AAOS Bulletin - June, 2006

Ancillary services under attack

It’s getting harder for orthopaedists to offer office-based physical therapy and imaging services.

By Robert C. Fine, JD, CAE

Ancillary services—such as office-based physical therapy and imaging services—are essential parts of orthopaedic practice. Most orthopaedists provide them because they’re good medical care and because they’re a convenience to patients who would otherwise have to travel elsewhere for such services.

In recent years, office-based physical therapy and imaging services have come under attack by outsiders attempting to interfere with orthopaedic practice. This time, however, the usual suspects are not government and private payers. Instead, the culprits are physical therapy and radiology associations bent on increasing the number of patients their members see and expanding their scope of practice.

This issue of the Bulletin examines the current situation facing orthopaedists who offer ancillary services, with a focus on physician-owed physical therapy and imaging services, particularly magnetic resonance imaging (MRI).

Physician-owned physical therapy services

Physical therapists (PTs) may work in freestanding physical therapy centers, hospitals or medical practices. Most are independent contractors or employees; some have their own physical therapy facilities. Physician-owned physical therapy services (POPTS) refers to physicians that employ PTs.

The exact number of orthopaedic practices that employ PTs is unknown. A 2004 survey of AAOS leaders, including members of the Board of Councilors (BOC), found that about 25 percent of respondents employed PTs. Although this survey does not statistically reflect the entire AAOS membership, it does show that a sizable number of orthopaedists employ PTs in their practices.

POPTS provide a number of benefits for patients, physicians and physical therapists. Patients may find it more convenient to have physical therapy at their orthopaedists’ offices than to travel somewhere else. Patients may also feel more comfortable knowing that their PT and their doctor are working together at the same location.

“Our patients think it’s great to have these services in one location and not have to travel,” says Russell A. Hudgens, MD, a BOC member from Mobile, Ala. “We have very flexible hours, so a patient can schedule an early-morning appointment with the physical therapist before work or stop on the way home. I don’t know of any other facility in our area that offers that kind of convenience.”

POPTS give some orthopaedists the chance to interact more quickly with PTs than they might if the PTs are off-site. POPTS also allow orthopaedists to offer their patients a wider range of services in the same location.

“It’s a great benefit,” says BOC member Paul N. Krop, MD, of Virginia Beach, Va. “Having the physical therapist right there is very helpful in fine-tuning postoperative exercises to respond to the patient’s condition. There’s better communication when the therapist is in the office and can simply walk over to the doctor to ask a question or make a suggestion.”

“The constant exposure of having a physical therapist on staff is great,” agrees BOC Chair-elect Matthew S. Shapiro, MD, of Eugene, Ore. “We have a terrific relationship with our two part-time physical therapists on staff and will often see patients together.”

Finally, POPTS give PTs more employment opportunities. Although many PTs like working in hospitals or PT facilities, others would prefer to be part of a medical practice.

“Our employed PTs like providing their service in a medical office,” says Dr. Krop. “They’re paid adequately, and consider their compensation comparable to what they could make on their own.”

Eliminating POPTS reduces the number of workplace choices for PTs, and could lead to increased unemployment within the profession.

Naturally, not all orthopaedic practices will employ PTs nor will patients go only to orthopaedists with PTs on staff. Many orthopaedists have good working relationships with PTs who are self- or hospital-employed. Patients can receive excellent care from independent as well as employed PTs. But those orthopaedists and PTs who want to work together in an employment arrangement for their own benefit and the benefit of their patients should be free to do so.

The opposing argument

Those opposed to POPTS argue that a conflict of interest exists between physicians and PTs who have an employment relationship. This argument seems to assume that physicians, as employers, are not interested in what’s best for their patients but only how they can make more money by providing in-office physical therapy services. A corollary assumption is that these physicians are forcing PTs to provide unnecessary or inappropriate services.

This argument not only condemns physicians who offer in-office physical therapy services, but also challenges the integrity of the PTs who work in medical practices. It implies that office-based PTs are so afraid of their physician-employers, they are willing to provide bad patient care. But according to AAOS members, that’s not at all true.

“Our PTs enjoy a great deal of autonomy,” responds Dr. Hudgens. “We work together to develop treatment guidelines. Within those established guidelines, they’re free to do what’s most effective for the patient.”

“Our PTs uniformly understand the subtle demands that complex knee and shoulder reconstruction requires. For the roughly half of our patients who visit them, I repeatedly see superior rehabilitation outcomes and surgical results,” says BOC member John D. Kelly IV, MD, of Philadelphia.

If, in fact, physicians who employ PTs are interfering with physical therapy services to make more money, wouldn’t the same hold true for PTs who employ other PTs in their own facilities? Those opposing POPTS, however, have not expressed concerns about this issue.

Another argument against POPTS focuses on the professional relationship between physicians and physical therapists. This argument says that physicians do not recognize their employed PTs as colleagues nor do they see physical therapy as a distinct health care profession.

On the contrary, most orthopaedists and other physicians who employ PTs give great weight to their judgment and are well aware of their unique knowledge and skills. “Our staff PTs are phenomenally talented,” says Dr. Shapiro. “The constant interaction between physician and therapist gives both of us a better understanding of each other’s roles and the patient’s needs. I also think the interaction gives our PTs a higher level of sophistication about musculoskeletal conditions.”

