SB640,1,8 1An Act to renumber and amend 448.01 (11); to amend 449.19; and to create
2subchapter V of chapter 150 [precedes 150.88], 441.07 (1) (f), 446.04 (4m),
3447.07 (3) (km), 448.01 (11) (c), 448.57 (2) (gm), 448.90 (2) (gm), 449.07 (1) (fc),
4450.10 (1) (a) 3m., 455.09 (1) (em), 457.26 (2) (gm), 459.34 (2) (fm) and 459.46
5(5) (b) 6m. of the statutes; relating to: prohibiting certain health care providers
6from referring a patient to a health care entity in which the health care provider
7has a financial interest, granting rule-making authority and providing a penal
8ty.
Analysis by the Legislative Reference Bureau
Under current law, a person licensed by the medical examining board (board)
as a physician or podiatrist, or a person certified by the board as an occupational ther
apist, occupational therapy assistant or respiratory care practitioner, may not direct
ly or indirectly give or receive any fee, commission or other form of compensation in
exchange for referring a person to seek professional services from a person licensed
by the board. A person licensed as a physical therapist by the physical therapists
affiliated credentialing board may not directly or indirectly give or receive any fee,
commission or other form of compensation in exchange for referring a person to seek
professional services from a person licensed by the affiliated credentialing board. A
chiropractor or an optometrist is also prohibited from splitting or dividing any fee for
his or her professional services with any person except an associate licensed chiro
practor or optometrist. In addition, current law, as contained in the administrative
code, regulates fee splitting or referrals by other health care providers as follows: 1)
dentists are prohibited from accepting rebates from or splitting fees with another

health care provider unless the action is disclosed to the client; 2) pharmacists are
prohibited from accepting rebates or splitting fees with any other health care provid
er or health care facility; and 3) psychologists, social workers, family therapists and
professional counselors are required to inform a client of any financial interest that
is not obvious and that may accrue to the psychologist, social worker, family therapist
or professional counselor for a referral to or use of a service, product or publication.
This bill explicitly prohibits a health care provider from referring a patient to
a health care entity outside the health care provider's office practice or group practice
if the health care provider has a financial interest in the health care entity. The bill
defines "health care provider" as a nurse, chiropractor, dentist, dental hygienist,
physician, podiatrist, physical therapist, occupational therapist, occupational thera
py assistant, physician assistant, respiratory care practitioner, dietitian, optome
trist, pharmacist, psychologist, social worker, marriage and family therapist, profes
sional counselor, speech-language pathologist or audiologist. The bill defines
"financial interest" as an ownership interest in, an equity or debt security from, or
a compensation agreement with, a sole proprietorship, partnership, firm, corpora
tion, limited liability company or other business.
The bill also provides for several exceptions to the general prohibition against
a health care provider referring a patient to a health care entity in which the health
care provider has a financial interest. Specifically, the bill allows such referrals in
the following circumstances: 1) in the case of an emergency, when complying with
the prohibition presents an immediate danger to the life of the client; 2) in a case for
which medicaid or medicare reimbursement is sought and the referral is permitted
by federal law governing such cases; 3) in a case in which the health care provider
will be providing health care services personally and directly to the patient within
the entity to which the patient is referred; 4) in a case in which the health care entity
is a publicly traded entity that meets criteria specified in the bill and in which the
health care provider's interest is less than 0.5% of the entity's total equity; 5) in a case
in which the referral is to a health maintenance organization in which the patient
is an enrolled participant and with which the health care provider has a referral
agreement; and 6) in a case in which the referral is to certain joint ventures, an ambu
latory surgery center or a hospital if the health care provider has an employment or
service agreement with the joint venture, ambulatory surgery center or hospital and
if the health care provider's compensation is not based on the number of referrals
made to the joint venture, ambulatory surgery center or hospital.
