Virginia Qui Tam Law.com

Recently, the Washington Post featured an editorial applauding Maryland’s 18 year old statute banning physician self-referrals and encouraging other states to follow Maryland’s example.  Sadly, the WaPo editorial misses the mark, although they do get points for trying. 

WaPo misses the mark because if they were going to take up an esoteric–but important–subject, physician self-referrals should not have been the number one thing on the list.  It would have been far more helpful if they had directed their efforts towards the passage of a Maryland False Claims Act last year, which they chose not to do. 

Don’t get me wrong, physician self-referrals are something that needs to be purged from the health care system, but they are far from the worst thing going on in the world of health care fraud.  Indeed, there is a way Maryland could have killed multiple birds with one stone, by cutting down on physician self-referrals, eliminating corrupt providers from the system, and at the same time freeing up more Medicaid money….   

First things first.  What are physician self-referrals, and why are physician self-referrals not a good idea?

The post does a good job of summing it up:  imagine if physicians were allowed to sell prescription medications (and to profit from the sale of prescription medications).  No one outside the medical profession thinks that such an arrangement would be a good idea–the urge on the part of some doctors to prescribe medications when patients only marginally needed them would be just too strong, and no doubt there are some doctors that would make sure every single patient they treat was prescribed something.   

We don’t allow physicians to sell drugs, but in some circumstances physicians are allowed to profit from prescribing MRI scans, CT scans, and other types of imaging services.  Why? Because the technology to perform these services has become cheaper and cheaper and many physicians can now afford to purchase the equipment themselves.  When they do so, there is nothing to stop them from profiting from imaging services performed in their own offices. 

The performing of such services in-house is known as a “self-referral” because the physicians prescribe an MRI or a CT scan and then “refer” the patient to themselves, because the services are performed in-house. 

The WaPo article not only celebrates an old statute passed in Maryland in 1993 that prevents such self-referrals, the editorial announces that the statute should be “a model for the rest of the nation” and things like that.  

Here are the reasons why it is a waste of time for the WaPo to get behind Maryland’s self-referral statute:  

1. The fact is that self-referrals are already illegal for a very large percentage of the health care services performed all over the United States.  That is because physicians are barred from self-referrals in connection with any health care claims that will be paid in full or in part by the United States government.  That includes Medicare, Medicaid, Tricare, health care programs for federal employees, and so forth.   

The federal Physician Self-Referral Law (commonly referred to as the Stark law) is a “strict liability” statute, which means proof of intent to break the law is not needed, and indeed evidence of intent is not even relevant.  So, if physicians did want to set up a self-referral scheme, they would have to make good and doggone sure that they didn’t self-refer any patients whose claims will be paid by a government program. 

(Note:   the Stark law is a purely civil statute, in contrast with the federal Anti-Kickback Statute, which is a criminal statute and requires evidence of intent or of a corrupt motive, etc.)

What usually happens is health providers who don’t care about the law aren’t scared of a rarely-enforced state self-referral law.  On the other hand, those who do want to comply with the law will make sure they comply with the federal standard, and will not want the administrative nightmare of bothering to sort government health claims (for which self-referrals are already unlawful) from the private pay claims (where self-referrals would be lawful in the absence of a state self-referral law). 

2.    State self-referral statutes like Maryland’s are rarely enforced, and are only licensing statutes, which is not in the public interest. 

Physicians and the health care services they provide are important to society.  To me, it makes little sense to revoke a physician’s license for breaking the law and self-referring (unless other aggravating factors are present, such as a complete disregard for patient well-being).  Moreover, a doc who loses his license is going to be unable to pay the fines and penalties needed to make society whole. 

Instead, physicians should be forced to pay stiff fines and learn their lesson, and then should be allowed to go forth and heal. 

Also, of course, the state self-referral statute only allows for enforcement by the Attorney General, and so enforcement of the statute is very much dependent on the state budget.  I don’t know how many physicians in Maryland have lost their licenses as a result of the state, but the post editorial seems to admit that the number is not high.  

I could go on and on, but the bottom line is this.  Last year, we really needed help with passage of the Maryland False Claims Act, and the WaPo ignored us.  This year, they chose to pick out an esoteric statute that, while well intentioned, does not do all it could, and may even harm Maryland health care providers in some ways.  

What gives?