FTC Staff Comment to the Hon. Ray Hamlett Concerning Missouri H.B. 320 to Prohibit Paid Referrals to Physical Therapists

L":\lTW :,TATES OF .-\:,IERIC.-\
FEDERAL TRADE CO~\'l~lISSIO~
SA:" FR:-\:"CISCO REGIO:\AL OFFICE
V890030
COMMISSION AUTHORIZED
9C~ M."~.• 1 SIr"1
SUIl' 570
Sar F..ners:c. CA ~'03
1~'5i 995·~20 	February 	27, 	1989
The Honorable Ray Hamlett
Missouri 	House 	of Representatives
state 	Capitol, 	House 	Post 	Office
Jefferson 	City, 	MO 	65101
Re: 	House 	Bill 	320
Dear Mr. 	Hamlett:
We 	are 	pleased 	to 	provide 	these 	comments 	in 	response 	to 	your
request 	for 	our views 	on House 	Bill 	320 	(tlH.B. 	320 tl ).1 	The 	bill,
if 	enacted, 	would 	prohibit 	any 	physical 	therapist 	from 	accepting
wages 	or 	any 	other 	form 	of 	payment 	from 	any 	person who 	refers
patients 	to 	the 	therapist. 	In 	effect, 	the 	bill 	would 	prevent
physical 	therapists 	from working 	for 	referring physicians 	or
physician-owned physical 	therapy 	services. 	In 	addition, 	H.B. 	320
would 	reenact 	a 	prohibition 	on 	physical 	therapists 	receiving
referral 	fees.
We 	believe 	that 	the 	bill 	is 	likely 	to 	injure 	consumers 	by
reducing 	competition among 	physical 	therapy 	providers, 	thereby
decreasing 	the 	choices 	available 	to 	consumers. 	In 	addition,
restrictions 	on 	referral 	fees 	may 	interfere with 	legitimate
health 	care 	delivery 	systems 	that 	contain 	costs. 	We 	respectfully
recommend 	that the Missouri 	legislature consider 	these 	effects 	of
the 	proposed 	legislation 	in 	determining whether 	to 	enact 	H.B.
320.
Interest 	and 	Experience 	of 	the 	Federal 	Trade 	Commission
For more 	than 	a 	decade, 	the 	Commission 	and 	its 	staff 	have
investigated the 	competitive 	effects 	of 	restrictions 	on 	the
business 	practices 	of 	state-licensed professionals, 	including
dentists, 	lawyers, 	physicians, 	physical 	therapists 	and 	other non-
1 	These 	comments 	represent 	the 	views 	of 	the 	staff 	of 	the
Bureau 	of 	Competition 	and 	the 	San 	Francisco 	Regional 	Office 	of
the 	Federal 	Trade 	Commission. 	They 	are 	not 	necessarily 	the 	views
of 	the 	Commission 	or 	any 	individual 	Commissioner. 	The 	San
Francisco Regional 	Office 	participated 	in 	the 	preparation 	of
these 	comments 	because 	of 	its 	experience 	in 	this 	SUbject 	area.

The 	Honorable 	Ray 	Hamlett
Missouri 	House 	of 	Representatives
Page 	2
physician 	health 	care 	providers. 2 	The 	goal 	of 	the 	Commission has
been 	to 	identify 	and 	recommend 	the 	removal 	of 	those 	restrictions
on practice 	that 	impede 	competition 	or 	increase 	costs 	without
providing 	adequate 	countervailing benefits 	to 	consumers.
