Are 'self-referrals' a conflict of interest?

Many query doctors' role in filling hospitals' HIV units

With even the American Medical Association divided on the issue of "self-referrals" (doctors referring patients to clinics or hospitals in which they have a financial interest), and some states passing laws to restrict the practice, the ways in which hospitals arrange with doctors to fill HIV units is coming under scrutiny from medical ethics professionals.

A survey of Southern California doctors specializing in HIV care about their attitudes concerning joint financial ventures between doctors and hospitals and the referring of AIDS patients to such facilities, together with a lengthy report on self-referral laws, both prepared by the Renaissance Medical Group of West Covina, were presented at the National Lesbian and Gay Health Conference and AIDS/HIV Forum in Los Angeles in July.

In some cases, hospitals are entering into joint ventures with doctors who specialize in treating AIDS patients to establish and maintain special HIV units, known as ISUs (Immune Suppression Units). Sometimes the doctors invest money up front. In other cases, they need only arrange to admit their patients to the unit.

Doctors affiliated with HIV units often get a cut of the unit's profits through a monthly stipend (usually $10,000 to $20,000 per month). In some cases, rather than having a direct financial stake in the unit, the doctors receive a stipend in connection with holding the title of "medical director."

It is the direct linking of referrals to doctor income that is considered unethical by almost everyone (although not illegal in all cases); many say they are aware of the practice, but no one wants to admit being involved in it -- no one except one West Covina doctor who claims he was a part of just such a venture in the 1980s and now is on a campaign to end them.

"God damn it, it's wrong!" said Dr. James Lee. "It's wrong to get involved in something that increases costs. The profits go back to the corporations and the doctors, and the medical patients have to care for themselves."

The so-called "kickback schemes" are illegal if the facility accepts Medicare and/or state health care program funds, and the U.S. Health Care Financing Administration is in charge of enforcing kickback laws.

Lou Morris, an attorney with the U.S. Health and Human Services Department in Washington, D.C., confirmed that by simply eliminating patients from the HIV units whose bills are paid by government-funded health care programs, putting those people in other parts of the hospital and not billing them through the special units, the hospitals can keep the HIV units exempt from the kickback laws. Plus, a violation requires "specific intent," he added.

And in 1991, the Office of the Inspector General of HHS additionally passed "safe harbor" rules, exempting more joint ventures from the kickback laws.

Then two months ago, the American Medical Association's House of Delegates, at a policy-setting meeting, passed a resolution saying that self-referral is not unethical if the doctor's financial interest is disclosed to the patient. This was in contrast to an earlier ethical finding from the AMA's Council on Ethical and Judicial Affairs.

"The council has said it is not right," said AMA Communications Director Lydia Steck. Specifically, the council said physicians should not refer patients to a health care facility in which they have an investment interest and "at which they do not directly provide care or service."

Also in June, state legislation that would have made it illegal in California for doctors to send their patients to facilities in which they had a "personal financial interest" was so watered down on its way through the lawmaking process that it was turned into a bill outlawing self-referrals only in workers' compensation cases.

Midway Hospital in Los Angeles is one of those with an HIV unit that is a joint venture with a group of doctors specializing in HIV care.

Sharon Clancy, spokeswoman for the hospital, said information about the structure of the joint venture is confidential. "That's a private investment," she said. "Private investments are not public information."

The ISU at Midway has been operational for six years, and this year is completing an expansion from a 15-bed unit to 40 beds.

About eight months ago, the ISU at Midway employed a full-time salaried hospital employee to serve as the unit's clinical director, Clancy added.

Some other Southern California hospitals have arrangements with doctors who serve as part-time "medical directors" on a fee basis and also refer HIV-positive patients to the AIDS units they are paid to administer.

The 1991 "safe harbor" rules allow for such remuneration if it is linked solely to services provided by the manager, and not to the volume of referrals generated.

At the Medical Center of North Hollywood, Sherry Reese, vice president of marketing, said several independent doctors admit patients to the medical center's HIV unit, including two who act as co-medical directors, and each receives a stipend. Reese said the medical directors have many duties for which they are paid by the unit.

"You're required by law to have a medical director," Reese added. "The medical directors have certain responsibilities under the law. There are a variety of doctors (who admit patients). It's not like Sherman Oaks, which has a specific medical group."

David Levinsohn, chief executive officer at Sherman Oaks Community Hospital, confirmed that doctors at two medical groups receive directorship stipends in connection with the HIV unit there, but he too insisted that "ours is definitely not a joint venture."

Levinsohn said Dr. Michael Gottlieb of the Gottlieb Medical Group and the nine doctors at the Pacific Oaks Medical Group (as a group) receive stipends for acting as co-medical directors, but he said the fee is not based on the admission of patients.

"They don't own a stake in the unit at all," said Levinsohn. "A joint venture means when someone actually profits from admitting people to a hospital. Then there is a directorship; they have to put in a certain amount of time. Every single hospital in this city has medical directors of certain departments. There is no pressure on the doctors to admit a certain number of patients."