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MD Appeals Court Upholds State's Physician Self-Referral Ban

John Commins, for HealthLeaders Media, January 25, 2011

A Maryland state appeals court this week upheld a state law prohibiting physicians from referring patients for MRI, CT, and radiation therapy services to providers in their own group practice.

The Maryland Court of Appeals, in Potomac Valley Orthopaedic Associates, et al. v. Maryland State Board of Physicians, et al. ruled that the board was entitled to interpret and apply the self-referral statute to its administers. The court also clarified that the law's "direct supervision" exception -- which is limited to referrals to "outside entities" -- requires that the referring physician be "personally present within the treatment area when the service is being performed" and must personally provide that service or directly supervise it.

A receptionist at Potomac Valley Orthopedic Associates said the physicians' group had no statement about the ruling, and would not say whether or not it would appeal.
However, the American College of Radiology cheered the court's decision, which it called a major victory for quality patient care and patient choice.

"Studies have shown that there is very little, if any, patient benefit to self-referral of advanced imaging and radiation therapy," said John A. Patti, MD, chair of the American College of Radiology board of chancellors. "Instead, the practice often results in significant unnecessary utilization of imaging, unwarranted radiation exposure, lower quality of care and increased cost that is ultimately passed on to patients.

Patti called the Maryland law "a model to which other states should look to," and he noted it has been under attack since it was enacted in 1993.

The court ruled that the Maryland General Assembly clearly intended to exclude MRIs and CTs from the "in-office ancillary services exception," and that lawmakers rejected four attempts since 2007 to weaken the statute.

Last year, the ACR unsuccessfully led an effort to put language in the federal Accountable Care Act that would eliminate the in-office ancillary services exception for advanced imaging and radiation therapy. However, ACA requires self-referring physicians to disclose their financial interest to patients and tell them about other facilities near them.

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