Here are some frequently asked questions about physician owned physical therapy services:

Q: Is it legal for a physical therapist to work for a doctor and provide physical therapy services?

A: It is not legal in CA for a PT to provide physical therapy services for a physician under a medical corporation.  The medical practice act clearly states that physicians must provide medical services under a medical corporation.  However, physicians are precluded from employing PTs by the Moscone Knox Act.

Q: What is the ethical argument against ownership of a POPTS clinic?

A: Most law schools teach that knowingly engaging in a conflict of interest is a breach of ethics. Additionally, knowingly breaking the law for financial gain is almost always considered unethical.   A Congressman from New York was recently censured for engaging in monetary conflicts of interest.  Medical professionals whom patients entrust with their health should hold themselves to the very highest ethical standards and place their patients interests before their own financial gain.

Q: Is it legal for a physical therapist to work as a contracted employee for a physician?

A: The IRS definition of independent contractors and employees demonstrates that it would be very difficult, if not impossible for a PT to be an independent contractor, providing therapy services for a medical group.  Nearly all PTs working for medical corporations in CA are doing so as employees.  It is not legal for these PTs to change their IRS filing status from employee to independent contractor to avoid abiding by referral for profit-related laws.  Remember three of the criteria typical of independent contractors are that the service relationship is temporary, the work schedule is determined by the IC, and the IC typically provides all of the equipment necessary to complete the job, (ie. treatment tables, modalities, exercise equipment, etc.).

Q: How much money is wasted on unnecessary care in a POPTS clinic?

A: It is not known how much money is wasted on unnecessary PT in POPTS clinics.  Based on the Mercer Study of the CA Workers Comp System and the OIG Study, which showed that over 90% of PT services in POPTS did not meet professional standards, it is safe to say that billions of dollars are wasted every year on POPTs in the US.

Q: Is it legal for a medical doctor to form a medical corporation with a physical therapist and treat patients in CA?

A: It is not legal for an MD and PT to form a medical corporation to treat patients in CA.  PTs are precluded from being shareholders and employees of medical corporations by the Moscone Knox Act.

Q: Is it legal for a medical doctor and a physical therapist to form a general corporation and treat patients in CA?

A: It is not currently legal for an MD and a PT to form a general corporation to provide physical therapy services.  The only corporate structure allowed to be formed to provide physical therapy services is a physical therapy corporation.  However, the Physical Therapy Licensing Board intends to allow general corporations formed before November 3, 2010 the ability to continue providing physical therapy services.

Q: What percentage of care is provided by unlicensed staff in a POPTS clinic?

A: It is not known exactly what % of care is delivered by unlicensed staff in POPTS.  However, several studies in top medical journals have indicated patients see unlicensed staff significantly more in POPTS and/or the care falls below medical standards most of the time.

Q: Are there studies that demonstrate inappropriate billing in POPTS clinics?

A: All of the studies of POPTS and RFP (MRIs, physician-owned hospitals, etc) show inappropriate billing because the services are often ordered and delivered for economic rather than clinical reasons.  The CA Work Comp study showed that PT referral occurred 2.3 times more often when the doctor owned the PT clinic.  Numerous studies show that 30-50% of MRIs ordered by physicians are not medically necessary when the physician owns the MRI equipment.  So, the answer is a definite yes.  When inappropriate services are provided, inappropriate billing follows shortly thereafter. Secondly, there are widespread reports in CA that POPTS do not understand or do not follow Medicare guidelines when it comes to the one-on-one provision of PT services.  This often leads to treating and billing for multiple patients per hour per therapist.

Q: What is the APTA’s position on POPTS clinics?

A: The APTA’s position on POPTS is clearly defined in it’s 2005 White Paper, which can be found online.  Its decades-long opposition is largely based upon the potential limitation of patient’s rights to choose their own PT provider as well as overwhelming proof of the large burden placed on society by services provided for economic rather than clinical reasons.

Q: What is the National Private Practice Section’s position on POPTS clinics?

A: As a section of APTA, the National Private Practice Section strongly supports APTA’s position on POPTS.  Most other sections and chapters of APTA strongly support this core position, though some are much more or less proactive in their legislative efforts to eliminate POPTS than others.

Q: What about these management companies that create doctor/ physical therapist relationships that I hear about.  Are they legal?

A: It is difficult to answer the question regarding management companies that help set up physician and PT relationships without knowing the contractual arrangement. Many PTs are unaware if the CA Physician Ownership Referral Act, AKA PORA Law, which generally and broadly prohibits physicians from profiting on a referral for specified goods or services.  Partnership relationships between physicians and PTs could also be considered illegal fee splitting if the physician or management/billing company receives income for the PT services that exceeds fair market value. Such arrangements are particularly egregious when there appears to be remuneration or inducement for referrals. Finally, federal Stark Laws only allow medical corporations an in-office ancillary service exception, which currently includes PT services (though MedPac has recommended that PT be taken out of that exception).  However, medical corporations are precluded from employing PTs in CA.  So, it does not appear there is a legal way or business structure, in CA, in which physicians could bill federal programs such as Medicare and Tricare.  This may be why many management organizations setting up partnerships between PTs and MDs do not billing patients enrolled in federal programs.

Q: What are the possible conflicts of interest with these physical therapist/doctor arranged partnerships?

A: The possible conflicts of interest between a physician and PT which are generally prohibited by CA law can be found in Section 650.01 of the Business and Professions Codes of CA law. CA law can be found online at leginfo.ca.gov.