Are California Medical Corporations Stealing the Physical Therapy Trade?

A long-running catfight between the states powerful medical lobby and independent physical therapists is heating up again in Sacramento, threatening an uneasy truce that promised new benefits for patients and taxpayers.

Recent amendments to a health care bill worked out by the warring parties earlier this year would place new burdens on independent therapists by requiring them to attach warning labels to their services. These labels, they say, would frighten off patients and drive them into the arms of competing clinicians who work for doctor-owned medical corporations.

Paul Gaspar, spokesperson for the California Association of Independent Therapists told NBC4 that the amendments would force him and his colleagues to present themselves in disclosure documents as "incompetents" with no ability to diagnose patient problems and no sure claim on Medicare dollars.

"Those are the kinds of self-insults that we would have to offer people who come for our services," he said.

The specific language of newly amended Senate Bill No. 924 would bar all physical therapists from treating a patient beyond 30 days (or 12 visits) unless the patient obtains a diagnosis from a licensed doctor or podiatrist. This stipulation would lead patients to conclude that self-employed therapists "do not know what we are doing in the first 30 days and need a medical doctor to tell us," said Gaspar.

"Many therapists like myself have doctoral degrees in our profession and are well trained to identify patient issues," he said.

Other amendments require a written warning to patients that "some health plans and insurers will not pay for direct physical therapy treatment services without a medical diagnosis and referral."

Patients also are to be notified that therapists may be engaged in "unprofessional conduct" if they treat an undiagnosed patient for longer than 30 days.

The net effect of these add-ons is to denigrate therapists with no medical affiliation and to make their extended-care services dependent on doctors who may be competitors for the patient’s dollar and unfamiliar with his ailments, said Gaspar.

"Under these conditions, why would anyone come to a therapist who is not working for a doctor in the first place?" said Gaspar.

In his view, the disclosure requirements will decimate independent clinics and enable medical corporations to corner the physical therapy market and inflate insurance and Medicare charges without fear of completion.

"It would spike costs to consumers, insurers and taxpayers without any improvement in service, and with the danger of inferior service since doctor-owned clinics often hire cheap inexperienced labor," Gaspar said.

Gaspar accused several Democratic lawmakers of having caved in to the medical lobby on the physical therapy issue. He was particularly critical of Assemblywoman Mary Hayashi, a major fund-raiser for the state Democratic party who spearheaded a year-long campaign for doctor-friendly legislation; Assemblyman Felipe Fuentes, outgoing chair of the appropriations committee, where, Gaspar says, a cost analysis based on misplaced concerns about workers' compensation issues was used to stall the bill; and the new committee chair, Assemblyman Mike Gatto, who was presiding when the amendments were attached.

"These lawmakers and others conspired to get these amendments passed in committee behind closed doors without public notice or debate," said Gaspar. "Our people now have no choice but to try to kill the entire bill that we helped negotiate in earnest."

Assemblywoman Hayashi stated in a phone call to NBC4: "I don’t think you're going to give me a fair shake. I am not on the appropriations committee. I don't know anything about the bill."

Her attempt to distance herself from the bill puzzled Gaspar.

"Hayashi offered to be a co-author of SB 924 as long as we kicked our primary authors, senators Curren Price and Mimi Walters, off the bill," he told NBC4. "That would have left her and our only remaining author, Sen. Darryl Steinberg, to control the bill and insert the amendments she wanted. We refused."

A press spokesman for Assemblyman Fuentes said the cost analysis that led to the bill's "suspension" in the appropriations committee -- a process that allowed for introduction of the amendments -- was automatic and that the Assemblymen had no role in it.

In a written statement, Assemblyman Gatto, the current committee chair, addressed objections raised by Gaspar and other independent therapists.

"I recognize that they are upset," he said, "because they wanted a dramatic expansion of their businesses. But the policies they were pushing for would have resulted in millions of dollars in extra costs for the state and our taxpayers, and could have hurt many people who have undiagnosed conditions.

