opposing the measure than Republicans. In addition to Monnes Anderson, the bill was opposed by Sen. Elizabeth Steiner Hayward, D-Portland, who works for Oregon Health & Science University, along with Sen. Lee Beyer, D-Springfield.

On Tuesday, while Monnes Anderson continued to express sympathy for Providence’s position, it was the Republicans along with Shields and Sen. Floyd Prozanski, D-Eugene, who were most visibly frustrated at the health authority.

“We wanted to make sure the patient knew they had other options,” said Sen. Herman Baertschiger, R-Grants Pass. “I was disappointed that these rules got fouled up. Let’s get it done.”

Chris can be reached at [email protected].

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How very unfortunate since "transparency" of prices is not an option for consumers, given trade secrets built into Oregon's All Payer All Claims database. And yet... the Oregon Health Authority red-letters these two purposes for the legislation to create Oregon's All Payer All Claims database: • Providing information to consumers and purchasers of health care. • Improving the quality and affordability of health care and health care coverage. When HIPAA privacy forms are sent out, the OHA should also disclose that Oregonians' personal health information is directly uploaded to the global actuarial corporation, Milliman Inc., which has the keys to encryption. Names, diagnoses, prescriptions, test results... Both Oregon Health Authority and Q-Corp All Payer All Claims databases use Milliman Inc. for their databases. According to Bloomberg, the maintenance of electronic medical records and data sharing intended to rein in growth of U.S. health care costs was estimated at $2.7 trillion in 2011. A good return on investment for the healthcare industry, no doubt!
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