CAA Legislative Inquiry on 3PA Contracts

Let us know your thoughts on this subject by emailing us at
When we did our legislative survey last fall, one issue of note for some members is the legality of third- party (3PA) hearing aid contracts.  Our legislative committee is in the process of gathering information about this subject including consulting with the SLPAHAD board, talking to the leadership of the Hearing Healthcare Providers (HHP) and engaging with our membership. 
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:
This inquiry has two purposes.  One is educating our membership about the issue of 3PA contracts and the other is to start a conversation around what the membership would like us to do about this issue.  We want audiologists in the state of California to be practicing within the bounds of the law and we want California audiologists to be able to serve the hearing-impaired population of our state. 
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:
Thank you,
Leigh Kjeldsen, Au.D. and Kaitlyn Bruchierri, Au.D.

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.