Sometimes Journalism Matters! Smith Files MRI Bill After Arkansas Business Story

Some of the other Capitol buzz this week centered on Rep. Lindsley Smith’s HB1108, which would prevent physicians from referring patients to medical imaging centers in which they have a financial interest. As and John Williams report, the an amended version of the bill came up yesterday but was withdrawn and we be reconsidered later.

The practice of doctors sending patients for MRIs at centers in which they have stake hasn’t gone unnoticed. Late last summer, Arkansas Business reporter Mark Friedman filed a lengthy cover story on the matter. Smith later told Friedman that his story inspired her to file HB1108.

The lead of Friedman’s story focused on Fayetteville MRI LLC, which was seeking doctors to invest:

To become an investor in Fayetteville MRI LLC, a doctor would need to put in only $100.

But earning returns on that investment will depend solely on how many patients the doctor refers to Fayetteville MRI, which currently operates as Clearvue Medical Imaging in a strip mall in Lowell, according to the company’s confidential private offering memorandum obtained by Arkansas Business and the Northwest Arkansas Business Journal.

The memorandum indicates that Fayetteville MRI — led by four Northwest Arkansas doctors — is seeking 50 physicians to invest a total of $5,000. It anticipates annual profits that would quickly exceed $2 million from a controversial business plan that relies on self-referral.

State and federal laws forbid self-referral to imaging centers that accept Medicare and Medicaid patients, so Fayetteville MRI will not accept patients insured by those government programs, the memo said.

Jean Mitchell, a professor of public policy at Georgetown University who has studied physician-owned imaging centers, points out in the story that at least 25 states ban these self-referrals to diagnostic imaging centers, even if the patients aren’t covered by government insurance programs.

“If Arkansas had a state ban on self-referrals, this would clearly be in violation of the law,” she said of Fayetteville MRI’s plan. “These, to me, are just disguised kickbacks.”

Dr. David Brown, a neurologist who practices at the Neurological Association PLC in Fayetteville and holds a stake in Fayetteville MRI, told Friedman the business model isn’t illegal because the imaging center wouldn’t accept Medicare or Medicaid patients. And he said he didn’t think other physician investors would refer patients to the center just to make money.

In committee yesterday, Rep. Billy Gaskill, D-Paragould, said the bill amounted to the kind of “meddling” the committee and the state doesn’t need to be involved in. Several doctors also testified against the bill: Dr. Michael Morris, Dr. Lynette Brian and Dr. Anthony Taylor, a representative with Arkansas Chiropractors’ Association., in a blog post yesterday, described the committee meeting as “heated.” Smith, saying she wasn’t even aware the bill would come up in that meeting, put the bill on the deferred list. We’ll see what happens next.

Meanwhile, read Friedman’s complete story here.


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