The bill also creates an exception for referrals to an entity in which the health
care provider has a financial interest if there is a demonstrated need for the entity
in the community. Under the bill, there is a demonstrated need for an entity in the
community in any one of the following circumstances: 1) there is no other health care
entity or facility of reasonable quality that provides medically adequate service; 2)
requiring a patient to use another entity or facility creates a hardship for the patient;
3) the entity is formed to own or lease medical equipment that replaces obsolete or
inadequate equipment in or under the control of a hospital located in a health man
power shortage area; or 4) the community meets any other demonstrated need estab
lished by rule by the cost containment commission. In addition, the structure of the

entity must satisfy the following requirements: 1) a person who is not in a position
to refer a patient to the entity is able to invest in the entity on the same terms as a
health care provider; 2) a health care provider who invests is not required or encour
aged to make referrals to the entity as a condition of becoming or remaining an inves
tor; 3) the entity markets or furnishes its services to referring health care provider
investors and other investors on equal terms; 4) the entity does not make loans to or
guarantee loans for health care providers who are in a position to make referrals; 5)
the income from the health care provider's investment is based on the health care
provider's equity, not on the number of referrals; and 6) the entity does not prohibit
the health care provider from investing in other entities.
Under the bill, before obtaining a financial interest in an entity, a health care
provider may request a determination from the cost containment commission as to
whether referrals to that entity will be proper under the community need exception.
If a health care provider does not request such a determination before obtaining a
financial interest in an entity, he or she must request a determination before making
any referral to the entity under the community need exception unless it is not practi
cal to seek a determination for a particular referral. Under the bill, the cost contain
ment commission has 90 days to provide any determination, whether requested be
fore or after the health care provider obtains a financial interest in the entity to
which the referral is made. If the cost containment commission does not provide a
determination in the 90-day period, the health care provider may make referrals to
the entity, if he or she requested the determination before obtaining a financial inter
est in the entity, or may make the particular referral on which the request was based,
if he or she made the request after obtaining a financial interest in the entity.
The bill also provides that a health care provider may seek an advisory opinion
from the cost containment commission as to whether a referral violates the bill's pro
visions. The cost containment commission is required to promulgate rules that are
necessary to administer and enforce the provisions of the bill. The bill also allows
an examining board that regulates a health care provider to discipline the health
care provider for violating the provisions of the bill. Finally, the bill provides that
any person who violates the provisions of the bill shall forfeit $20,000.
For further information see the state fiscal estimate, which will be printed as
an appendix to this bill.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
SB640, s. 1 1Section 1. Subchapter V of chapter 150 [precedes 150.88] of the statutes is
2created to read:
SB640,3,33 Chapter 150
SB640,4,3
1Subchapter V
2 Referrals by health care
3 providers
SB640,4,4 4150.88 Definitions. In this subchapter:
SB640,4,9 5(1) "Financial interest" means an ownership interest in, an equity or debt secu
6rity from, or a compensation agreement with, a sole proprietorship, partnership,
7firm, corporation, limited liability company or other business. "Financial interest"
8does not include a directorship that is uncompensated if the director has no owner
9ship interest in the entity for which he or she is a director.
SB640,4,13 10(2) "Group practice" means 2 or more health care providers organized as a part
11nership, professional corporation, limited liability company, foundation, not-for-
12profit corporation, faculty practice plan, or similar association, in which all of the fol
13lowing apply:
SB640,4,1614 (a) Each member, employe or independent contractor of the group provides the
15full range of health care services that the health care provider routinely provides
16through the use of the office space, facilities, equipment or personnel of the group.
SB640,4,1817 (b) The services of the health care provider are provided through the group, and
18payments received for health care services are treated as receipts of the group.
SB640,4,2119 (c) The expenses of, and the income from, the practice are shared or distributed
20by a method determined by the group either at the time the group is formed or by a
21later determination revising the method initially determined by the group.
SB640,4,24 22(3) "Health care entity" means an individual or a sole proprietorship, partner
23ship, firm, corporation, limited liability company or other enterprise that provides
24health care services.
SB640,4,25 25(4) "Health care provider" means any of the following:
SB640,5,1
1(a) A nurse licensed under ch. 441.
SB640,5,22 (b) A chiropractor licensed under ch. 446.
SB640,5,33 (c) A dentist or dental hygienist licensed under ch. 447.
SB640,5,44 (d) A physician, podiatrist or physical therapist licensed under ch. 448.
