Mo. bill would regulate doctor billing

Wednesday, April 30, 2008

KANSAS CITY, Mo. -- A bill before the Missouri House would prohibit doctors from marking up the cost of certain anatomical laboratory work -- such as skin biopsies and Pap tests -- that are performed by outside laboratories.

The bill, which has been approved by the Senate and is awaiting floor debate in the House, would prohibit what's known as "pass-through" billing.

That's when a doctor sends a patient's test sample to an outside laboratory for analysis. The lab charges the doctor a discounted price for the work, but the doctor bills the patient's insurance company or the patient a higher amount.

The extra amount is profit for the doctor, and most patients don't even know what has happened.

"It seems to me that we should protect the patient from being charged [by a doctor] for a service that someone else is doing," said Rep. Kevin Wilson, R-Neosho, who is sponsoring the bill in the House.

Opponents argue that the bill gets the state involved in pricing decisions that should be left to private practice physicians and could hurt services for some patients, particularly the uninsured.

The bill would require doctors or laboratories that actually perform the anatomical services to send bills directly to insured patients.

Doctors who send the tests to labs could bill uninsured patients for the services but could not increase the charges. The doctors would have to tell the uninsured patients who performed the pathology services and the cost of each service.

Nineteen states have passed bills that either require direct billing or prohibit markup of pathological services. Medicare and Medicaid have already prohibited doctors from marking up the cost of the anatomical laboratory work they don't perform.

And the American Medical Association's code of ethics says no physician should be paid for a service that he or she does not perform or charge a markup on services performed by others.

The law would reduce the potential for abuse even as doctors are ordering more tests than ever for their patients, said Dr. Joseph Lombardo, a pathologist who is medical director of hospital laboratories in the St. Charles area.

Lombardo said tests for such things as skin cancer and prostate cancer, as well as procedures such as colonoscopies, have grown dramatically in the past 10 years.

"The general population has never been, on such a broad scale, subjected to so much testing and put at so much risk for markup charges," Lombardo said.

He cited a 1993 study by the Center for Health Policy Studies that found two states that didn't have direct billing laws had 9.6 percent higher costs per test and ordered 28.3 percent more tests than two states that required direct billing.

"Patients waiting on biopsy results and wanting to know if they have cancer should not be exploited by markups," he said. "They need to know the lab doing the work wasn't chosen for cost rather than quality."

But Dr. Arthur Freeland, a family practice doctor in Kirksville, said the bill is a solution looking for a problem, at least in Missouri. Freeland is a vice president of the Missouri Academy of Family Physicians, which testified against the bill in the Senate.

Freeland said before the session, pathologists could not provide the academy with any specific examples of unethical markups by Missouri doctors.

"It was sort of, 'This is probably happening in (Los Angeles) or somewhere," he said. "It was that kind of response, 'It must be happening somewhere."'

Missouri private practice doctors and their patients, particularly those in small towns, would be hurt by the bill precisely because it removes physicians' discretion on pricing, he said. Most of Freeland's anatomical lab work is Pap smears, and he currently negotiates a volume discount for the anatomical services from a lab about 100 miles from Kirksville.

That arrangement reassures the lab that it will get paid, while also assuring his patients that they are getting a good price, he said. Freeland said he has often reduced the price for some cash-paying patients who need the tests but are concerned about costs.

"The lab has no appreciation for who has insurance or who is paying cash, but patients know I've represented them to get the best price," he said.

Freeland said the markups on his tests are not for profit but to cover his risk that a patient might not pay a bill.

"It's not an unconscionable markup, and it is more convenient for everyone," he said. "(The measure) takes away my control of what the patient has to pay, and I'm the one looking out for them."

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