From the Arkansas Statehouse...

Bill to limit medical conflict of interest hits snag.

In Ethics, Public Health on 12 February 2009 at 5:42 pm

Rep. Lindsley Smith’s bill to prevent doctors from taking kickbacks for MRI and other screening referrals failed to gain traction this morning in the House Health Committee. While some opposition was based on principle, the bill will get another hearing later in the session after several of its provisions are clarified.

Rep. Smith scrapped her original measure and presented an amended version (not yet online) to committee members at the beginning of the meeting. A late amendment posed no problem for Rep. Dawn Creekmore’s partial-birth abortion ban in front of the same committee on Tuesday, but questions today flustered Rep. Smith and caused the bill’s withdrawal for further consideration.

The aim of the bill, whatever changes it may undergo, is to keep doctors from referring patients to outside screening facilities in which they have a financial interest. Rep. Smith said she wants to prevent situations in which doctors unnecessarily prescribe MRIs and other expensive scans in order to make money from insurers. She detailed how some doctors arrange to send patients to an outside screening center in return for a part of the insurance payment. (The Wall Street Journal described this situation in a 2005 article.)

Rep. Smith said the measure would save $160 million in annual healthcare costs in Arkansas, though she did not elaborate on her figures. The savings would mostly benefit private insurers, as federal law already bans Medicaid and Medicare from paying for outside screening procedures where the referrer has a financial interest.

“This is to close loopholes in the federal law,” Rep. Smith said. She added that over 20 states have similar statutes on the books.

Rep. Billy Gaskill objected to the bill on its face. “You want to tell a doctor when he can do this procedure,” he said. “This is the type of meddling we don’t need to get into.”

Another committee member objected that the bill does not provide an exception for rural doctors. Rep. Smith said that issue should have been addressed in her amendment but was not.

Though the bill as currently written would prevent murky kickback schemes, it may still allow doctors to profit from MRI referrals in an overt way.

(Read on for further analysis.)

The bill explicitly allows a doctor to make MRI referrals to his own practice or to group practices of which he is a part. In theory, at least, that means a doctor could still benefit from prescribing an MRI — it would simply have to be given at his own facility.

In effect, the law may fail to prevent the overuse of medical screens. According to this 2004 New York Times article, for example, Syracuse saw an increase in MRIs that occurred partially because expanded screening gave doctors a new revenue source.

Indeed, Rep. Smith’s bill appears to be more about financial disclosure than reducing the frequency of medical screens. Besides allowing for apparently broad exceptions, the measure requires doctors to inform patients when they or their families have an financial interest in screening centers.

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  1. […] FOR THE DOCS WHO COME HERE AFTER BUZZ GETS AROUND: An unrelated subject, but John Williams has coverage of legislation to prevent doctors from referring patients to MRI and other screening facilities in which they have […]

  2. […] Business Story Posted on February 13, 2009 by lanceturner Some of the other Capitol buzz this week centered on Rep. Lindsley Smith’s HB1108, which would prevent physicians from […]

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