Senate Bill 2438c1
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    Florida Senate - 1999                           CS for SB 2438
    By the Committee on Health, Aging and Long-Term Care; and
    Senator Latvala
    317-2198-99
  1                      A bill to be entitled
  2         An act relating to health care; amending s.
  3         455.654, F.S.; providing definitions; providing
  4         requirements for accepting outside referrals
  5         for diagnostic imaging; providing for
  6         disciplinary procedures against a group
  7         practice or sole provider that accepts an
  8         outside referral for diagnostic imaging
  9         services in violation of such requirements;
10         providing a fine; requiring the Agency for
11         Health Care Administration to study issues
12         relating to quality care in providing
13         diagnostic imaging services; authorizing the
14         agency to convene a technical assistance panel;
15         requiring a report to the Governor and
16         Legislature; providing for registration of all
17         group practices; prescribing registration
18         information; authorizing group practices and
19         sole practitioners to accept a prescribed
20         percentage of their patients from outside
21         referrals for a specified time; requiring the
22         Agency for Health Care Administration in
23         conjunction with the Medicaid Fraud Unit of the
24         Office of the Attorney General to study certain
25         specified business activities and arrangements
26         of providers of clinical laboratory services
27         for kidney dialysis; requiring a report;
28         amending s. 4, ch. 98-192, Laws of Florida;
29         eliminating requirement that the agency receive
30         written confirmation from the federal Health
31         Care Financing Administration that amendments
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  1         to ss. 395.701 and 395.7015, F.S., will not
  2         adversely affect assessments or state match for
  3         the state's Medicaid program; providing an
  4         effective date.
  5
  6  Be It Enacted by the Legislature of the State of Florida:
  7
  8         Section 1.  Section 455.654, Florida Statutes, 1998
  9  Supplement, is amended to read:
10         455.654  Financial arrangements between referring
11  health care providers and providers of health care services.--
12         (1)  SHORT TITLE.--This section may be cited as the
13  "Patient Self-Referral Act of 1992."
14         (2)  LEGISLATIVE INTENT.--It is recognized by the
15  Legislature that the referral of a patient by a health care
16  provider to a provider of health care services in which the
17  referring health care provider has an investment interest
18  represents a potential conflict of interest.  The Legislature
19  finds these referral practices may limit or eliminate
20  competitive alternatives in the health care services market,
21  may result in overutilization of health care services, may
22  increase costs to the health care system, and may adversely
23  affect the quality of health care.  The Legislature also
24  recognizes, however, that it may be appropriate for providers
25  to own entities providing health care services, and to refer
26  patients to such entities, as long as certain safeguards are
27  present in the arrangement.  It is the intent of the
28  Legislature to provide guidance to health care providers
29  regarding prohibited patient referrals between health care
30  providers and entities providing health care services and to
31
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  1  protect the people of Florida from unnecessary and costly
  2  health care expenditures.
  3         (3)  DEFINITIONS.--For the purpose of this section, the
  4  word, phrase, or term:
  5         (a)  "Board" means any of the following boards relating
  6  to the respective professions: the Board of Medicine as
  7  created in s. 458.307; the Board of Osteopathic Medicine as
  8  created in s. 459.004; the Board of Chiropractic Medicine as
  9  created in s. 460.404; the Board of Podiatric Medicine as
10  created in s. 461.004; the Board of Optometry as created in s.
11  463.003; the Board of Pharmacy as created in s. 465.004; and
12  the Board of Dentistry as created in s. 466.004.
13         (b)  "Comprehensive rehabilitation services" means
14  services that are provided by health care professionals
15  licensed under part I or part III of chapter 468 or chapter
16  486 to provide speech, occupational, or physical therapy
17  services on an outpatient or ambulatory basis.
18         (c)  "Designated health services" means, for purposes
19  of this section, clinical laboratory services, physical
20  therapy services, comprehensive rehabilitative services,
21  diagnostic-imaging services, and radiation therapy services.
22         (d)  "Diagnostic imaging services" means magnetic
23  resonance imaging, nuclear medicine, angiography,
24  arteriography, computed tomography, positron emission
25  tomography, digital vascular imaging, bronchography,
26  lymphangiography, splenography, ultrasound, EEG, EKG, nerve
27  conduction studies, and evoked potentials.
