[Congressional Record Volume 141, Number 127 (Wednesday, August 2, 1995)]
[Extensions of Remarks]
[Page E1595]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


          THE PHYSICIAN SELF-REFERRAL IMPROVEMENT ACT OF 1995

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                        HON. FORTNEY PETE STARK

                             of california

                    in the house of representatives

                        Wednesday, August 2, 1995
  Mr. STARK. Mr. Speaker, I am today introducing legislation to 
clarify, simplify, and improve the Medicare and Medicaid physician 
self-referral legislation, while maintaining its important protections 
against abuse of patients and expensive over-utilization and over-
billing of the Medicare and Medicaid Programs.
  Last month, when Caremark International Inc., a former health care 
giant pleaded guilty to Federal fraud and kickback charges, two 
physicians were accused along with the company. It is predicted that 
several hundred more doctors eventually could face criminal prosecution 
before the investigation concludes--that is because Caremark's guilty 
pleas stemmed from paying doctors to induce referrals of Medicare and 
Medicaid patients to the company's several home care businesses. 
Although the Caremark case is not a pure physician self-referral case, 
it confirms that physicians are vulnerable--vulnerable to greed; 
vulnerable to pay-offs; and vulnerable to temptation.
  Without a doubt, physician self-referral is bad for the public and 
bad for the patient. Study after study has shown that it inevitably 
encourages unnecessary duplication and overutilization of facilities 
and services, producing an overall significant increase in cost to the 
patient and to the Treasury in higher Medicare and Medicaid payments. 
As shown by the Caremark case, this type of unethical arrangement gives 
doctors powerful incentives to bend their professional judgment. 
Without laws to prohibit abusive arrangements, doctors will continue to 
drift toward the opinion that medicine is just a business, and patients 
are theirs to be bought and sold.
  Clarification of current law is necessary. Perhaps the main problem 
with the law is the administration's inexcusable delay in releasing the 
antireferral regulations. The lack of guidance has contributed to both 
confusion of the doctors and to the bank accounts of lawyers, who have 
often created unnecessary fears about the legislation. We must clarify, 
where necessary, without creating loopholes that would essentially 
negate the law. Last year, we worked extensively with a number of 
provider groups and organizations to draft amendments during health 
reform, which were included in H.R. 3600, but that unfortunately did 
not pass. Today, I offer legislation to amend and clarify the physician 
self-referral law.
  Today's bill includes a number of provisions designed to make the law 
clearer, more workable, and more acceptable to the provider community. 
The bill does the following: repeals the exception for physicians' 
services; includes durable medical equipment and parenteral and enteral 
nutrients, equipment and supplies in the exception for in-office 
ancillary services; excepts shared facility services that are furnished 
under certain conditions; creates a prepaid plan exception in the case 
of a designated health service, if the designated health service is 
included in the services for which a physician or physician group is 
paid only on a capitated basis by a health plan pursuant to a written 
arrangement and in which the physician or the physician group assumes 
financial risk for those services; includes an exception to the 
prosthetics, orthotics, and prosthetic devices and supplies designated 
health service by providing for prosthesis replacing the lens of an 
eye, eyeglasses, or contact lenses; and exceptions relating to 
compensation arrangements are deleted and language is inserted to 
define an acceptable compensation arrangement.
  Physician self-referral has no inherent social value, biases the 
judgment of physicians, and compromises their loyalty. As the Caremark 
case exhibits, physicians are susceptible to the same temptations as 
any other person. This bill clarifies and simplifies many of the 
questions raised by current law while maintaining important protections 
for patients and for the taxpaying public.


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