Self Referral for Diagnostic Testing

Maryland enacted a self referral law in 1993 to help decrease the costs of health insurance and medical care after concerns that Maryland doctors would order unnecessary testing if they had a financial stake in ordering the testing. I think this was a problem with few doctors but as we saw with the St. Joe’s stent debacle, it does not take many doctors to create a real problem for patients. Accordingly, Maryland-Self Referral Law prohibits any self-referral or any arrangement which has the practical effect of a self referral.

Where there is radar, there is usually a radar detector. I don’t mean that necessarily in a sinister way but doctors are looking to make a profit like anyone else. It does not necessarily mean they plan to order unnecessary tests but if they see a chance to make byproduct business, many doctors want to take that opportunity.

In Potomac Valley Orthopaedic Associates, et al. v. Maryland State Board, doctors appealed a ruling by the Maryland State Board of Physicians forbidding orthopedic doctors from referring patients for an MRI to a facility that is owned or leased by the orthopedic group in which the doctor holds a financial interest.

Doctors appealed the case first to the Montgomery County Circuit Court where Chief Judge DeLawerence deferred to the Board’s decision in spite of his conclusion that the Board had “eschewed the plain language of the statute,” and had “added and deleted statutorily provided words and definitions,” and reached a conclusion contrary to the plain words of the statute.

Why the disconnect? Maryland courts review agency decisions in these cases in the light most favorable to the agency. So the Board’s decision carried with it the presumption of validity. The deck was definitely stacked for the Board in this appeal.

Anyway, the case went directly to the Maryland Court of Appeals. Because MRI and CT services have become standard diagnostic tools not only for orthopaedists but for urologists, cardiologists, ER doctors, neurologists, and tons of other doctors, this case ginned up some interest. The American College of Radiology also had an interest (and were giddy about the court’s ruling)

The Maryland high court found that the ban on doctor self-referrals applies to an orthopedic surgeon’s referral of a patient to another health care provider in the same group practice for an MRI or a CT scan if the referring doctor has a financial interest in the health care provider receiving the referral.

The ruling applies to orthopedic doctors ordering MRI and CT scans but I would think it will be interpreted more broadly.

You can read the opinion here.