28         (e)  "Direct supervision" means supervision by a
29  physician who is present in the office suite and immediately
30  available to provide assistance and direction throughout the
31  time services are being performed.
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  1         (f)(d)  "Entity" means any individual, partnership,
  2  firm, corporation, or other business entity.
  3         (g)(e)  "Fair market value" means value in arms length
  4  transactions, consistent with the general market value, and,
  5  with respect to rentals or leases, the value of rental
  6  property for general commercial purposes, not taking into
  7  account its intended use, and, in the case of a lease of
  8  space, not adjusted to reflect the additional value the
  9  prospective lessee or lessor would attribute to the proximity
10  or convenience to the lessor where the lessor is a potential
11  source of patient referrals to the lessee.
12         (h)(f)  "Group practice" means a group of two or more
13  health care providers legally organized as a partnership,
14  professional corporation, or similar association:
15         1.  In which each health care provider who is a member
16  of the group provides substantially the full range of services
17  which the health care provider routinely provides, including
18  medical care, consultation, diagnosis, or treatment, through
19  the joint use of shared office space, facilities, equipment,
20  and personnel;
21         2.  For which substantially all of the services of the
22  health care providers who are members of the group are
23  provided through the group and are billed in the name of the
24  group and amounts so received are treated as receipts of the
25  group; and
26         3.  In which the overhead expenses of and the income
27  from the practice are distributed in accordance with methods
28  previously determined by members of the group.
29         (i)(g)  "Health care provider" means any physician
30  licensed under chapter 458, chapter 459, chapter 460, or
31
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  1  chapter 461, or any health care provider licensed under
  2  chapter 463 or chapter 466.
  3         (j)(h)  "Immediate family member" means a health care
  4  provider's spouse, child, child's spouse, grandchild,
  5  grandchild's spouse, parent, parent-in-law, or sibling.
  6         (k)(i)  "Investment interest" means an equity or debt
  7  security issued by an entity, including, without limitation,
  8  shares of stock in a corporation, units or other interests in
  9  a partnership, bonds, debentures, notes, or other equity
10  interests or debt instruments. The following investment
11  interests shall be excepted from this definition:
12         1.  An investment interest in an entity that is the
13  sole provider of designated health services in a rural area;
14         2.  An investment interest in notes, bonds, debentures,
15  or other debt instruments issued by an entity which provides
16  designated health services, as an integral part of a plan by
17  such entity to acquire such investor's equity investment
18  interest in the entity, provided that the interest rate is
19  consistent with fair market value, and that the maturity date
20  of the notes, bonds, debentures, or other debt instruments
21  issued by the entity to the investor is not later than October
22  1, 1996.
23         3.  An investment interest in real property resulting
24  in a landlord-tenant relationship between the health care
25  provider and the entity in which the equity interest is held,
26  unless the rent is determined, in whole or in part, by the
27  business volume or profitability of the tenant or exceeds fair
28  market value; or
29         4.  An investment interest in an entity which owns or
30  leases and operates a hospital licensed under chapter 395 or a
31  nursing home facility licensed under chapter 400.
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  1         (l)(j)  "Investor" means a person or entity owning a
  2  legal or beneficial ownership or investment interest, directly
  3  or indirectly, including, without limitation, through an
  4  immediate family member, trust, or another entity related to
  5  the investor within the meaning of 42 C.F.R. s. 413.17, in an
  6  entity.
  7         (m)  "Outside referral for diagnostic imaging services"
  8  means a referral of a patient to a group practice or sole
  9  provider for diagnostic imaging services by a physician who is
10  not a member of the group practice or of the sole provider's
11  practice and who does not have an investment interest in the
12  group practice or sole provider's practice, for which the
13  group practice or sole provider billed for both the technical
14  and the professional fee for the patient, and the patient did
15  not become a patient of your group practice or sole provider's
16  practice.
17         (n)  "Patient of a group practice" or "patient of a
18  sole provider" means a patient who receives a physical
19  examination, evaluation, diagnosis, and development of a
20  treatment plan if medically necessary by a physician who is a
21  member of the group practice or the sole practitioner's
22  practice.
