State Advocacy Network: Proposed Referral Restrictions Create Roadblocks to Patient Care (Colorado)
The AACU State Advocacy Network joins the Colorado Medical Society in opposition to SB18-115, Concerning the prevention of self-dealing in referrals for medical services.
Current law in Colorado prohibits health care providers who receive reimbursement through Medicaid to make referrals for medical services to an entity owned or controlled by the provider or immediate family. This bill will extend that prohibition to all health care providers and will:
- Go far beyond existing federal and Colorado laws governing self-referral practices by vastly expanding to whom the prohibition applies and which transactions are prohibited;
- Shift the burden of proof to show public harm under the Consumer Protection Act to the defendant provider, citing HIPAA as too burdensome for the plaintiff insurer to overcome; however, the defendant’s provider would face the same HIPAA limitations in his or her ability to defend against a deceptive trade practice claim;
- Lessen patient options in the marketplace, concentrate market power, and drive up prices;
- Make no accommodation for the best interests of the patient, and instead presume physician referrals are adverse to those interests;
- Physicians already have ethical obligations that prevent referrals damaging to the patient or which places the physician’s financial interests above those of the patient;
- Make such referrals a deceptive trade practice under the ’Colorado Consumer Protection Act,’ entitling any person harmed by a violator’s conduct to treble damages. The Colorado Attorney General will be authorized to seek injunctions and civil penalties, require reimbursement, and refer violators for insurance fraud investigation;
- Allow insurers to unfairly withhold payment of questionable charges pending investigation.
This bill could actually increase overall costs. It would make the joint ventures currently in place between hospitals or health systems and physicians illegal. Many such joint ventures provide less costly alternatives to hospital care.
The Stark law was created in the volume-based world of fee-for-service and was meant to prevent overutilization, inappropriate patient steering, and compromised medical judgment. However, the health care system as a whole is now transitioning to value-based reimbursement, which doesn’t have the same potential perverse incentives as fee-for-service. The fraud and abuse laws, including Stark, impede innovation that aligns physician reimbursement by using financial incentives to achieve quality standards, generate cost savings, and reduce waste.
SB18-115 creates a remedy that is disproportionate to the problem the proponents are trying to address and is insufficiently sensitive to its potential effects on Colorado healthcare. We do not believe it is beneficial to create more roadblocks that will stand in the way of payment and delivery system innovation.
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