Health Systems Work to Block Impact of Self-Referral Law

A bipartisan bill crafted by Sen. Chip Shields and Sen. Larry George requires doctors to notify patients of their right to get tests or physical therapy from a provider of their choice, but Providence and others want to give patients as little notice as possible, and keep them inside their health system.

Editor's Note: An earlier version incorrectly associated an OHSU attorney with Legacy Health System. We regret the error.

The Oregon hospital association and the Portland area’s leading health systems are pulling out all the stops and gaining an assist from the Oregon Medical Association to block the impact of a new law designed to ensure patients know they have a choice of physical therapy and radiology services.

As independent physical therapists have seen their new patients from Providence and Legacy dry up, they’ve fielded dozens of complaints from patients that the major health systems pressured patients to avoid going outside their system for care.

Expensive radiology services have been a key source of revenue growth for health systems, as well as their staff of physical therapists. If the hospitals can keep patients in their systems, their profits increase.

Some patients have seen their referrals canceled after they made appointments with independent therapists. Patients have been told they must stay inside the health system even if it takes days or weeks to see an in-house physical therapist while an independent therapist is often available immediately, according to a document provided by attorney Diana Godwin.

However, the law has been clear -- patients have a right to go to the provider of their choice in non-emergency situations.

Sen. Chip Shields, D-Portland and Sen. Larry George, R-Sherwood, teamed up during the session to pass Senate Bill 683B — which bars doctors from canceling referrals when a patient chooses a diagnostic test or healthcare treatment outside of their suggested clinic or health system, and it requires doctors with a conflict of interest to inform patients that they can go wherever they want for care.

Shields needed the support of the Republican George to get the bill passed after Sen. Laurie Monnes Anderson, D-Gresham, made several attempts to kill it as well as similar bills, acting on behalf of the Oregon Association of Hospitals and Health Systems.

Now those same hospital forces are working overtime to kill the heart of the new law’s reforms and notification requirements, using an Oregon Health Authority rule-making process laid out in a last-minute amendment to SB 683 adopted in the House.

The hospitals have agreed to not cancel a referral for patients who go outside their systems, but there’s still major disagreement about how doctors should notify patients when choosing a physical therapist or imaging facility to have an MRI or PET scan. The hospitals want to give patients as little notice as possible, while independent physical therapists want the notice to be simple but clear.

Amanda Hess, the legislative aide for Shields, pleaded with the Oregon Health Authority to require an oral notification, which she said would take no more than 10 seconds.

“You have a right to receive care with a provider of your choice,” said Hess. “And most of the time people are going to go where they’re referred because they trust their doctor.”

If the physician has a direct financial stake in the referral, the law is very clear — physicians must tell their patients both orally and in writing.

But in the area where the most complaints have originated — when physicians are salaried employees who make referrals insider their own health system, such as Providence or Legacy —  it’s up to the Oregon Health Authority to make the rules, according to the 11th-hour amendment.

Post-Session Sausage-Making

The work that goes into passing a bill into law is often compared to sausage-making, but even after the governor signs a bill into law and the legislators leave Salem, the actual impact of a law can be left to government agencies such as the Oregon Health Authority or the Department of Consumer & Business Services to hammer out the details.

And these agencies’ wide discretion can determine whether the sausage of a law remains kosher or not.

The deep-pocketed hospitals and insurance companies pack the agency hearings with lobbyists and lawyers, who are paid to aggressively push their special interest’s agenda and minimize the impact of consumer protection. The lawyers and lobbyists throw many arguments against the wall, many with merit but many specious, hoping that something will stick.

On the other side are a paltry few people speaking up for the public’s interest. The common person would have to take time from work to attend these obscure hearings, while lobbyists and lawyers are paid to attend. At the self-referral hearing, the physical therapists did hire an attorney to advocate on their behalf, while a few physical therapists took time away from patient care to push their case that seemed to be settled when SB 683 passed the Senate.

The likely final hearing will be today, but the Oregon Health Authority has a public comment period where concerned members of the public can weigh in their opinion.

The Senate passed Senate Bill 683 in April with broad bipartisan support, despite Monnes Anderson’s opposition. George called it “a shot across the bow” aimed at health systems engaged in unethical behavior. “This is a warning shot. We in the Legislature are watching you.”

But at the rule-making hearing last week, hospital interests didn’t seem too concerned.

Lawyers from Providence and Oregon Health & Science University argued that their physicians should only have to notify patients of referral options when seeing a patient for the first time — not when the actual referral is made, perhaps years later.

Such information, in their opinion, should be included in the large packet of material a patient receives on a first visit, such as HIPAA forms and medical history statements.

Their position was echoed by Gwen Dayton, legal counsel for the Oregon Medical Association: “A better way is when a new patient comes in, they need to receive this notice.” She also suggested wall posters about referral options might be sufficient to fulfill the law’s requirements.

All sides agreed that it would be unreasonable to notify a patient multiple times for multiple tests and referrals for the same diagnosis: “The initial referral to the facility would require the notice, but the Ping Pong within the facility would not,” said Keely West of the Oregon Health Authority.

Oral Notice Dispute

Dayton argued vociferously against requiring doctors to notify patients verbally about their options. A patient could potentially check a box on a written notice, indicating that they’ve been informed of their referral rights, but Dayton argued there is no way to know if a patient had been honest when they file a complaint with the medical board.

The punishment for violating the laws set out in SB 683 is a $1,000 fine levied on the practitioner by the appropriate licensing board. The health system, which might be creating the atmosphere in which out-of-system referrals are strongly discouraged, would not be directly impacted.

“The oral part is so simple to do,” said Renata Marsal, a Newberg physical therapist. “Their argument that they can’t protect against that goes against the vast majority of patient interactions, which are documented. I think it’s telling that there’s such resistance to saying they have a choice.”


To take a look at the complaints filed by patients, click here.

Chris can be reached at [email protected].

News source: 


Consumers of health care who read The Lund Report, what do YOU think about having referral decisions made for you with the least possible notice of your options and your health care system's internal financial incentives?