Legislative and legal challenges to POPTS

State physical therapy practice acts govern the conduct of PTs. Self-referral laws govern the kinds of ancillary services that physicians can have in their practices. Both types of laws can affect where PTs work.

Missouri’s self-referral law prohibits physicians from sending patients to physical therapy practices in which they have an ownership interest. This effectively bans physicians from employing PTs.

Most other states do not have such language in their self-referral laws, although these laws can always be amended if someone can persuade the state legislatures to do so. However, changing current laws is usually harder than reinterpreting existing ones.

Therefore, a more promising opportunity to challenge POPTS involves reinterpreting existing state physical therapy practice acts. This is because several states have practice acts that contain unclear language about whether or not a PT can accept patients from a physician-employer. In these situations, the opponents of POPTS use the following strategy:

1. Find a state attorney general who is likely to interpret the physical therapy practice act as prohibiting PTs from accepting patients from their physician-employers.

2. Approach a sympathetic public official to ask the state attorney general to issue an opinion on the physical therapy practice act.

3. The state attorney general issues an opinion stating that the physical therapy practice act prevents PTs from accepting patients from their physician-employers.

4. The state’s physical therapy board then adopts the state attorney general’s opinion as policy or as its own new interpretation of the physical therapy practice act.

5. The new policy or new interpretation of the physical therapy practice act has the practical effect of preventing PTs from being employed by physicians.

In 2002, the Delaware attorney general concluded that PTs could be disciplined under that state’s physical therapy practice act for accepting patients from their physician-employers. Although a “grandfather clause” exempted PTs who were already employed by physicians, the PTs hired by physicians after the legislation passed can be sanctioned for treating patients from their physician-employers.

A similar situation occurred in South Carolina in 2004—but without the “grandfather” clause. All PTs working for physicians were given 90 days to comply with the new interpretation of the practice act.

Other states that may be targeted include Arkansas, Arizona, Florida, Louisiana and Tennessee, all of which have physical therapy practice acts that forbid PTs from sharing fees with a referral source. This language possibly could be interpreted as preventing PTs from accepting patients from physician-employers.

Other states still face the possibility that their legislatures will change their physical therapy practice acts or self-referral laws to essentially bar PTs from being employed by medical practices.

AAOS and state society responses

The AAOS has been working with state orthopaedic societies to counter these efforts.

In South Carolina, for example, the South Carolina Orthopaedic Association and a coalition of other concerned parties responded to the attorney general’s position by suing the state’s Board of Physical Therapy Examiners to stop them from revoking the licenses of PTs who work for physicians.

The suit challenged the new interpretation of the state’s physical therapy practice act. Although the coalition lost the suit at the trial level, it is now being appealed. The AAOS joined the appeal late last year with an amicus curiae brief supporting the coalition’s position. A decision is expected by the end of summer.

The AAOS is working with other state orthopaedic societies to counter any legislative attempts to limit POPTS. In addition, the AAOS has set aside $200,000 for state societies to use in dealing with this and other pressing state health policy issues.

Direct access

Some physical therapists would like to have direct access to patients. It’s easy to see why.

Direct access gives PTs a broader patient base and greater independence in deciding what kind and how much therapy to give patients.

It’s also easy to see why direct access is bad for patients.

A patient who goes to a physical therapist without a physician referral also goes without a medical diagnosis. Although a PT is an important part of the musculoskeletal care team, he or she is not qualified to make medical diagnoses. And without a medical diagnosis, the PT cannot be sure that the therapy being provided is appropriate for the patient. If it’s not, the patient can delay getting the right treatment while the undiagnosed condition may be worsening.

Direct access at the state level

Although some physical therapy groups claim that most states allow direct access of PTs to patients, only two—Iowa and Montana—have unlimited direct access laws.

Six states do not allow direct access at all; eight allow PTs to evaluate, but not treat, patients without a physician referral; 15 allow direct access with limitations, such as a 30-day time limit on treatment, after which the PT must get a physician referral; and 19 have laws that are silent on the issue of direct access.

In many of these states, the battle is on for unlimited direct access of PTs to patients. And state orthopaedic societies are working hard with the AAOS to counter those efforts.

Direct access in the Medicare program

In 2003, Congress directed one of its advisory bodies, the Medicare Payment Advisory Commission (MedPAC), to study the feasibility of allowing Medicare patients direct access to PTs.

In its report to Congress in December 2004, MedPAC recommended that PTs not be given direct access to patients. According to the MedPAC report:

Beneficiaries often have multiple medical conditions and physicians can consider their broad medical needs ... Without these physician requirements, the medical appropriateness of starting or continuing physical therapy services would be more uncertain. 1

MedPAC’s findings and recommendation seem to have laid to rest, for now, any further attempts to give PTs direct access to Medicare patients.

POPTS and direct access

The connection between the issues of direct access and physician-owned physical therapy services is clear. They are linked by the desire by some to expand PTs’ scope of practice and independence from physicians. As long as any PTs are employed by physicians, it’s harder to argue that PTs should be completely independent from physicians. Unfortunately, these efforts may come at the expense of the musculoskeletal care team approach and, most important, the musculoskeletal patient.


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