SB 1215 Would Eliminate In-office Exception for Advanced Imaging in California

A bill introduced in the California Senate has been amended to remove the in-office exception (IOE) for advanced imaging and radiation oncology from the state’s self-referral regulations. Additionally, SB 1215 would prohibit physicians in the state of California from self-referring for anatomic pathology and physical therapy services.

In seeking to remove the IOE for the four services, Democratic Sen. Ed Hernandez, author of SB 1215 and chair of the Senate Health Committee, clearly seeks to rein in health-care costs. The bill refers to recent GAO studies that identified financial gain as the likely cause of increases in self-referral for advanced imaging and anatomic pathology.

A 2012 investigative report on a California urology clinic that self referred prostate cancer patients for radiation treatments, increasing costs and adversely affecting patient care, also is referenced.

Hernandez has been at the forefront of health-care reform in California with respect to the implementation of the Accountable Care Act and the state’s expansion of Medi-Cal. He held a Senate Committee on Health hearing on health-care cost containment early in March.

“To date, more than 2.3 million Californians have been added to Medi-Cal or the exchange," Hernandez said, according to CaliforniaHealthline. “These successes should be celebrated, but they do come at a great cost… The next debate in the state and in the country has to be: Why are medical bills so high?”

The bill was first introduced by Hernandez to amend sections of the Health and Safety and Insurance Codes that related to health-care coverage. Because the original provisions were removed, SB 1215 now returns to the Senate Rules Committee for committee assignment.

Bob Achermann, executive director of the California Radiological Society,  said he expects the bill to be referred to the Senate Business and Professions Committee and heard later in April.

Having worked on a 2008 law to tighten regulations around the leasing of medical equipment, Achermann says there is nothing easy about the self-referral issue. “We passed a law in 2008 on leasing equipment by referring physicians, but the in-office ‘sanctuary’ is going to be a tough one to penetrate,” he notes.

Once a hearing date has been scheduled, the CRS will attempt to mobilize the state’s radiology community to contact their state legislators in support of the bill. Opposition is likely to include the same specialties that have fought this issue at the federal level: urology, gastroenterology, and orthopedic surgeons.

“There is more of them, with a greater grassroots network, so we’ll need people to reach out and let their legislators know what this means and what they’ve seen in their own experience,” Achermann says.

The amended bill to end the in-office exception outlines out a series of exceptions of its own that would exempt certain providers from self-referring. For instance, those practitioners located where there is no other provider within 25 miles or 40 minutes traveling time would not be constrained from self-referral for the four targeted services.