23         (o)(k)  "Referral" means any referral of a patient by a
24  health care provider for health care services, including,
25  without limitation:
26         1.  The forwarding of a patient by a health care
27  provider to another health care provider or to an entity which
28  provides or supplies designated health services or any other
29  health care item or service; or
30         2.  The request or establishment of a plan of care by a
31  health care provider, which includes the provision of
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  1  designated health services or other health care item or
  2  service.
  3         3.  The following orders, recommendations, or plans of
  4  care shall not constitute a referral by a health care
  5  provider:
  6         a.  By a radiologist for diagnostic-imaging services.
  7         b.  By a physician specializing in the provision of
  8  radiation therapy services for such services.
  9         c.  By a medical oncologist for drugs and solutions to
10  be prepared and administered intravenously to such
11  oncologist's patient, as well as for the supplies and
12  equipment used in connection therewith to treat such patient
13  for cancer and the complications thereof.
14         d.  By a cardiologist for cardiac catheterization
15  services.
16         e.  By a pathologist for diagnostic clinical laboratory
17  tests and pathological examination services, if furnished by
18  or under the supervision of such pathologist pursuant to a
19  consultation requested by another physician.
20         f.  By a health care provider who is the sole provider
21  or member of a group practice for designated health services
22  or other health care items or services that are prescribed or
23  provided solely for such referring health care provider's or
24  group practice's own patients, and that are provided or
25  performed by or under the direct supervision of such referring
26  health care provider or group practice; provided, however,
27  that effective July 1, 1999, a physician licensed pursuant to
28  chapter 458, chapter 459, chapter 460, or chapter 461 may
29  refer a patient to a sole practitioner or group practice for
30  diagnostic imaging services, excluding radiation therapy
31  services, for which the sole practitioner or group practice
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  1  billed both the technical and the professional fee for or on
  2  behalf of the patient, if the referring physician has no
  3  investment interest in the practice. The group practice or
  4  sole practitioner may accept no more than 15 percent of their
  5  patients receiving diagnostic imaging services from outside
  6  referrals, excluding radiation therapy services.
  7         g.  By a health care provider for services provided by
  8  an ambulatory surgical center licensed under chapter 395.
  9         h.  By a health care provider for diagnostic clinical
10  laboratory services where such services are directly related
11  to renal dialysis.
12         i.  By a urologist for lithotripsy services.
13         j.  By a dentist for dental services performed by an
14  employee of or health care provider who is an independent
15  contractor with the dentist or group practice of which the
16  dentist is a member.
17         k.  By a physician for infusion therapy services to a
18  patient of that physician or a member of that physician's
19  group practice.
20         l.  By a nephrologist for renal dialysis services and
21  supplies.
22         (p)  "Present in the office suite" means that the
23  physician is actually physically present; provided, however,
24  that the health care provider is considered physically present
25  during brief unexpected absences as well as during routine
26  absences of a short duration if the absences occur during time
27  periods in which the health care provider is otherwise
28  scheduled and ordinarily expected to be present and the
29  absences do not conflict with any other requirement in the
30  Medicare program for a particular level of health care
31  provider supervision.
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  1         (q)(l)  "Rural area" means a county with a population
  2  density of no greater than 100 persons per square mile, as
  3  defined by the United States Census.
  4         (r)  "Sole provider" means a health care provider
  5  licensed under chapter 458, chapter 459, chapter 460, or
  6  chapter 461, who maintains a medical practice separate from
  7  any other health care provider and who bills for his or her
  8  services separately from the services provided by any other
  9  health care provider.
10         (4)  REQUIREMENT FOR ACCEPTING OUTSIDE REFERRALS FOR
11  DIAGNOSTIC IMAGING.--
12         (a)  A group practice or sole practitioner accepting
13  outside referrals for diagnostic imaging services is required
14  to comply with the following conditions:
15         1.  Diagnostic imaging services must be provided
16  exclusively by a group practice physician or by a full-time or
17  part-time employee of the group practice or of the sole
18  provider's practice.
19         2.  All equity in the group practice or sole provider's
20  practice accepting outside referrals for diagnostic imaging
21  must be held by the physicians comprising the group practice
22  or the sole provider's practice, each of which must provide at
23  least 75 percent of his professional services to the group.
