Cost Containment Bill Goes Down

A Senate committee yesterday rejected a plan to limit some types of in-office physician referrals, such as imaging and physical therapy.

The point of SB 1215 is cost containment, said bill author Sen. Ed Hernandez (D-West Covina) at yesterday’s hearing of the Senate Committee on Business, Professions and Economic Development.

“Last year my goal was the implementation of the Affordable Care Act. …

This year my goal is the success of the ACA,” Hernandez said. “And a big part of the success of this Act is going to be containing costs.”

Hernandez cited studies that show overutilization rises when physicians order tests and services using the physicians’ own imaging equipment and service providers.

“In recent years the in-office exemption has been exploited to provide very complex, costly and often unnecessary services that are rarely provided on the same day as the initial office visit,” Hernandez said. This loophole has created a perverse incentive that leads to overutilization of services.”

He said physicians, whether consciously or not, are more likely to refer patients when services or tests are owned by them.

 “When a doctor has a financial incentive to perform services or order tests, they do more often than those who don’t have the same incentives,” Hernandez said. “This bill simply closes a loophole that some doctors are using to make money off expensive and often unnecessary in-office testing.”

Stuart Thompson, associate director at the Center for Government Relations at the California Medical Association, disagreed.

“We believe that, in order to improve health care in the state, there should be more integration, not less,” Thompson said. “Limiting patient access does save the system money, and we believe that’s what this bill does. This would fragment the health care delivery system and close hundreds of practices across the state.”

Thompson said with millions of newly covered Californians through the exchange and Medi-Cal expansion, access will be an even bigger issue.

“This bill could not come at a worse time,” Thompson said.

Tim Shannon, legislative advocate for the California Orthopedic Association, pointed out that many tenets of SB 1215 are antithetical to a bill passed one year ago by the Legislature. AB 1000 by Assembly member Bob Wieckowski (D-Fremont), signed into law by the governor last year, changed the rules between physicians and physical therapists.

“The ink is barely dry on that bill. This bill would undo that,” Shannon said. “It’s not even 12 months later, and this bill would come along and you’re being asked as a committee to repeal a bill that was passed just last year.”

Sen. Alex Padilla (D-Pacoima) moved the bill, but said he would abstain from voting on it.

“I still have reservations about it,” Padilla said. “I’m happy to make a courtesy motion, but knowing the conversation has a long way to go.”

The bill failed on a 1-3 vote.

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