THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

INTRODUCED BY DeLUCA, MUNDY, BARBIN, D. COSTA, BELFANTI, CALTAGIRONE, FRANKEL, GEORGE, HARKINS, JOSEPHS, KOTIK, MATZIE, MILLER, M. O'BRIEN, PASHINSKI, SIPTROTH, SOLOBAY, THOMAS, WHITE AND YOUNGBLOOD, MAY 19, 2010

REFERRED TO COMMITTEE ON INSURANCE, MAY 19, 2010  

AN ACT

Providing for prohibition on health care provider self-referral.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1.  Short title.

This act shall be known and may be cited as the Prohibition

on Health Care Provider Self-referral Act.

Section 2.  Definitions.

The following words and phrases when used in this act shall

have the meanings given to them in this section unless the

context clearly indicates otherwise:

"Compensation arrangement."  An arrangement involving

remuneration, direct or indirect, between a provider or a member

of a provider's immediate family, and a person or entity.

"Designated health service."  The following goods or

services:

(1)  clinical laboratory services;

(2)  physical therapy, occupational therapy or speech

language pathology;

(3)  chiropractic;

(4)  radiation oncology;

(5)  psychometric services; 

(6)  home health services; or

(7)  diagnostic imaging.

"Financial interest."  An ownership or investment interest or

a compensation arrangement.

"Health care provider."  A person, corporation, facility or

institution licensed or otherwise authorized by the

Commonwealth to provide health care services, including, but not

limited to, a physician, coordinated care organization,

hospital, health care facility, dentist, nurse, optometrist,

podiatrist, physical therapist, psychologist, chiropractor or

pharmacist and an officer, employee or agent of the person

acting in the course and scope of employment or agency related

to health care services.

"Immediate family member."  Husband or wife; birth or

adoptive parent, child or sibling; stepparent, stepchild,

stepbrother or stepsister; father-in-law, mother-in-law, son-in-

law, daughter-in-law, brother-in-law or sister-in-law;

grandparent or grandchild; and spouse of a grandparent or

grandchild.

"Ownership or investment interest."  A direct or indirect

ownership or investment interest through equity, debt or other

means that includes an interest in an entity that holds an

ownership or investment interest in any entity that furnishes

designated health services. An ownership or investment interest

includes, but is not limited to, stock, stock options,

partnership shares, limited liability company memberships, as

well as loans, bonds or other financial instruments that are

secured with an entity's property or revenue or a portion of

that property or revenue.

"Referral."

(1)  The term shall include:

(i)  The request by a health care provider for, or

ordering of, or the certifying or recertifying of the

need for any designated health service, including a

request for a consultation with another health care

provider and any test or procedure ordered by or to be

performed by, or under the supervision of, that other

health care provider, but not including any designated

health service personally performed or provided by the

referring provider. A designated health service is not

personally performed or provided by the referring health

care provider if it is performed or provided by any other

person, including, but not limited to, the referring

health care provider's employees, independent contractors

or group practice members.

(ii)  A request by a health care provider that

includes the provision of any designated health service,

the establishment of a plan of care by a health care

provider that includes the provision of such a designated

health service or the certifying or recertifying of the

need for such a designated health service, but not

including any designated health service personally

performed or provided by the referring health care

provider. A designated health service is not personally

performed or provided by the referring health care

provider if it is performed or provided by any other

person, including, but not limited to, the referring

health care provider's employees, independent contractors

or group practice members.

(2)  The term shall not include a request by a

pathologist for clinical diagnostic laboratory tests and

pathological examination services by a radiologist for

diagnostic radiology services and by a radiation oncologist

for radiation therapy or ancillary services necessary for,

and integral to, the provision of radiation therapy, if:

(i)  the request results from a consultation

initiated by another whether the request for a

consultation was made to a particular pathologist,

radiologist or radiation oncologist or to an entity with

which the pathologist, radiologist or radiation

oncologist is affiliated; and

(ii)  the tests or services are furnished by or under

the supervision of the pathologist, radiologist or

radiation oncologist or under the supervision of a

pathologist, radiologist or radiation oncologist,

respectively, in the same group practice as the

pathologist, radiologist or radiation oncologist.

(3)  A referral may be in any form, including, but not

limited to, written, oral or electronic.

"Secretary."  The Secretary of Health of the Commonwealth.

Section 3.  Unprofessional conduct.

(a)  Referrals.--

(1)  It is unlawful for a health care provider to refer a

person for a designated health service if the provider or an

immediate family member of the provider has a financial

interest with the person or entity that receives the

referral.

(2)  It is unlawful for a health care provider to enter

into an arrangement or scheme, such as a cross-referral

arrangement, which the health care provider knows or should

know has a principal purpose of assuring referrals of

designated health services by a health care provider to a

particular entity which, if the provider directly made

referrals to such entity, would be in violation of this act.  

(b)  Limitation on billing.--No claim for payment may be

presented by an entity to any individual, third-party payer or

other entity for a designated health service furnished pursuant

to a referral prohibited under this section.

(c)  Denial of payment.--

(1)  Except as provided in paragraph (2), no payment may

be made by any payer for a designated health service that is

furnished pursuant to a prohibited referral.

(2)  Payment may be made to an entity that submits a

claim for a designated health service if the entity did not

have actual knowledge of, and did not act in reckless

disregard or deliberate ignorance of, the identity of the

provider who made the referral of the designated health

service to the entity.

(d)  Exceptions.--The provisions of subsections (a), (b) and

(c) do not apply to the following:

(1)  Referrals permitted under all present and future

Safe Harbor regulations promulgated under the Medicare and

Medicaid Patient and Program Protection Act (section 1128B(b)

(1) and (2) of the Social Security Act (49 Stat. 620, 42

U.S.C. § 301 et seq.) currently published at 42 CFR 1001.952

(relating to exceptions)).

(2)  Referrals permitted under all present and future

exceptions to the Stark amendments to the Medicare Act

(section 1877 of the Social Security Act) and all present and

future regulations promulgated thereunder, currently

published at 42 CFR Pt. 411 Subpt. J (relating to financial

relationships between physicians and entities furnishing

designated health services).

(3)  Referrals permitted by the secretary through

regulations upon a determination that the referrals do not

pose a risk of program or patient abuse.

(e)  Prohibition.--An individual, third-party payor or other

entity may not deny payment to a health care provider involved

in a transaction or referral described in subsection (d).

Section 4.  Penalties.

(a)  Requiring refunds for certain claims.--If a person

collects amounts billed in violation of section 3(a), he shall

be liable to the individual, payer or other entity for and shall

refund on a timely basis to the individual, payer or other

entity the collected amounts.

(b)  Civil penalty for improper claims.--A person that

presents or causes to be presented a bill or a claim for a

service that he knows is for a service for which payment may not

be made under section 3(a) or for which a refund has not been

made under subsection (a) or otherwise violates this act shall

be subject to a civil penalty of not more than $15,000 for each

service.

(c)  Civil penalty for circumvention schemes.--A provider or

other entity that enters into an arrangement or scheme, such as

a cross-referral arrangement which the provider or entity knows

or should know has a principal purpose of assuring referrals by

the provider to a particular entity which, if the provider

directly made referrals to such entity, would be in violation of

this section, shall be subject to a civil penalty of not more

than $100,000 for each arrangement or scheme.

Section 20.  Effective date.

This act shall take effect in 60 days.