CAA Legislative Inquiry on 3PA Contracts
We are aware that some 3PA contracts may violate Business and Professions Code 650 (a) which prohibits licensees from offering, paying, receiving or accepting anything of value from a third party for the referral of patients. The text of the code is at the bottom of this email for your reference.
The types of actions that appear to be illegal include:
- Free hearing tests before fitting hearing aids (offering something of value to become the rendering provider) if you routinely bill for or charge for hearing tests.
- Accepting a lower fitting fee for lower technology despite doing the exact same work to fit the hearing aids (offering a discount for a referral).
- Promoting a higher technology product in order to get a larger fitting fee (accepting a larger commission) despite doing the exact same work.
- Sharing the fitting fee (paid by the patient to the 3PA) between the audiologist and the insurance company (fee splitting). Even the fitting fee itself is an “item of value.”
Our intention is to send out another email or two about this subject in hopes that everyone will read up and consider the issue. We will follow this educational period with a survey asking your input. In the meantime, we welcome your immediate thoughts, questions, opinions at: legislation@caaud.org.
Thank you,
Leigh Kjeldsen, Au.D. and Kaitlyn Bruchierri, Au.D.
| BUSINESS AND PROFESSIONS CODE 650 Section 650(a) of the Business and Profession Code (BPC) states “…..the offer, delivery, receipt or acceptance by any person licensed under this division….. of any rebate, refund, commission, preference, patronage dividend, discount or other consideration, whether in the form of money or otherwise, as compensation or inducement for referring patients, clients or customers to any person, irrespective of any membership, proprietary interest, or co-ownership in or with any person to whom these patients, clients, or customers are referred is unlawful.” |
Interpretation: Business and Professions Code 650 prohibits licensees from offering, paying, receiving or accepting anything of value from a third party for the referral of patients. Section 650(a) applies broadly to cash payments, gifts, discounts or other exchanges of value between a licensee and a third party for the referral of patients.
Fee splitting and kick-back definitions and prohibitions: Kickbacks and fee-splitting are related, in that a “kickback” involves the payment to or from a physician (or, depending on the state, chiropractor, acupuncturist, nurse, other licensed healthcare practitioner) in exchange for a referral (which can be taking a reduced fitting fee), while fee-splitting involves splitting the physician’s fee to the patient between the physician and a third-party. B&P 650 prohibits either/both. The bottom line is that referrals must not “be induced… by considerations other than the best interests of the patients” (i.e., by promise of financial remuneration). Please see the documents linked below for more information on this subject.
According to the California Attorney General, being listed on a roster of participating physicians constitutes an unlawful referral, since "refer" means "send or direct for treatment."
We encourage you to download the documents below to read further into the legal definitions and issues around this subject:
Fee-spiltting 101 for medical doctors, chiropractors, and others
Corporate Practice of Medicine & Anti-Kickback / Fee-Splitting Rules: Deep Down the Regulatory Rabbit Hole
| We want to hear from you about this issue. Please contact us to share your thoughts, questions, and opinions on this subject with the CAA Legislative Committee. |