Senate Panel Guts Bill to Control Physician ‘Self-Referrals’

In the face of strong opposition from organized medicine, a bill to stop physicians from profiting on referrals was stripped of all of its remaining muscle by a Senate committee Wednesday.

The Industrial Relations Committee voted 5 to 0 to remove all specific prohibitions and penalties that would have barred physicians from referring patients to labs and other facilities in which they hold a financial interest.

After hearing three hours of testimony from opponents, the committee substituted toothless general language of the Legislature’s intent to address the problem.

When the bill by Assemblywoman Jackie Speier (D-S. San Francisco) passed the Assembly in January, it had broad authority, banning most “self-referrals” from which physicians profit.

But even before Speier took her measure to the committee Wednesday, she had agreed to limit it to doctors who examine and treat injured workers covered under workers’ compensation.

Speier contended that the measure could save California employers $350 million by avoiding unnecessary tests and services if the doctors were not allowed to profit by ordering physical therapy, computerized X-rays, body scans and psychological exams.

But Sen. Bill Lockyer (D-Hayward) called for the amendment to strip the bill of those provisions. Instead, he said, the legislation will become part of a package to address the high costs and low benefits that have plagued California’s workers’ compensation system.

The committee action left the Speier bill technically alive with the possibility of reviving it later in the summer.

Many physicians, following the lead of the California Medical Assn. and other physician groups, complained that the measure would disrupt good patient care while it forced them to sell off lawful investments.

Representatives of the association conceded that there have been some documented instances of doctors referring patients for profit, but they argued that forcing a whole class of doctors--those who specialize in workers’ compensation cases--to give up their investments was discriminatory and set a harmful precedent.