SB640,5,65 (e) An occupational therapist, occupational therapy assistant, physician assis
6tant, respiratory care practitioner or dietitian certified under ch. 448.
SB640,5,77 (f) An optometrist licensed under ch. 449.
SB640,5,88 (g) A pharmacist licensed under ch. 450.
SB640,5,99 (h) A psychologist licensed under ch. 455.
SB640,5,1110 (i) A social worker, marriage and family therapist or professional counselor cer
11tified under ch. 457.
SB640,5,1312 (j) A speech-language pathologist or audiologist licensed or registered under
13ch. 459.
SB640,5,15 14(5) "Health care services" means services provided to a person by a health care
15provider.
SB640,5,16 16(6) "Health maintenance organization" has the meaning given in s. 609.01 (2).
SB640,5,19 17(7) "Health manpower shortage area" means an area in this state that is in a
18health manpower shortage area as determined by the federal department of health
19and human services under 42 USC 254e.
SB640,5,21 20(8) "Office practice" means the primary facility at which a health care provider
21provides health care services.
SB640,5,23 22(9) "Publicly traded health care entity" means a health care entity that satisfies
23all of the following requirements:
SB640,6,3
1(a) The entity is listed for trading on the New York stock exchange, the Ameri
2can stock exchange or the national association of securities dealers automated quota
3tion system.
SB640,6,54 (b) The entity had, at the end of its most recent fiscal year, total net assets of
5$30,000,000 or more that were related to providing health care services.
SB640,6,86 (c) The entity provides its services, products or facilities on equal terms to
7health care providers who are investors and health care providers who are not inves
8tors.
SB640,6,109 (d) The entity issues one class of common stock only, without preferential treat
10ment among shareholders as to status, voting rights or remuneration.
SB640,6,1211 (e) The entity does not loan funds to, or guarantee any loans for, health care
12providers who are able to refer patients to the entity.
SB640,6,1413 (f) The income from a health care provider's investment is not related to the
14volume or type of referrals a health care provider makes to the entity.
SB640,6,19 15(10) "Refer" means requesting, suggesting, sending or inducing a person to
16seek or obtain professional services from a health care entity. "Refer" includes a
17health care provider requesting or establishing a plan of care that includes the provi
18sion of health care services outside the health care provider's practice or group prac
19tice.
SB640,6,23 20150.882 Prohibited conduct. Except as provided in ss. 150.884 and 150.886,
21no health care provider may refer a patient to a health care entity outside the health
22care provider's office practice or group practice if the health care provider has a finan
23cial interest in that entity.
SB640,7,3
1150.884 Exceptions. A health care provider may refer a patient to a health
2care entity that is outside his or her office practice or group practice and in which he
3or she has a financial interest in any of the following circumstances:
SB640,7,5 4(1) The referral is made during an emergency and compliance with s. 150.882
5presents an immediate danger to the life of the patient.
SB640,7,7 6(2) (a) The referral is one to which 42 USC 1395nn applies and is permitted
7under 42 USC 1395nn.
SB640,7,98(b) The referral is one to which 42 USC 1396b (s) applies and is permitted under
942 USC 1396b (s).
SB640,7,11 10(3) The health care provider provides health care services personally and di
11rectly to the patient within the entity to which the patient is referred.
SB640,7,14 12(4) The health care entity to which the patient is referred is a publicly traded
13health care entity and the health care provider's financial interest does not exceed
140.5% of the entity's total equity.
SB640,7,18 15(5) The health care entity to which the patient is referred is part of a health
16maintenance organization, if the patient is an enrolled participant of the health
17maintenance organization and the referral is made under an agreement between the
18health care provider and the health maintenance organization.
SB640,7,22 19(6) The health care entity to which the referral is made is a joint venture in
20which the health care provider's group practice has invested for the purpose of pro
21viding health care services, an ambulatory surgery center or a hospital, if all of the
22following conditions are met:
SB640,7,2423 (a) The health care provider has an employment or service agreement with the
24entity for specified services.
SB640,8,4
1(b) The compensation the health care provider receives from the entity is con
2sistent with the fair market value of the services provided, is not determined on the
3basis of the value or volume of referrals, and is reasonable even if no referrals are
4made to the entity.
