02 DEPARTMENT OF PROFESSIONAL AND FINANCIAL REGULATION

031 BUREAU OF INSURANCE

Chapter 870: HEALTH CARE PRACTITIONER SELF-REFERRALS

Section 1. Authority and Purpose

This Rule is adopted by the Superintendent of Insurance, pursuant to 24-A M.R.S.A. § 212 and 22 M.R.S.A. §§ 2085 and 2087, to provide standards and procedures for the administration of 22 M.R.S.A. Chapter 414, the Health Care Practitioner Self-Referral Act. The purpose of this Rule is to set forth criteria for determining whether there are adequate safeguards against the conflict of interest that may arise when health care practitioners self-refer patients to facilities in which they have an investment interest, and to establish a process whereby a health care practitioner can apply to the Superintendent for an exemption authorizing referrals to a practitioner-owned facility.

Section 2. Definitions

A. "Community," with respect to a health care practitioner, means the smallest geographic service area (town, region, county, state) that encompasses 80% of the practitioner's clients.

B. "Outside facility" means a facility that is not part of the practitioner's individual or group practice.

Section 3. Prohibited Referrals

A health care practitioner may not refer any patient to an outside facility in which he or she is an investor, other than:

A. To a facility certified by the Superintendent as an exempt practitioner-owned facility pursuant to Section 4 of this Rule;

B. To a facility within which the practitioner directly provides health services and will be personally involved in the referred patient's care;

C. Pursuant to a contract with a health maintenance organization, or under a preferred provider arrangement, in which the patient is enrolled; or

D. An independent publicly traded facility in compliance with 22 M.R.S.A. § 2085 (3).

Section 4. Certification of Exempt Practitioner-Owned Facilities

A facility in which a health care practitioner has an investment interest may be certified to accept self-referrals from the practitioner only if the practitioner demonstrates to the satisfaction of the Superintendent that the facility satisfies the requirements of this Section.

1. A. Community need. No feasible source of alternative financing is available and community need for the practitioner-owned facility is further demonstrated by at least one of the following criteria:
2. 1. There is no other facility of reasonable quality that provides appropriate service to the community;
3. 1. The use of other facilities is onerous or creates too great a hardship for patients; or
4. 1. The facility is formed to own or lease medical equipment that replaces obsolete or otherwise inadequate equipment in or under the control of a hospital located in a federally designated health manpower shortage area; or
5. 1. The fees charged by the facility for the health care service are competitive with the fees charged outside the community.
6. B. The following requirements must be met in order for the facility to be exempt and remain exempt:
7. 1. Investment nondiscrimination. Individuals who are not in a position to self-refer patients to the facility must be given a bona fide opportunity to invest in that facility on the same terms as those offered a referring health care practitioner.
8. 1. Clinical freedom. A health care practitioner who invests may not be required or encouraged to make referrals to the facility or otherwise generate business as a condition of becoming or remaining an investor.
9. 1. Price nondiscrimination. The facility must market or furnish its services to investors who are referring health care practitioners and to other investors on equal terms.
10. 1. No lending to practitioners. The facility may not loan funds or guarantee loans for health care practitioners who are in a position

to self-refer patients to the facility.

5. No compensation for referrals. The income on the health care practitioner's investment must be tied to the practitioner's equity in the facility rather than to the volume of referrals made.

6. Nonexclusivity. An investment contract between the facility and the health care practitioner may not include a covenant or noncompetition clause that prevents a health care practitioner from investing in other facilities.

7. Disclosure to patients. When making a referral, the practitioner shall disclose his or her investment interest in the facility to the patient. The practitioner shall inform the patient that the patient will not be treated differently by the practitioner if the patient chooses to use another facility, and shall provide the patient with a list of any alternative facilities that are reasonably available.

8. Disclosure to third-party payors. Upon request, the practitioner must disclose the nature and extent of his or her investment interest in the facility to any third-party payor that provides coverage to clients of the practitioner or the facility.

9. Utilization review. The facility must have an internal utilization review program.

10. Conflict of interest. If a health care practitioner's financial interest in a facility is incompatible with a referred patient's interest; the health care practitioner shall make alternative arrangements for that patient's care.

Section 5. Application for Certification

Applicants for an exemption must file a signed affidavit that describes in detail how the applicant has made the determination that each of the requirements have been met. The affidavit should be accompanied by documents that support the affirmations made in the affidavit. Examples of supporting documentation include but are not limited to the following:

A. Documents from the facility that describe investment terms. B. Marketing materials which demonstrate that investment opportunities are offered equally to health care practitioners and other potential investors. C. Copies of any loan arrangement between the practitioner and the facility.

D. Copies of any forms or a written description of how the health care practitioner discloses his or her investment interest to patients being referred to the facility. To the extent that alternative facilities are reasonably available, the health care practitioner must demonstrate how patients are informed of the alternative facilities.

E. A description of the internal utilization review program, including a copy of the goals and the bylaws or rules of operation of the program, and a list of the names and licensure and specialty certification status of the persons who will be conducting the review.

F. Documents demonstrating that the investor's attempts to secure financing from alternative sources for this venture have failed.

The Superintendent may request any additional documents necessary to make the finding whether each of the requirements of this Rule has been met. Such documents must be made available within thirty days after a written request by the Superintendent, or the application will be denied. The applicant with good cause may request an extension of time, which shall not be unduly denied by the Superintendent.

Section 6. Completeness of Request

Within 30 days after the submission of an application, the Superintendent shall either acknowledge in writing that the application is complete or inform the applicant why the application is incomplete and specify the materials known to be missing. The Superintendent will render a decision within 90 days after the date of the letter acknowledging that the application is complete.

Section 7. Re-evaluation of Exempt Facilities

The Superintendent may from time to time require a re-evaluation of certified exempt facilities to verify compliance with this Rule or any statutory requirements.

Section 8. Public Hearing

Public hearings may be convened at the Superintendent's initiative or requested pursuant to 24-A M.R.S.A. § 229.

Section 9. Severability

If any section, term, provision, or application of this Rule is adjudged invalid for any reason, that judgment shall not impair or invalidate any other section, term, provision, or application, and the remainder of this Rule shall continue in full force and effect.

Section 10. Effective Date

This Rule is effective October 22, 1998.

STATUTORY AUTHORITY: 24-A M.R.S.A. §212 and 22 M.R.S.A. §§2085, 2087.

EFFECTIVE DATE: October 22, 1998