Potential 	Harm to 	Competition 	and 	Limitation 	of 	Consumer 	Choice
H.B. 	320 	would 	add 	a 	new 	section, 	section 	20, 	to 	the
Missouri 	statutes 	that 	address 	the 	grounds 	for 	discipline 	of
health 	care 	professionals 	regulated 	by 	the 	state 	Board 	of
Registration 	for 	the 	Healing Arts 	("the 	Board"). 	section 	20
would 	provide 	that 	the 	Board may 	refuse 	to 	issue 	or 	renew the
license 	to practice 	of 	any physical 	therapist who
• 	• 	• 	engages, 	directly 	or 	indirectly 	in 	the 	division,
transferring, 	assigning, 	rebating 	or 	refunding 	of 	fees
received 	for 	professional 	services 	or 	profits 	by means
of 	a 	credit 	or 	other valuable 	consideration 	such 	as
wages, 	an unearned 	commission, 	or gratuity with 	any
person who 	referred 	a 	patient, 	or with 	any 	relative 	or
business 	associate 	of 	the 	referring 	person. 	[Emphasis
added. ]
This 	bill, 	therefore, 	would 	subject 	to 	discipline 	any
physical 	therapist 	who 	receives 	wages 	from 	a 	referring physician.
Such 	a 	provision would 	have 	the 	effect 	of 	prohibiting physical
therapists 	from 	working 	for 	any 	physician who 	refers 	patients 	to
that 	physical 	therapist. 	Although 	the 	bill 	provides 	for 	certain
2 	The 	Commission's 	work 	in 	this 	area 	has 	included 	law
enforcement 	investigations 	involving 	efforts 	to 	restrict 	the
practice 	of 	physical 	therapy. 	See In ~ 	Iowa 	Chapter 	of 	the
American 	Physical 	Therapy 	Ass'n, 	Dkt. 	No. 	C-3242 	(consent
agreement 	barring 	state 	physical 	therapy 	association 	from
prohibiting 	its 	members 	from 	accepting 	employment 	by physicians
or 	physician-owned 	clinics) 	(Nov. 	4, 	198'8). 	In addition, 	the
Commission's 	staff 	has 	submitted 	comments 	concerning 	legislative
and 	regulatory 	proposals 	to 	enact 	such 	restrictions. 	Letter 	to
the 	Honorable 	Chuck Hardwick, 	Speaker 	of 	the 	New Jersey Assembly
(May 	21, 	1987) 	(regarding 	proposed 	legislation 	to 	prohibit
physicians 	from 	having 	financial 	interests 	in 	physical 	therapy
practices); 	letter 	to 	Lin 	Ng, 	Nevada 	Deputy Attorney General
(Oct. 	23, 	1986) 	(regarding 	proposed 	regulation 	by 	the 	Nevada
State 	Board 	of 	Physical 	Therapy 	to 	prohibit 	physician employment
of 	physical 	therapists).

.'
"
The Honorable Ray 	Hamlett
Missouri 	House 	of 	Representatives
Page 	3
exemptions 	from 	its 	coverage,3 	it 	would 	prohibit 	physical
therapists 	from 	accepting 	employment 	from 	physicians.
Similarly, 	it would 	prohibit 	physical 	therapists 	from 	working 	for
physician-owned physical 	therapy 	services 	or 	other 	specialty
clinics. 4 	In 	addition, 	H.B. 	320 	would apparently 	prohibit 	a
physical 	therapist 	from 	employing 	another physical 	therapist 	to
whom 	the 	employing 	therapist 	refers 	patients. 5
The 	primary 	adverse 	effect 	of 	H.B. 	320 	is 	that, 	if 	enacted,
it would 	deny 	consumers 	the 	benefits 	of 	the 	full 	range 	of
service, 	price, 	and 	quality 	options 	that 	a 	competitive 	market
would 	offer. 	H.B. 	320 may hinder 	the 	development 	of more
efficient practices 	that 	reduce 	costs 	through 	economies 	of 	scale
or 	scope. 	For example, 	an 	orthopedist and 	a 	therapist 	would be
unable 	to 	open a 	joint practice 	that 	could 	reduce 	the
administrative costs 	associated 	with consultation. 	Providers
would 	also be 	limited 	in offering, 	and consumers 	prevented 	from
purchasing, 	allied 	services 	at 	a 	single 	location. 	This 	form 	of
allied 	practice may provide 	greater 	convenience 	and 	lower 	costs
to 	consumers who would 	otherwise 	have 	to 	go 	to 	different
locations 	to 	obtain 	these 	services. 	For example, 	a 	patient may
wish 	to 	obtain 	care 	at 	a 	clinic where 	both 	diagnosis 	and 	therapy
are 	offered 	(~, 	a 	sports 	medicine 	or occupational 	health
clinic). 	Similarly, 	a 	patient 	may wish 	to 	obtain 	physical
3 	The 	proposal 	exempts 	positions 	currently held 	by
physical 	therapists 	employed by 	licensed physicians 	and 	surgeons.
