Illinois passes self-referral ban

July 15, 1992

Illinois will become the latest state to fire a volley againstphysician self-referral if Gov. Jim Edgar signs broad legislationpassed by the state legislature this month prohibiting the practice.HB-4163 would ban a wide range of health-care providers

Illinois will become the latest state to fire a volley againstphysician self-referral if Gov. Jim Edgar signs broad legislationpassed by the state legislature this month prohibiting the practice.HB-4163 would ban a wide range of health-care providers from referringto facilities in which they have an investment interest.

Similar legislation stalled in California last month (SCAN7/1/92), while opponents of a Florida self-referral law have goneto court to halt the law's imposition (see story, page 3).

Development of the Illinois legislation was remarkably smooth,in sharp contrast to the sometimes acrimonious debates that haveoccurred in other states. Two of the state's largest medical associations,the Illinois State Medical Society and the Illinois RadiologicalSociety, helped draft the bill and played significant roles insecuring its passage.

"Our opinion was that this was an ethical issue, and wehad a duty to become involved in developing the legislation,"said Dr. Arthur Traugott, president-elect of the Illinois StateMedical Society. "It was our intent that it should be verybroad so that we weren't disadvantaging any one area in the providerfield."

Because of the medical society's involvement, the legislationwas expanded to apply not only to physicians but also to dentists,optometrists, social workers, nurses, physical therapists, psychiatristsand several other professions.

Health-care workers in the professions designated by the billwould have until Jan. 1, 1996 to divest ownership in facilitiesto which they self-refer. Investment after that date would beallowed, provided it constitutes less than one-half percent ofthe total equity of companies with over $30 million in net assets.

The bill would also allow a number of exemptions to the self-referralrestrictions. Referrals that would be allowed are:

  • for in-office services;

  • within an HMO;

  • to other members within a group practice;

  • to physician-owned hospitals;

  • within faculty practice plans; and

  • by physicians who apply for and receive an exemptionfrom the state Health Facilities Planning Board.

Exemptions could be obtained from the board by health-careworkers with practices in rural areas, to ensure that self-referralrestrictions do not inhibit access to high-quality care in thoseareas. If an applicant's exemption petition were not reviewedwithin 90 days, it would be automatically granted, thus keepingthe process on a fast track by preventing a backlog of petitions.

The passage of the bill can be seen as a case study in howa specialty medical society can work with a general medical organizationto get effective legislation passed, according to Traugott.

The bill was originally proposed by the state radiologistassociation after a medical imaging company from out of stateannounced plans to expand in Illinois. The legislation struggleduntil the medical society threw its weight behind the bill.

"I hope that it can be seen as an opportunity for a specialtysociety to work with an umbrella organization to create legislationthat applies to all of medical care in a state and not just toa single specialty," Traugott said.

Edgar has 60 days to sign the bill, an outcome that supporterssaid is likely, given the breadth of support for the legislation.If signed, the legislation will become law January 1.