A Plan of Care to Protect Physical Therapist Practices

By Dave Mason 

APTA looks to new strategies to combat the reemergence of physician ownership of physical therapy services. 

Make no mistake: Physician ownership of physical therapy services (POPTS) is one of the biggest threats to autonomous practice of physical therapy. And if you don't think it affects you, you'd best think again. 

Physical therapists (PTs) in private practice across the country are finding themselves confronted with one of the most serious threats they've ever faced. POPTS steal away their patients and virtually eliminate their ability to attract new clients. In many cases it cripples PTs' ability to carry on autonomously. 

The Economics of Patient Referral 

Physicians' control of patient/client referrals and access to PTs dates back to the dawn of the physical therapy profession. The traditional model of medical practice in the 20th century revolved around the physician as gatekeeper to physical therapy and other health care services. As PTs grew in education, training, and experience, it probably was inevitable that the resulting development of independent physical therapy care would lead to confrontation. 

The medical economics of the 1970s and 1980s gave rise to increasing competition for health care dollars. Doctors began to reconsider the financial wisdom of referring patients to other health care professions when they could provide the care and receive the payment themselves. They had the ability to close the gate because they controlled the referral of the patient-no referral, no lost revenue. It was a small step to expand the office, hire a PT (or a less-trained, less-expensive surrogate, if state law allowed), and provide services themselves. 

In the early 1980s, APTA began mounting opposition to the development of POPTS, focusing on the problems created when physicians can derive increased compensation from the delivery of physical therapy or other services to which they refer patients. APTA's early efforts concentrated largely on working with its state chapters to revise state physical therapy acts to make a PT's participation in a physician-owned practice grounds for losing his or her license. 

Not surprisingly, these efforts were forcefully opposed by physician associations, and as a result were largely unsuccessful. Laws restricting POPTS were enacted in Delaware and Missouri but relatively little progress was made elsewhere. APTA and its chapters pursued other approaches to discourage the spread of POPTS, mindful of ensuring that none strayed into activities that could raise antitrust questions. Refusing to carry advertising for POPTS arrangements and similar strategies had some limited success in slowing their spread. 

Stark Reality 

Efforts to stop inappropriate referral arrangements got a significant boost in the mid-1980s when Congress took an interest. Congressman Fortney "Pete" Stark (D-CA) became concerned about the impact on Medicare beneficiaries if physicians were able to benefit financially by referring patients to services in which they had an ownership interest. Interest in Congress was heightened by the release of a study conducted by Jean Mitchell, PhD, of Georgetown University on the impact of physician ownership on charges, utilization, and profits of physical therapy services. The Mitchell study helped build support in Congress for legislation to outlaw inappropriate physician ownership referral arrangements. Despite strong opposition from physicians, Stark's self-referral prohibition bill was enacted into law in 1989 and was expanded to include physical therapy services in 1993. 

Despite its positive intentions, however, the Stark self-referral ban encountered problems from the time of its conception. Physicians were able to keep the referral prohibition from applying to ancillary services provided in the physician's office. Other exceptions that had been intended to prevent referral-for-profit schemes led to new and creative financial arrangements that raised more questions about which practices violated the law. The Health Care Financing Administration (now the Centers for Medicare and Medicaid Services) struggled to develop and enforce regulations that carried out the intent of the Stark law. Efforts over the years to refine both the statute and the regulations have been increasingly frustrating. 

Passage of the self-referral law did dramatically chill the spread of POPTS through most of the 1990s. Potential risks and liabilities under the new law generally were sufficient to dampen the enthusiasm of most physicians for setting up their own physical therapy practices. As the 1990s drew to a close, however, the cumulative pressure of managed care cost-containment efforts in the private sector and insufficient Medicare payments pushed physicians to look for ways to make up for lost income. With the creative use of exceptions in the rules and with loose enforcement, the self-referral chill began to thaw-and physician interest in physical therapy services as a revenue source reheated. 

The resurgence of POPTS comes as federal and state policymakers have little interest in or will to take on physicians and rein in self-referral arrangements. In fact, the current policy environment appears to be more sympathetic to the development of creative physician practice models and less sensitive to the risks associated with incentives to self-refer. In regulations issued late last year, CMS authorized Medicare carriers to enroll PTs and occupational therapists (OTs) employed by physician groups as PTs or OTs in private practice, and ruled that no on-site supervision by the physician is required if the PT or OT obtains a separate provider number. With that decision the agency brushed aside concerns APTA had raised about the risk of unlicensed personnel providing services in physician offices, and about potential fraud and abuse that could result when doctors refer Medicare beneficiaries to practices in which they have a financial interest. In CMS's view, established procedures for issuing provider numbers are sufficient to address these issues. 

Leveling the Playing Field 

There appears to be concern among some federal policy experts about the potential impact on patients of lax regulation and unbridled competition among providers of health care services. Last fall, APTA met with officials from the US Department of Health and Human Services' Office of Inspector General to participate in a study of "incident to" billing of physical therapy services by physicians. The 6-month probe examined physician offices to determine who provides physical therapy, whether those services are skilled, and whether they are properly billed. APTA called the inspector general's attention to potential problem areas with these arrangements. At this writing, the report's release is anticipated by early this fall. 

The Federal Trade Commission (FTC) is another agency with traditional interest in health care competition. APTA CEO Francis J Mallon, Esq, testified in June as part of a series of joint hearings by the FTC and the US Department of Justice (DOJ) on health care competition law and policy. In his remarks, Mallon described the requirement of physician referral as "one major obstacle for patients seeking access to physical therapists." He further called it "something of an anachronism that is slowly being removed from, or modified in, state laws." 

Mallon also warned the FTC that mandated physician control over access to PTs can distort the traditional professional relationship between physicians and PTs-"especially at times when physician revenues are adversely affected by managed care or government policies." Physicians and medical practice management consultants may see physical therapy as "a readily available means of negating some of the revenue losses," Mallon testified, adding that "the requirement that patients obtain a physician referral to receive services from a physical therapist clearly creates an unfair and unlevel playing field between physician-owned physical therapy practices and practices owned by physical therapists." 

The FTC/DOJ hearings concluded this summer. APTA is continuing to provide information to FTC staff regarding the POPTS problem. 

New Strategies for Meeting New Challenges 

The Board has formed a seven-member task force chaired by APTA Treasurer Francis J Welk, PT, MEd, to undertake research and analysis of federal and state laws and regulations and collect the practice information necessary to develop effective strategies to respond to the spread of POPTS arrangements. A major focus of the task force's work will be to provide both offensive and defensive strategies for use by PTs confronted with a physician-owned practice. APTA's Web site already offers information on federal self-referral rules (go to www.apta.org and click on "Government Affairs," then "Regulatory Affairs," then "Fraud and Abuse"). Strategies developed by the task force to help PTs deal with POPTS are being posted as they become available. 

There is no quick solution to the threat posed by POPTS. In order to convince federal and state policy makers that this problem must be dealt with, PTs must be able to demonstrate clearly anti-competitive behavior by physicians that increases health care costs and threatens patient care. Physician control of referrals also is a critical component of leveling the competitive playing field and establishing the autonomy of PTs as the appropriate source of the services they are ideally suited to provide by dint of their education, training, and experience. 

The fight against POPTS affects the future of the entire profession. No matter how difficult the fight, it is one that we should not and cannot avoid, and one we ultimately must win.
__________________
Dave Mason is vice president of the Government Affairs Department at APTA. He can be reached at davemason@apta.org.

_{PT Magazine - October 2003}