That 	is, 	it 	"grandfathers" 	those 	physician-physical 	therapy
practices 	already 	in 	existence; 	however, 	such 	practices could 	not
be 	expanded by employing 	additional 	physical 	therapists.
Physicians 	who 	are 	"grand fathered" 	can 	replace 	physical
therapists who 	leave. 	H.B. 	320 	also 	provides 	that 	the 	proposal
shall 	not 	be 	construed to 	prohibit 	business 	entities 	comprised 	of
physical 	therapists 	from 	dividing 	fees 	as 	necessary 	to 	"defray
joint 	operating 	costs." 	Our 	comments 	therefore 	address 	the
effects 	of H.B. 	320 	on 	practices 	that 	do 	not 	currently 	employ
physical 	therapists.
4 	The 	bill 	exempts 	from 	its 	coverage 	physical 	therapy
positions 	"on 	the 	premises 	of 	Missouri 	licensed 	hospitals." 	It
would, 	however, 	inhibit 	the 	ability 	of 	hospitals 	to 	o~en off-
premises 	physical 	therapy 	clinics. 	Physical 	therap~:ts working
from 	such 	clinics 	would 	be 	unable 	to 	accept 	referrals 	from 	the
hospital.
5 	As 	noted 	above, 	the 	bill 	would 	allow the 	division 	of 	fees
among 	physical 	therapists 	who 	are 	partners 	"to defray 	joint
operating 	costs," 	but would 	not 	allow 	the 	payment 	of 	wages 	to 	an
employed 	physical 	therapist.

'.
The 	Honorable 	Ray 	Hamlett
Missouri 	House 	of Representatives
Page 	4
therapy 	at 	a 	facility 	affiliated 	with his 	physician 	so 	that 	the
therapy provided 	will 	be 	closely 	coordinated with 	the 	prescribed
treatment 	plan. 	If H.B. 	320 	is 	enacted, 	however, 	it will 	not 	be
practical 	for 	physical 	therapists 	to work with 	physicians 	to
offer 	consumers 	either of 	these 	options 	because 	of 	the 	bill's
restriction 	on 	employment 	and 	other 	financial 	relationships.
H.B. 	320 	may 	also 	limit 	a 	physician's 	ability 	to 	oversee 	the
care provided 	to 	patients. 	A physician who 	employ~ 	a 	physical
therapist 	in his 	practice 	is 	able 	to 	monitor 	the 	prescribed
treatment 	directly. 	The 	physician 	is 	also 	readily 	available 	for
consultation with 	either the 	patient 	or 	the 	therapist. 	Although
the 	treating 	therapist 	need 	not 	be 	employed by 	a 	physician 	in
order 	to 	engage 	in 	coordination and 	consultation, 	some 	physicians
and 	physical 	therapists may 	find 	such an 	arrangement 	to 	be 	the
most 	efficient 	form 	of practice. 	The benefits 	of 	this
arrangement 	could be 	lost 	if 	physicians 	and physical 	therapists
are 	prevented 	from 	entering 	into employment 	and 	other business
relationships.
