California referral bill weakened in assembly

July 1, 1992

Opponents of physician self-referral suffered a setback in theCalifornia Legislature last week after a bill that would havebanned the practice was gutted.As originally written, AB 819 would have prohibited all referralsto clinics and diagnostic centers

Opponents of physician self-referral suffered a setback in theCalifornia Legislature last week after a bill that would havebanned the practice was gutted.

As originally written, AB 819 would have prohibited all referralsto clinics and diagnostic centers in which physicians have anownership interest (SCAN 2/12/92).

A lack of legislative support for a blanket ban, however, promptedthe bill's author, Assemblywoman Jackie Speier (D-San Mateo),to amend the legislation to apply only to workers' compensationclaims.

The modification brought the substance of the bill closer to astudy released earlier this year that raised questions about physicianself-referral.

That study, conducted by William Mercer, Inc., examined claimsfor MRI, physical therapy and psychiatric evaluation and founda correlation between physician self-referral and unnecessaryworkers' compensation claims. According to the study, the state'sworkers' compensation system pays out about $356 million annuallyfor unnecessary claims.

Despite narrowing AB 819's focus, Speier was unable to get thebill out of the state senate's Industrial Relations Committee.The bill was stripped of its substantive provisions and sent toa special conference committee scheduled to deal with workers'compensation issues later this summer. Speier can reintroduceprovisions banning physician self-referral in the workers' compensationsystem at that time.

Imaging center industry representatives stopped short of claimingvictory, but said that the legislature's action was encouraging.

"(We) view this not so much as a victory but as an acceptanceby the legislature that there are alternative reform measuresto those suggested by Assemblywoman Speier," said EdwardGiron, president of the American Imaging Association.

Speier's reliance on the Mercer study could have hurt her chancesof getting a blanket ban passed, according to Lloyd Pantell, anattorney representing the association.

"I think she realized that since the Mercer study--the primarybasis for the contentions in the bill--was limited to workers'comp, the only way to gather sufficient support was to amend itto apply only to workers' comp," Pantell told SCAN.

In related self-referral news, the American Medical Association'sgoverning body approved a resolution supporting physician self-referral.The resolution contradicts the AMA's ethical guidelines, whichdiscourage self-referral.

According to the resolution as passed by the AMA's house of delegates,self-referral should be considered ethical if patients are informedof physician ownership and are aware that alternate facilitiesexist.

An AMA spokesperson said the adopted policy would not affect ethicalguidelines.