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Physical Therapists Testify that Coercive Self-Referrals Common at Health Systems

The independent physical therapists, testifying with Sen. Shields in a flagging attempt to tighten self-referral laws, said physicians at Legacy and OHSU had badgered patients into using in-house therapists before relenting to patient choice. Outright cancellation of referrals and threats of dropping patients from care were alleged at a Beaverton clinic.
April 13, 2015

Physical therapists testified Friday before the House Health Committee that Legacy Health, Oregon Health & Science University and other hospital systems continue to flout the self-referral law passed in 2013, and are coercing patients into using in-house therapists in an attempt to increase their profit margins.

Karl Kolbeck has had patients tell him they had to fight off demands from doctors at Legacy Good Samaritan and OHSU that they go inside their systems, but were ultimately allowed to be seen by him.

In the most egregious case, involving a physician-owned pain management group in Beaverton, a doctor threatened to cut a patient from care if that person opted not to be seen by the physical therapist with whom the doctor had a financial interest, Kolbeck told legislators.

Sen. Chip Shields, D-Portland, a lonely legislative fighter against the hospital systems that heavily influence the state government into shaping state health policy around their business interests, is back again this session with another self-referral bill, House Bill 3087. It requires a physician to give verbal notice to a patient every time the physician or their employer has a financial stake in a referral, and inform the patient of their choice to see a different, typically less expensive, independent provider.

“If we put these small providers out-of-business, costs will increase because we will have just one big health system,” Shields said.

Shields countered arguments from the hospitals that keeping care inside their system leads to more coordinated care and reduces costs. In fact, he said because hospitals have greater leverage with insurance companies, costs are often three times what they’d be at an independent provider, and much of that increase comes straight from a patient’s wallet for copayments or deductibles.

The coordinated care touted by the large health systems also can be an illusion, with some patients instead lost in the system. PT Kent Bond testified he saw a patient who had been pressured to use hospital system therapists, but was given six different physical therapists in 22 visits, and the poor coordination prevented the patient from improving.

Instead, under his care, with only one physical therapist, the patient returned to full health, and avoided expensive and uncertain surgery.

Bond also testified that he stopped getting referrals from one orthopedic surgeon after the surgeon’s practice was bought by a hospital system, and the hospital warned the physician: “Why do we need to remind you which side your bread is buttered on?”

Shields’ bill is an attempt to out-maneuver the Oregon Health Authority, which thwarted his legislative attempt in Senate Bill 683 to require oral notification of conflict of interest in referrals, and instead sided with lobbyists from the hospital systems and physician clinics that would lose money if such self-referrals were limited by patients choosing to seek care elsewhere.

“We argued that you could just tell a patient,” Shields said. “The lobby group worked to make it much more complicated and then complained that it had become much too complicated. It was an interesting strategy.”

The health authority ultimately decided that physicians only needed to tell patients one time, in writing, when making a referral to their organization. Future in-house referrals, even years later and for different tests or physical therapy, would not require such a notice.

But, House Bill 3087 doesn’t appear to be going anywhere this session, despite co-sponsorship by Rep. Mitch Greenlick, D-Portland.

Rep. Knute Buehler, R-Bend, an orthopaedic surgeon, opposed HB 3087 as impractical, although he understood the concerns of physical therapists. “I think that verbal notice will add a burden to providers,” he said, noting that he often has to order a litany of tests and referrals and might have to constantly give notice to patients on top of other requirements.

There are federal self-referral laws called Stark laws that protect against some self-referrals, although Shields argued loopholes were “big enough to drive a bus through.” This winter, Dr. Bob Dannenhoffer was fired from his post atop the Douglas County coordinated care organization, Architrave Health, not long after he reported a federal self-referral violation against his own company.

Whether the notice Shields wants would resolve the problem is questionable. If there are, in fact, patient records of coercive self-referrals by physical therapists, the hospital systems aren’t afraid of the Oregon Health Authority or the Oregon Medical Board cracking down on their physicians with civil penalties, which the agencies can do if a physician limits or denies care.

Any notice, oral or written, would be hard for either party to document or prove. Still physical therapist Bud Herigstad was optimistic patient awareness would help his business while keeping things fair. “Patient choice equalizes the playing field for all practitioners.”


Submitted by Donald Thieman on Tue, 04/14/2015 - 16:58 Permalink

Rep. Shields is precisely correct in saying the loopholes in the Pete Stark federal anti-self-referral law, and other such regulations, are "big enough to drive a truck through."  The loopholes began to appear almost as soon as that law was passed, more than 20 years ago. Revenue capture by a practice or system is an illegitimate reason for choosing where to send a referral, and a simple notification requirement like Shields advocates is something professionals and administrators should support on ethical grounds rather than seeking reasons to avoid it.  Good results, great service and high-level skills will bring all the business anyone needs--and deserves.

Don Thieman