ROBYN JACKSON

If you ask physical therapists how they feel about Stark Laws, you get a variety of responses. Some are adamant that an exemption that allows physicians to offer physical therapy services in their offices interferes with patient choice and is hurting private practice, while others say it's not that big a deal.

Richard W. Shutes, an Ocala physical therapist, is in the former camp.

"I am familiar with a number of therapist-owned practices that have been forced out of business as a result of physician self-referral," Shutes said. "Our experience is that when a physician opens his own PT practice referrals to outside providers all but disappear."

Shutes has had his own practice for 24 years. He specializes in orthopedics, including sports, occupational health and hands.

"As 'gatekeepers,' physicians enjoy unfettered control of the physical therapy market, having the exclusive authority to prescribe the service while at the same time owning the clinics to which they refer," Shutes said. "It’s a huge problem, particularly in today’s healthcare system where costs continue to escalate. Physical therapy costs alone are estimated to be at least 40 percent higher when physicians self-refer; when profit is a motive for the patient’s referral. What’s so striking then is that such a clear conflict of interest is allowed to exist at all; a conflict which squanders precious healthcare dollars."

The biggest issue is that the Stark Laws cannot be enforced, said Steve Forbush, president of the Arkansas Physical Therapy Association, who feels that the exemption is not much of a problem.

"I believe there are so many diluting exemptions in the federal laws at this time that the Stark Laws do not have any clout on the state or national level and can't really be enforced," Forbush said.

Stark Laws are named for U.S. Congressman Pete Stark, who sponsored the legislation in the Omnibus Budget Reconciliation Act of 1989 which barred self-referrals for clinical laboratory services under the Medicare program, effective Jan. 1, 1992. This provision is now known as "Stark I." The law included exceptions to the ban in order to accommodate legitimate business arrangements. The Omnibus Budget Reconciliation Act of 1993, known as "Stark II," expanded the restriction to a range of additional health services and applied it to both Medicare and Medicaid. Passage of "Stark II" raised concerns among some provider groups, including physical therapists.

The American Physical Therapy Association has been fighting the In-Office Ancillary Services Exemption for years. The exemption allows physicians to own and refer to the services that they own.

"The current loopholes in the Stark regulations allowing physicians to employ/own PT have had a devastating effect on the PT profession, as well as restricting patient choice and increasing healthcare costs," said Justin Elliott, associate director, State Government Affairs, for the American Physical Therapy Association in Alexandria, Va. "Some physicians have used the loopholes to exploit PT for their own profit."

Physicians and their legal representatives argue that providing physical therapy to their patients is a legitimate right, not a conflict of interest.

"Physicians ought to be able to employ a physical therapist for rehabilitation services," said Steve Keene, general counsel for the North Carolina Medical Society in Raleigh. "We think it's good for patient care. We would oppose any law that prevents physicians from employing physical therapists."

Officials of the Florida Medical Association did not respond to requests for interviews.

The American Physical Therapy Association issued a White Paper in 2007 that defines the issue:

"The term 'referral for profit,' in the context of physical therapy practice, describes a financial relationship in which a physician refers patients for physical therapy treatment and derives a financial benefit from the referral. In the most common referral-for-profit arrangements, physicians have an ownership interest in the physicial therapy practice to which they refer, known as physician-owned physical therapy services, or POPTS.

"The American Physical Therapy Association has long held that POPTS present conflicts of interest for health care providers, diminishing patients' right to choose a physical therapist, and could subject patients to unnecessary inconvenience, expense and treatment. In a January 2005 position paper, APTA restated its longstanding opposition to POPTS and support for legislative and regulatory measures at the state and federal levels to ban the practice."

The APTA conducted a survey in February 2007 of members of its private practice section asking for feedback on their experience with POPTS. Letters and e-mails cited loss of patient choice and superfluous treatment issues, shoddy care and unqualified staff at POPTS establishments, as well as in overall loss of referrals for traditional private physical therapy clinics, according to the White Paper, which added that nearly 6 percent of the physical therapists who responded to a 2004 survey reported receiving threats of withheld referrals from physician-owned practices. More than 85 percent of the responding therapists said the threats were made to induce the sale of their practices to the physicians.

An in-office physical therapy service can add hundreds of thousands of dollars in annual revenue to a medical practice, and take business from private physical therapy practices, the APTA maintains.

"We are seeing abusive situations where physicians are using physical therapy to boost their profits, or where the patient really doesn't need the service," said Roshunda Drummond-Dye, associate director of federal regulatory affairs for the APTA. "We have been seeing a lot of abuse from a national standpoint. (The federal government is) hearing from occupational therapists, people in medical imaging, pathology and other areas. It is a growing problem. We've put forth several proposals to the federal government to take out physical therapy from the Stark Laws In-Office Ancillary Services Exception."

Shutes believes the exemption allows conflict of interest as long as the service is performed in the physician's office, and cited several legal decisions, including a 2006 South Carolina Supreme Court decision that declared that POPTS constitute illegal fee splitting and kickbacks. He also cited a 2006 decision by the U.S. Office of Inspector General that declared that "91 percent of physical therapy billed by physicians failed to meet program requirements, resulting in $136 million in improper payments."