24         3.  The group practice or sole provider accepting
25  outside referrals for diagnostic imaging may not be managed by
26  the same entity or any related entity that either owns,
27  manages, or otherwise has any interest in the group practice
28  or sole provider referring the patient.
29         4.  The group practice or sole provider accepting
30  outside referrals for diagnostic imaging services must bill
31  for both the professional and technical component of the
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  1  service on behalf of the patient and no portion of the
  2  payment, or any type of consideration, either directly or
  3  indirectly, may be shared with the referring physician.
  4         5.  Group practices or sole providers that have a
  5  Medicaid provider agreement with the Agency for Health Care
  6  Administration must furnish diagnostic imaging services to
  7  their Medicaid patients and may not refer a Medicaid recipient
  8  to a hospital for outpatient diagnostic imaging services
  9  unless the physician furnishes the hospital with documentation
10  demonstrating the medical necessity for such a referral.
11         6.  All group practices and sole practitioners
12  accepting outside referrals for diagnostic imaging shall
13  report annually to the Agency for Health Care Administration
14  providing the number of outside referrals accepted for
15  diagnostic imaging services and the total number of all
16  patients receiving diagnostic imaging services.
17         (b)  If a group practice or sole provider accepts an
18  outside referral for diagnostic imaging services in violation
19  of this subsection or if a group practice or sole provider
20  accepts outside referrals for diagnostic imaging services in
21  excess of the percentage limitation established in
22  subparagraph (a)2. of this subsection, the group practice or
23  the sole provider shall be subject to the penalties in
24  subsection (5).
25         (5)(4)  PROHIBITED REFERRALS AND CLAIMS FOR
26  PAYMENT.--Except as provided in this section:
27         (a)  A health care provider may not refer a patient for
28  the provision of designated health services to an entity in
29  which the health care provider is an investor or has an
30  investment interest.
31
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  1         (b)  A health care provider may not refer a patient for
  2  the provision of any other health care item or service to an
  3  entity in which the health care provider is an investor
  4  unless:
  5         1.  The provider's investment interest is in registered
  6  securities purchased on a national exchange or
  7  over-the-counter market and issued by a publicly held
  8  corporation:
  9         a.  Whose shares are traded on a national exchange or
10  on the over-the-counter market; and
11         b.  Whose total assets at the end of the corporation's
12  most recent fiscal quarter exceeded $50 million; or
13         2.  With respect to an entity other than a publicly
14  held corporation described in subparagraph 1., and a referring
15  provider's investment interest in such entity, each of the
16  following requirements are met:
17         a.  No more than 50 percent of the value of the
18  investment interests are held by investors who are in a
19  position to make referrals to the entity.
20         b.  The terms under which an investment interest is
21  offered to an investor who is in a position to make referrals
22  to the entity are no different from the terms offered to
23  investors who are not in a position to make such referrals.
24         c.  The terms under which an investment interest is
25  offered to an investor who is in a position to make referrals
26  to the entity are not related to the previous or expected
27  volume of referrals from that investor to the entity.
28         d.  There is no requirement that an investor make
29  referrals or be in a position to make referrals to the entity
30  as a condition for becoming or remaining an investor.
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  1         3.  With respect to either such entity or publicly held
  2  corporation:
  3         a.  The entity or corporation does not loan funds to or
  4  guarantee a loan for an investor who is in a position to make
  5  referrals to the entity or corporation if the investor uses
  6  any part of such loan to obtain the investment interest.
  7         b.  The amount distributed to an investor representing
  8  a return on the investment interest is directly proportional
  9  to the amount of the capital investment, including the fair
10  market value of any preoperational services rendered, invested
11  in the entity or corporation by that investor.
12         4.  Each board and, in the case of hospitals, the
13  Agency for Health Care Administration, shall encourage the use
14  by licensees of the declaratory statement procedure to
15  determine the applicability of this section or any rule
16  adopted pursuant to this section as it applies solely to the
17  licensee. Boards shall submit to the Agency for Health Care
18  Administration the name of any entity in which a provider
19  investment interest has been approved pursuant to this
20  section, and the Agency for Health Care Administration shall
21  adopt rules providing for periodic quality assurance and
22  utilization review of such entities.