Restrictions 	on 	financial 	arrangements 	among 	providers 	of
health 	care 	may 	have 	adverse 	effects 	on 	consumers. 	For 	this
reason, 	the 	Commission has 	taken 	legal 	action 	against
organizations 	that 	imposed 	or 	allegedly 	imposed 	restrictions 	on
such 	arrangements. 6 	For 	example, 	the 	Commission 	recently
accepted 	a 	consent 	agreement with 	an 	association of 	physical
therapists 	that 	had 	allegedly 	communicated 	to 	its members 	that
they 	would be 	subject 	to 	discipline 	if they worked 	for
physicians.' 	The 	Commission 	believed 	that 	the 	alleged 	agreement
would have 	deterred 	physical 	therapists 	from 	offering 	their 	.
services 	in 	conjunction with 	physicians, 	and 	that, 	therefore, 	the
development 	of 	efficient 	forms 	of 	practice 	that 	may 	reduce 	costs
6 	The 	Commission 	staff 	has 	also, 	on 	several 	occasions,
suggested 	that 	state 	regulatory boards 	avoid 	enactment 	or
interpretation 	of 	regUlations 	that 	prevent 	providers 	from
adopting more 	efficient 	forms 	of 	practice. 	~,~, 	Letter to
Lin Ng, 	Deputy Attorney General, 	state 	of 	Nevada 	(October 	23,
1986) (opposing 	a 	regUlation 	proposed by 	the 	Nevada 	Board 	of
Physical 	Therapy 	that 	would 	prohibit 	physical 	therapists 	from
accepting 	employment with 	physicians); 	and 	Letter 	to 	H. 	Fred
Varn, 	Executive 	Director, 	Florida 	Board 	of 	Dentistry 	(November 	6,
1985) (opposing 	an 	interpretation 	of 	Florida 	law 	that 	would
prohibit 	dentists 	from 	referring 	patients 	to 	other 	dental
practices 	in 	which 	the 	referring 	dentists 	had 	an 	interest).
7
Ass'n, In ~ 	Iowa 	Chapter 	of 	the 	American 	Physical 	Therapy
Dkt. 	No. 	C-3242 	(Nov. 	4, 	1988).

The 	Honorable 	Ray 	Hamlett
Missouri 	House 	of 	Representatives Page 	5
by 	offering the 	combination 	of 	physician 	diagnosis, 	physical
therapy 	treatment, 	and physician-physical 	therapist 	consultation
at 	one 	location may 	have 	been hindered.
Another matter 	involved various 	ethical 	provisions 	enforced
by 	the 	American Medical 	Association. 	The 	Commission 	found 	that
the AKA's 	restrictions 	on physician employment 	relationships 	and
salaried practice 	inhibited 	development 	of 	innovative 	forms 	of
health 	care delivery 	that could be cost-efficient .and, 	hence,
beneficial 	to 	consumers. 8 	In 	addition, 	the 	Commission 	found 	that
the 	AMA's 	restrictions 	on 	joint business 	arrangements 	between
physicians 	and 	non-physicians 	inevitably had 	an 	adverse 	effect 	on
competition 	because 	they 	prevented 	physicians 	from 	adopting more
efficient business 	formats. 9
Potential 	Harm 	to 	Consumers 	through 	Restrictions 	on 	Referral 	Fees
H.B. 	320 	also 	provides 	for 	the 	repeal 	and 	re-enactment 	of
other 	sections 	of Missouri Revised statutes 	§334.100 	regarding
discipline 	of 	physical 	therapists. 	One 	such 	section, 	Section 	19,
prohibits 	"any person 	licensed 	to 	practice 	as 	a 	physical
therapist 	[from] 	paying 	or offering to 	pay 	a 	referral
fee 	•••• ,,10 	We 	are 	concerned 	that 	this 	language might 	be 	used
by 	the 	Board 	or 	others 	to 	stifle 	innovative 	practice 	or 	referral
arrangements. 	Because 	referral 	fees 	may 	promote 	competition 	as
discussed below, 	we 	suggest 	that 	you 	consider whether 	re-
enactment 	of 	this 	part 	of Section 	19 may be 	detrimental 	to
consumers.
