Disclosure an important step in patient referral

Notifying your patients of any financial interest you have in a service they may be referred to can not only help provide another layer of liability protection, but it also can be a good business move, experts said.

Asking patients to sign a form stating they were notified is a wise practice, attorneys said. AMA policy also states physicians "must disclose" their ownership interest in a health care facility or service.

"You're protecting yourself a little from bad care lawsuits," said Lisa Sooter, an attorney with Stewart Stimmel LLP, a health care law firm based in Dallas. "You don't want patients to say, 'You referred me, but you wouldn't have if you didn't have an ownership interest.' "

Often, physicians find that when they disclose their financial interest and offer a list of competitors in the area that offer the same service, the patients will want to go to the physician-owned facility, Sooter said. If the patient trusts the physician and recognizes the practice's strong reputation, it can be advantageous to disclose your financial relationship without trying to sell your services.

"The reality is, the patients want to go to a facility where they believe their physician has something to say about the quality of care," Sooter said.

Stark "self-referral" laws, which are pursued in civil court, generally prohibit physicians from referring Medicare or Medicaid patients to a facility for "designated health services" -- most laboratory or diagnostic services offered by a hospital or clinic -- if the physician has a financial interest in that particular facility.

Anti-kickback laws, which are more general criminal statutes, prohibit the acceptance or solicitation of anything of value as an inducement for patient referrals for services payable by a government program.

However, there are safe harbor provisions that allow physicians to invest in certain in-office services and other ventures, such as ambulatory surgery centers. Considering how complicated the laws can be, though, physicians should consult an attorney before committing to an investment.

Meanwhile, some states, such as Pennsylvania and Texas, require physicians to disclose their financial interests.

Physicians have grown to understand the possibility that if they invest in ancillary services, they may someday be asked to justify their referral patterns to a government official, said health care lawyer William Maruca, a partner with Fox Rothschild LLP in Pittsburgh.

"One thing that survives after all the different Stark rules is the presumption of referral unless you can refute that you steered them to your facility," Maruca said.

Having patients sign a disclosure form does not immunize you from Stark laws. But there are other benefits, the U.S. Dept. of Health and Human Services Office of Inspector General points out in a 1998 opinion. While disclosure generally is not enough to protect a practice from program abuse, "effective and meaningful disclosure offers some protection against possible abuses of patient trust," the opinion states.

Disclosure also deals largely with freedom-of-choice issues. By telling patients that you have a financial interest in a facility, you're giving them a chance to go elsewhere for their service, said Patricia Trites, CEO of Healthcare Compliance Resources, a consulting and education firm based in Augusta, Mich.

Freedom-of-choice notification is a common practice among hospitals and nursing homes, and it will likely find its way into physician practices in the future, Trites said.

"I think it's something that's going to evolve into a health care industry standard," she said. "When you're giving disclosure, you're offering informed consent."

Practices that do notify their patients of ancillary services often use a standard form that includes a list of businesses in the area that offer the intended service. The list should be a representative cross-section of competitors, and it should be neutral, meaning you shouldn't exclude nearby competitors to make your own facility or service look more convenient, Maruca said.

In contrast, some groups also use disclosure notices to prove they do not have a financial relationship, Trites said. Practices that cater to patients who need durable medical equipment, for example, may make referrals that are convenient for the patient, but they often will point that out with a disclosure form, she said.