23         (c)  No claim for payment may be presented by an entity
24  to any individual, third-party payor, or other entity for a
25  service furnished pursuant to a referral prohibited under this
26  section.
27         (d)  If an entity collects any amount that was billed
28  in violation of this section, the entity shall refund such
29  amount on a timely basis to the payor or individual, whichever
30  is applicable.
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  1         (e)  Any person that presents or causes to be presented
  2  a bill or a claim for service that such person knows or should
  3  know is for a service for which payment may not be made under
  4  paragraph (c), or for which a refund has not been made under
  5  paragraph (d), shall be subject to a civil penalty of not more
  6  than $15,000 for each such service to be imposed and collected
  7  by the appropriate board.
  8         (f)  Any health care provider or other entity that
  9  enters into an arrangement or scheme, such as a cross-referral
10  arrangement, which the physician or entity knows or should
11  know has a principal purpose of assuring referrals by the
12  physician to a particular entity which, if the physician
13  directly made referrals to such entity, would be in violation
14  of this section, shall be subject to a civil penalty of not
15  more than $100,000 for each such circumvention arrangement or
16  scheme to be imposed and collected by the appropriate board.
17         (g)  A violation of this section by a health care
18  provider shall constitute grounds for disciplinary action to
19  be taken by the applicable board pursuant to s. 458.331(2), s.
20  459.015(2), s. 460.413(2), s. 461.013(2), s. 463.016(2), or s.
21  466.028(2).  Any hospital licensed under chapter 395 found in
22  violation of this section shall be subject to the rules
23  adopted by the Agency for Health Care Administration pursuant
24  to s. 395.0185(2).
25         (h)  Any hospital licensed under chapter 395 that
26  discriminates against or otherwise penalizes a health care
27  provider for compliance with this act.
28         (i)  The provision of paragraph (a) shall not apply to
29  referrals to the offices of radiation therapy centers managed
30  by an entity or subsidiary or general partner thereof, which
31  performed radiation therapy services at those same offices
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  1  prior to April 1, 1991, and shall not apply also to referrals
  2  for radiation therapy to be performed at no more than one
  3  additional office of any entity qualifying for the foregoing
  4  exception which, prior to February 1, 1992, had a binding
  5  purchase contract on and a nonrefundable deposit paid for a
  6  linear accelerator to be used at the additional office.  The
  7  physical site of the radiation treatment centers affected by
  8  this provision may be relocated as a result of the following
  9  factors: acts of God; fire; strike; accident; war; eminent
10  domain actions by any governmental body; or refusal by the
11  lessor to renew a lease.  A relocation for the foregoing
12  reasons is limited to relocation of an existing facility to a
13  replacement location within the county of the existing
14  facility upon written notification to the Office of Licensure
15  and Certification.
16         (j)  A health care provider who meets the requirements
17  of paragraphs (b) and (i) must disclose his or her investment
18  interest to his or her patients as provided in s. 455.701.
19         Section 2.  (1)  The Agency for Health Care
20  Administration is directed to study issues relating to the
21  need for quality-of-care standards applicable to group
22  practices, hospitals, and health systems providing diagnostic
23  imaging services. Issues to be addressed in the scope of this
24  study include, but are not limited to:
25         (a)  The parameters of quality of care;
26         (b)  The need for periodic inspection of the facilities
27  or the entities providing diagnostic imaging services for the
28  purpose of evaluation of the premises, operation, supervision,
29  and procedures of the entity;
30         (c)  The extent to which requiring group practices
31  providing diagnostic imaging services to participate in
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  1  nationally recognized accrediting organizations would enhance
  2  quality assurance processes; and
  3         (d)  An assessment of how group practices, hospitals,
  4  and health systems providing diagnostic imaging services
  5  ensure appropriate utilization of services in order to prevent
  6  overutilization of these services.
  7         (2)  The agency may convene a technical assistance
  8  panel for purposes of this study which is representative of
  9  group practices providing diagnostic imaging services, group
10  practices, group practices generally, various professional
11  organizations representing providers and hospitals, and
12  representatives of the public.