Prohibitions 	on 	referral 	fees 	are 	often 	adopted 	to 	avoid 	the
danger 	that 	a 	provider 	of professional 	services 	may make 	a
referral 	for 	the 	purpose 	of 	receiving compensation, 	rather 	than
serving 	the 	needs 	of 	the 	patient 	or client. 	Such 	broad
prohibitions 	on 	all 	referral 	fees 	may, 	however, 	be 	too
restrictive. 	This may 	be particularly 	true 	in 	changing
conditions 	in 	the 	health 	care 	services 	market, 	where 	payment 	of
fees 	to 	a 	referring 	provider or 	entity may 	be 	used 	as 	a 	means 	to
contain health 	care 	costs.
8 	American Medical 	Ass'n, 	94 	F.T.C. 	701, 	1016-18 	(1979),
aff'd 	as 	modified, 	638 	F.2d 	443 	(2d 	Cir. 	1980), 	aff'd 	memo 	by 	an
equally divided 	Court, 	455 U.S. 	67~ 	(1982).
9 	American 	Medical 	Ass'n, 	94 	F.T.C. 	at 	1018.
10 Section 	19 	also 	prohibits 	physical
practicing 	independent 	of the 	prescription
physician, 	surgeon, 	dentist 	or 	podiatrist.
address 	this 	aspect 	of 	Section 	19.
therapists 	from
and 	direction 	of 	a
Our 	comments 	do 	not
,..

"
The 	Honorable 	Ray 	Hamlett
Missouri 	House 	of 	Representatives
Page 	6
In 	recent 	years, 	alternative 	health 	delivery 	systems, 	such
as preferred 	provider 	organizations 	("PPOs") 	have 	developed.
Although 	PPOs 	exist 	in many 	forms, 	all 	PPO 	programs 	involve 	a
series 	of 	contractual 	arrangements 	between 	"preferred" 	health
care 	providers 	and 	an 	intermediary, 	such 	as 	an 	insurer 	or 	self-
insured 	employer, 	that 	acts 	as 	a 	third 	party 	payor of 	health 	care
benefits. 	PPO 	programs 	often 	attempt 	to 	select preferred
providers 	for 	their 	ability 	to 	deliver 	quality health 	care 	at 	a
low 	cost. 	Enrollees 	in 	PPO programs 	usually 	are 	given 	financial
incentives 	(such 	as 	waivers 	of 	co-paYments 	or deductibles) 	to
encourage them to use 	the 	lower 	cost 	preferred 	providers.
Some 	of 	the 	contractual 	arrangements 	used by 	PPOs 	may,
however, 	involve 	legitimate paYments 	that 	could be 	construed 	as
referral 	fees, 	and 	therefore 	prohibited 	under 	§334.100(19}. 	For
example, 	some 	PPO 	programs 	require 	participating providers 	to 	remit
to 	the 	PPO a 	percentage 	of 	the 	fees 	earned 	from 	treating 	PPO
patients 	referred 	to 	the 	practitioner by 	the 	PPo. 	This 	is 	one
method 	used 	to 	fund 	a 	PPO's 	administrative 	expenses. 	Under
§344.100(19}, 	this 	paYment 	could be 	construed 	as 	a 	referral 	fee.
Prohibiting 	paYment 	of 	fees 	in 	such 	circumstances might 	restrict
the 	ability 	of 	physical 	therapists 	to 	participate 	in 	such
alternative 	health 	delivery 	systems. 	Consumers 	could 	therefore
lose 	the 	advantages 	of 	obtaining 	physical 	therapy 	services 	at
preferred 	provider 	rates.
