Mid-Atlantic Health Law TOPICS

The Maryland Patient Referral Law (the MPRL) prohibits health care practitioners from referring patients to health care entities with which the referrer has a financial interest, unless the arrangement qualifies under one of the MPRL's several exemptions.

Recently, the Maryland Board of Physicians was asked by CareFirst and IWIF to determine the legality of certain theoretical fact patterns involving orthopaedic surgeons who refer their patients for magnetic resonance imaging (MRI) services provided by the orthopaedic surgeons' group practices. On December 20, 2006, the Board concluded in a declaratory ruling that such referrals generally violate the MPRL. That ruling is currently being appealed, and may be overturned, modified or approved.

The cornerstone of the declaratory ruling is the Board's interpretation of a certain "carve-out" to the in-office ancillary services exemption to the MPRL. The in-office ancillary exemption permits health care providers to refer their patients for ancillary services provided in the referrer's office. However, the MPRL explicitly carves out MRIs, CTs and radiation therapy services from the definition of in-office ancillary services if such services are provided by a practice group that includes any non-radiologist.

The Board believes that the intent of this carve-out was to prohibit non-radiologists under all circumstances from referring their patients to MRIs that the non-radiologists operate. Accordingly, the Board declared that two other MPRL exemptions, the group practice exemption and the direct supervision exemption, are also not available to an orthopaedic surgeon who refers his or her patients for MRI services provided by that orthopaedic surgeon's group practice.

Question: Why doesn't the group practice exemption apply to an orthopaedic surgeon who refers his or her patients for MRI services provided by that orthopaedic surgeon's group practice?

Answer: The Board believes that the group practice exemption only applies to referrals within a group practice when a physician transfers a patient to another physician in the group for treatment, but not for services or tests.

Question: Why doesn't the supervision exemption apply to an orthopaedic surgeon who refers his or her patients for MRI services provided by that orthopaedic surgeon's group practice if the referring orthopaedic surgeon is available for consultation in the building where the MRI scan takes place?

Answer: While the term "direct supervision" is defined in the MPRL to mean that the referring doctor is available for consultation in the building where a service or test takes place, the Board declared that the direct supervision exemption does not apply to referrals within a group practice, but only to referrals made to a health care entity other than the referring physician's group practice.

Question: Did the Board distinguish between referrals by employees versus owners of a group practice?

Answer: Yes. The Board recognized that non-owner employees of a non-radiologist group practice may refer patients for MRI services provided by that group practice so long as the employee is not directed to refer patients to the group's MRI.

Question: Is the Board's ruling binding?

Answer: Yes and no. The declaratory ruling indicates the Board's position regarding the MPRL. Therefore, it is likely that the Board will now attempt to enforce its ruling against doctors who ignore the ruling. Nevertheless, the ruling is being appealed, and may be affirmed, modified or overturned in court.

Question: Does the ruling apply to both past referrals and future referrals?

Answer: Because the Board recognized the complexity of both the MPRL and the Board's interpretation of the MPRL, the Board concluded that the Board would only apply the ruling to physician conduct that occurs after December 20, 2006. That means that the Board will not fine doctors or suspend their licenses for past referrals. However, it should be remembered that patients and payors may seek the return of monies paid for services provided in violation of the MPRL. Therefore, patients and payors may still try to recoup amounts paid in regard to past referrals.

Question: Does the Board's ruling affect services other than MRI services?

Answer: Yes. Since CT and radiation therapy services are also included in the in-office ancillary carve-out, those services are directly impacted by the ruling. Moreover, all other health care services are also affected by the Board's interpretation that the group practice exemption does not apply to services or tests, and by the Board's interpretation that the direct supervision exception only applies to referrals made outside of a group practice.

Question: Is the Board right?

Answer: The Board believes that the intent of the in-office ancillary MRI, CT and radiation therapy services carve-out was to prohibit non-radiologists from referring their patients to obtain such services from entities owned by such non-radiologists under all circumstances. To give effect to that view, the Board has adopted a strained interpretation of the language of two other MPRL exemptions. Ultimately, the Court of Appeals of Maryland will have the last word as to whether the Board is correct or incorrect.