13         (3)  The agency shall submit its findings and
14  recommendations to the Governor, the President of the Senate,
15  and the Speaker of the House of Representatives by January 15,
16  2000.
17         Section 3.  The agency shall require registration by
18  all group practices providing diagnostic imaging services,
19  regardless of ownership. Registration information must include
20  the medical specialty of each physician; address and phone
21  number of the group; UPIN number for the group and each group
22  number; and Medicare, Medicaid, and commercial billing numbers
23  for the group. The agency shall complete the registration by
24  December 31, 1999.
25         Section 4.  Notwithstanding the provisions of section
26  455.564, Florida Statutes, 1998 Supplement, upon such time as
27  the Agency for Health Care Administration adopts and
28  implements rules recommended by the study, group practices and
29  sole practitioners may accept up to 25 percent of their
30  patients from outside referrals for diagnostic imaging.
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  1         Section 5.  The Agency for Health Care Administration,
  2  in conjunction with the Medicaid Fraud Division of the Office
  3  of the Attorney General, shall conduct a detailed study and
  4  analysis of clinical laboratory services for kidney dialysis
  5  patients in the State of Florida. The study shall include, but
  6  not be limited to, an analysis of the past and present
  7  utilization rates of clinical laboratory services for dialysis
  8  patients; financial arrangements among kidney dialysis
  9  centers, their medical directors, any business relationships
10  and affiliations with clinical laboratories, and any
11  self-referral to clinical laboratories; the quality and
12  responsiveness of clinical laboratory services for dialysis
13  patients in Florida; and the average annual revenue for
14  dialysis patients for clinical laboratory services for the
15  past 10 years. The agency shall report its findings to the
16  Legislature by February 1, 2000.
17         Section 6.  Section 4 of chapter 98-192, Laws of
18  Florida, is amended to read:
19         Section 4.  This act shall take effect July 1, 1998,
20  except that the amendment of sections 395.701 and 395.7015,
21  Florida Statutes, by this act shall take effect only upon the
22  Agency for Health Care Administration receiving written
23  confirmation from the federal Health Care Financing
24  Administration that the changes contained in such amendments
25  will not adversely affect the use of the remaining assessments
26  as state match for the state's Medicaid program.
27         Section 7.  This act shall take effect July 1, 1999.
28
29
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  1          STATEMENT OF SUBSTANTIAL CHANGES CONTAINED IN
                       COMMITTEE SUBSTITUTE FOR
  2                         Senate Bill 2438
  3
  4  The bill amends the Patient Self-Referral Act of 1992 to
    provide requirements for a sole practitioner or a group
  5  practice to accept outside referrals for diagnostic imaging
    services, defines additional terms used in the Act, and
  6  revises the definition of the term "referral" to allow an
    exception to the group practice exception to prohibited
  7  referrals under the Act for acceptance of referrals for
    diagnostic imaging services. It authorizes group practices and
  8  sole practitioners to accept up to 15 percent of their
    patients from outside referrals for diagnostic imaging
  9  services, effective July 1, 1999, and up to 25 percent of
    their patients for such services once the Agency for Health
10  Care Administration adopts and implements rules recommended by
    a study the Agency must submit by January 15, 2000. Group
11  practices providing diagnostic imaging services must be
    registered with the Agency by December 31, 1999, regardless of
12  who owns the group practice.
13  The bill directs the Agency to study the need for
    quality-of-care standards applicable to group practices,
14  hospitals, and health systems that provide diagnostic imaging
    services, addressing certain specified issues, and submit its
15  findings and recommendations by January 15, 2000. The Agency,
    is also required, in conjunction with the Medicaid Fraud
16  Division of the Office of the Attorney General, to conduct a
    detailed study and analysis of clinical laboratory services
17  for kidney dialysis patients. The Agency must submit a report
    of its findings to the Legislature by February 1, 2000.
18
    The contingency in the effective date of legislation enacted
19  during the 1998 legislative Session that repealed the Public
    Medical Assistance Trust Fund assessment on freestanding
20  radiation therapy centers and exempted hospital outpatient
    radiation therapy centers from the same assessment is deleted
21  from law.
22
23
24
25
26
27
28
29
30
31
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