Prohibitions 	on paYment 	of 	referral 	fees 	may 	also 	restrict
the 	ability 	of 	physical 	therapists 	to 	participate 	in 	referral
services. 	Referral 	services, 	which 	can 	be 	either 	for-profit 	or
not-for-profit, 	refer 	prospective 	patients 	to 	one 	or more
providers 	based 	on 	the 	stated 	needs 	of 	the 	patients 	and 	the
qualifications 	or 	prices 	of 	the 	providers. 	They also 	typically
make 	available 	a 	wide variety 	of 	information 	on 	the 	providers 	to
whom 	they 	refer 	patients. 	Such 	information 	can promote
competition 	by 	enabling patients 	to 	compare 	fees 	and 	services
offered. 	For 	example, 	a 	referral 	service 	can 	inform 	patients 	as
to which 	providers 	will 	accept Medicare 	assignment. 	The 	fees
paid 	to 	a 	referral 	service 	are 	unlikely 	to 	provide 	an 	incentive
for 	anyone 	to 	refer 	patients 	for 	unnecessary 	c~re. 	This 	is
because 	the 	entity 	receiving 	the 	fee 	-- 	the 	referral 	service 	--
does 	not 	recommend 	or 	suggest 	that 	the 	patient obtain medical
care. 	In 	the 	case 	of 	physical 	therapy, 	the 	pat~ent already 	has 	a
prescription 	from 	his 	or 	her 	physician 	and 	is 	using 	the 	service
to 	locate 	a 	physical 	therapist 	with 	particular 	qualifications
(location, 	price, 	area 	of 	specialization). 	Prohibitions 	on
payment 	of 	fees 	for 	referral 	services 	may 	limit 	the 	availability
of 	such 	services, 	and 	hinder 	consumers 	in 	locating 	independent

The 	Honorable 	Ray 	Hamlett
Missouri 	House 	of 	Representatives
Page 	7
physical 	therapy 	practices. 11 	For 	these 	reasons, 	we believe 	that
re-enactment 	of 	Section 	19 	may 	raise 	costs 	to 	consumers.
Less 	Restrictive 	Alternatives
One 	reason 	that has 	been 	advanced 	for 	adopting 	legislation,
such 	as 	that 	proposed 	by H.B. 	320, 	that 	places 	restrictions 	on
the 	relationship 	between 	referring 	entiti~s and 	health 	care
services 	providers 	is 	to 	ensure 	that 	medical 	care ·referrals 	are
based 	on 	the 	needs 	of 	the 	patient, 	rather 	than 	on 	the 	financial
interests 	of 	the 	practitioner. 	This 	argument 	contends 	that 	if 	a
physician has 	a 	financial 	relationship 	with 	a 	physical 	therapist,
then 	the 	physician 	has 	an 	incentive 	to 	prescribe 	treatment 	that
may 	not be appropriate. 	In 	those 	instances 	in which patients 	are
unaware 	that 	a 	physician's 	referral 	could 	be motivated 	by
financial 	considerations, 	they 	arguably may 	be 	misled 	about 	the
necessity 	and 	cost 	of 	the 	recommended 	treatment. 	Prohibitions 	on
the 	underlying 	relationship may be 	intended 	to 	avoid the
potential 	for 	abuse 	of the 	trust 	that 	a 	patient places 	in 	a
practitioner to make 	appropriate 	referrals 	based 	on 	independent
professional 	jUdgment 	of 	the 	patient's 	best 	interest.
The 	possibility 	that 	a 	physician may 	order unnecessary
treatment 	is 	a 	problem associated with many 	aspects 	of medical
service delivery, 	not 	just physical 	therapy. 	Whenever 	a
physician 	prescribes 	x-rays, 	injections, 	surgical 	procedures, 	or
other 	forms 	of 	treatment 	(including 	follow-up 	visits) 	to 	be
provided 	in 	the 	doctor's 	office, 	financial 	considerations 	could,
in 	theory, 	affect 	the 	recommendation. 	States, 	however, 	generally
do 	not 	ban doctors 	from 	ordering 	those 	other 	services, 	even when
the 	services 	are 	provided by 	the 	doctor's 	own 	practice.