"This bill had multiple, lengthy, public hearings, and the policy decisions were mulled over for months. They are either confused about the legislative process or purposefully misleading people about it."

In response, Gaspar pointed out that the amendments were actually rejected in early public hearings and attached only later in the appropriations committee without additional public discussion.

"Gatto's statement is a gaffe of epic proportions," he added. "Direct patient access to independent therapists has been proven in numerous scientific studies to save thousands of health care dollars per patient. His lack of knowledge regarding health care and his lack of respect for the legislative process, which I fully understand, will be soon be an embarrassment to him and his cohorts."

Apart from Gaspar, no other representative of the California Physical Therapy Association was willing to go on record for this story, allegedly for fear of retaliation.

"CPTA has recently been threatened by top Democratic legislative leaders that if any of its board members are quoted in the media regarding SB 924, the bill will be finished," Gaspar said. "I'm not intimidated because I stepped off the CPTA board a few months ago. I knew our opponents would try to hijack us and I had to be able to defend us."

The bitter feud between independent therapists and doctor-employed clinicians dates back many years, and offers a revealing window into how the public’s business is conducted in Sacramento when well-heeled medical corporations have a stake in the outcome.

The bill SB 924, which passed the Senate earlier this year, gave a little to each side and took a little from both. Independent therapists agreed to give up on a long-running effort to get state regulators to shut down allegedly illegal physical therapy clinics owned by medical corporations. Their opponents and their own legislative allies agreed to let patients seek help from independent therapists without a doctor's diagnosis or prescription.

Gaspar said that he viewed the bill as a lopsided compromise by his side, but one that seemed justified since it obliged medical corporations to recognize the right of independent clinics to see patients without doctor referrals or prescriptions.

During legislative skirmishing leading up to the bill, Gaspar and his allies pressed for the total abolition of doctor-owned clinics. They pointed to a state law banning such clinics and called on regulators to close them. They claimed that such clinics were merely thinly disguised "kickback" schemes enabling doctors to direct patients to their own therapists and thus take two bites of the insurance apple. Independent therapists, said Gaspar, offered cost-lowering competition and better, more attentive care.

Spokesmen and lobbyists for the California Medical Association countered that doctor-employed clinicians were better able to coordinate and focus the treatment of their patients.

By the end of last year, Gaspar's forces seemed to have won the battle. Assemblywoman Hayashi, who according to state records is a leading recipient of campaign contributions from the California Medical Association, had twice failed in committee to get approval for legislation legalizing doctor-owned clinics.

She had also embarrassed herself politically and personally by getting arrested for alleged shoplifting at a clothing store in San Francisco. She eventually pleaded no contest to a misdemeanor charge and was sentenced to three years probation and nearly $200 in fines, and her power as a prime exponent of the medical industry and a leader in its legislative struggle with independent therapists appeared to be on the wane.

It was in this environment that the Senate took up and passed the carefully crafted compromise known as SB 924 and handed it off to the Assembly for consideration. Once it reached the appropriations committee, however, the compromise gave way to the amendments that seem to put doctors back into the diagnostic process even for services offered by independent physical therapists.

Gaspar said that his group will probably try to jettison the amended bill and start over with a new proposal in the next legislative session.

"Our good-faith effort at compromise has been cynically backhanded by the medical lobby, at great cost in time and money to the legislature and the public," he said.

Meanwhile, state regulators continue to observe a self-imposed moratorium on enforcing the existing law against the hiring of physical therapists by medical corporations, and independent therapists remain uncertain of the future of their own clinics.

"Is this any way to run the state and serve the public's interests?" said Gaspar.

Note: NBC4 producer Frank Snepp recently won the RTNDA’s regional Edward R. Murrow Award for an investigative series he wrote for this website about the attempted takeover of the state’s lucrative physical therapy trade by medical corporations. This article is an update to that story.

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