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Proposed Pennsylvania Legislation Would Prohibit Physician Referrals for Ancillary Services

Posted May 20 2009 10:35pm

Pennsylvania physicians need to be aware that legislation ( House Bill 1405 ) has once again been introduced in the Pennsylvania House which would severely limit the ability of physicians to refer to entities in which they have investment interests. As drafted, this Bill would create an outright prohibition on the referral by a health care provider of any patient to an entity in which the health care provider is an investor or has an investment interest for a provision of “designated health services”. Designated health services are limited to:

(1) clinical laboratory services;

(2) physical therapy services;

(3) comprehensive rehabilitative services

(4) diagnostic imaging services; and

(5) radiation therapy services.


It would also prohibit health care providers from referring patients for any health care services (other than (designated health services) to an entity in which the health care provider is an investor or has an investment interest unless (1) the investment is in a publicly traded company with assets greater than $50 million, or (2) no more then 50% of the investment interests are owned by persons in a position to refer to the entity. 


Penalties for violations include a $15,000 penalty for each improper claim submitted, $100,000 for a “circumvention scheme” and possible disciplinary action.


As drafted, the Bill does not incorporate the federal anti-kickback safe harbors or Stark exceptions so if passed, it would be far more restrictive than the federal statutes. Similar legislation has been introduced in the past and has not passed. At present the Bill is before the Health and Human Services Committee.


Physicians opposed to this legislation should contact their State Representatives and join their medical societies in lobbying against it.

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