Moreover, 	there 	are 	clearly 	less 	restrictive means 	of
preventing abuse 	or 	deception 	than 	prohibiting 	all 	employment
relationships. 	For 	example, 	an ownership 	disclosure 	requirement
could be 	adopted. 12 	Such 	a 	requirement 	would provide 	patients
11 	We 	understand 	that, 	to 	date, 	the 	Board 	has 	not 	brought
action against 	the 	forms 	of 	practice 	and 	referral 	arrangements
discussed 	above. 	We 	are 	concerned, 	however, 	that 	the 	language 	of
Section 	19 	is 	susc~ptible to 	such 	an 	interpretation. 	Because 	of
this, 	even with~~·t disciplinary 	action 	by 	the 	Board, 	Section 	19
may 	chill 	practice 	arrangements 	beneficial 	to 	consumers.
12 	For 	example, 	in 	California, 	the 	Business 	& Professions
Code 	requires 	that 	physicians 	disclose 	in 	writing 	to 	patients 	any
financial 	interest 	they 	have 	in 	facilities 	to 	which 	patients 	are
referred, 	and 	inform patients 	that 	they 	do 	not 	have 	to 	go 	to 	the
(continued ... )
'.'"

The 	Honorable 	Ray Hamlett
Missouri 	House 	of Representatives
Page 	8
with 	information 	to 	aid 	in 	their decision 	whether 	to 	use 	the
recommended 	provider. 	In 	addition, 	we 	note 	that 	current Missouri
law already 	prohibits 	physicians 	from 	requiring 	patients 	to 	take
prescriptions 	to 	any particular 	facility; 	patients may 	use 	any
facility 	they wish to 	select. 13 	We believe 	that 	concerns'with
preventing 	potential 	deception 	can be 	alleviated without
proscribing 	physician-physical 	therapist 	emploYment 	or 	other
business 	relationships.
Conclusion
In 	sum, 	we 	believe 	that 	H.B. 	320 may 	unnecessarily 	inhibit
beneficial 	competition 	and 	limit 	consumer 	choice. 	The 	proposal
is 	broader than 	necessary 	to 	protect consumers 	from 	physicians'
potential 	conflicts 	of 	interest. 	Consumers 	should 	not 	be
deprived 	unnecessarily of 	the 	benefits 	of 	competition, 	including
the 	ability 	to 	choose 	the 	provider and 	practice arrangements most
suited 	to 	their 	needs. 	For 	these 	reasons, 	you may wish to
consider whether enactment 	of 	provisions 	prohibiting 	employment
of 	physical 	therapists 	by physicians 	or 	others 	and 	reenactment 	of
provisions 	prohibiting 	all 	referral 	fee 	arrangements 	are
detrimental 	to 	consumer welfare.
We 	appreciate 	the 	opportunity to 	present these 	comments.
Very 	truly yours,
Janet M.1ta1~Regional 	Director
12( ••. continued)
provider 	that 	the 	physician 	has 	selected. 	Cal. 	Bus. 	& Prof. 	Code
§ 	654.2 	(Deering 	1988).
13 	Under Missouri 	Rev. 	stat. 	§ 	334.100.2 	(21) 	(Supp.
1988), 	any 	person 	licensed 	to 	pr,ctice 	as 	a 	physician 	or 	surgeon
may 	be 	SUbject 	to 	discipline 	f~~ requiring 	that 	a 	patient 	obtain
"prescription drugs, 	devices 	or 	other 	professional 	services
directly 	from 	facilities 	of 	that 	physician's 	office 	or 	other
entities 	under 	that 	physician's 	ownership 	or 	control." 	That
statute 	further 	states 	that 	"a 	physician 	shall 	provide 	the
patient 	with 	a 	prescription 	which may be 	taken 	to 	the 	facility
selected 	by 	the 	patient. II