SB640,8,8 5150.886 Community need referrals. (1) A health care provider may refer
6a patient to a health care entity that is outside his or her office practice or group prac
7tice and in which he or she has a financial interest if all of the following conditions
8are met:
SB640,8,119 (a) The community in which the entity is located has a demonstrated need for
10the entity. A community has a demonstrated need for an entity in any one of the fol
11lowing situations:
SB640,8,1312 1. There is no other health care entity or facility of reasonable quality that pro
13vides medically appropriate service.
SB640,8,1514 2. Requiring a patient to use another entity or facility creates a hardship for
15the patient.
SB640,8,1816 3. The entity has been formed to own or lease medical equipment that replaces
17obsolete or inadequate equipment in or under the control of a hospital located in a
18health manpower shortage area.
SB640,8,2019 4. The community meets any other demonstrated need established by rule by
20the commission.
SB640,8,2121 (b) The structure of the entity meets all of the following requirements:
SB640,8,2322 1. A person who is not in a position to refer a patient to the entity is able to in
23vest in the entity on the same terms as those offered to a health care provider.
SB640,9,3
12. No health care provider who invests is required or encouraged to make refer
2rals to the entity or otherwise generate business for the entity as a condition of be
3coming or remaining an investor.
SB640,9,64 3. The entity markets or furnishes its services on equal terms to referring
5health care provider investors, other investors and health care providers who are not
6investors.
SB640,9,87 4. The entity does not loan funds or guarantee any loans for health care provid
8ers who are in a position to refer patients to an entity.
SB640,9,119 5. The income on the health care provider's investment is based on the health
10care provider's equity in the entity rather than on the volume of the referrals the
11health care provider makes to the entity.
SB640,9,1312 6. The investment contract between the entity and the health care provider
13does not prohibit a health care provider from investing in other entities.
SB640,9,24 14(2) Before obtaining a financial interest in a health care entity, a health care
15provider may request the commission to determine whether the entity satisfies the
16requirements under sub. (1). A request by a health care provider under this subsec
17tion shall be in writing and shall contain sufficient information for the commission
18to make a determination. The commission shall provide the determination in writ
19ing, stating the reasons for its determination, no later than 90 days after receiving
20the health care provider's written request. If the commission does not provide a de
21termination in the 90-day period, the entity shall be considered to satisfy the re
22quirements under sub. (1) based on the information contained in the health care pro
23vider's written request and the health care provider may make referrals to the entity
24under this section.
SB640,10,13
1(3) If a health care provider has not received a determination under sub. (2)
2that permits the health care provider to make referrals to an entity in which the
3health care provider has a financial interest, the health care provider shall, before
4making a referral under this section, request the commission to determine whether
5the entity satisfies the requirements under sub. (1). A request by a health care pro
6vider under this subsection shall be in writing and shall contain sufficient informa
7tion for the commission to make a determination. The commission shall provide the
8determination in writing, stating the reasons for its determination, no later than 90
9days after receiving the health care provider's written request. If the commission
10does not provide a determination in the 90-day period, the entity shall be considered
11to satisfy the requirements under sub. (1) based on the information contained in the
12health care provider's written request and the health care provider may make the
13referral to the entity under this section.
SB640,10,22 14(4) When making a referral under this section, a health care provider shall dis
15close his or her financial interest in the entity to which the patient is being referred
16to the patient and, if it requests information regarding the health care provider's fi
17nancial interest, to a 3rd-party payor. If alternative facilities are reasonably avail
18able, the health care provider shall provide the patient with a list of the alternative
19facilities and shall inform the patient that he or she may use the alternative facility
20other than the one in which the health care worker has a financial interest. A health
21care provider may not treat a patient differently if the patient chooses to use an alter
22native facility.
SB640,10,25 23(5) No entity may receive referrals under this section unless the entity esta
24blishes a referral review program to ensure that referrals from health care providers
25who have a financial interest in the entity are appropriate or necessary referrals.
SB640,11,6
1(6) If compliance with the provisions of this section are not practical, as defined
2by rule by the commission, the health care provider may refer the patient to an entity
3in which he or she has a financial interest without submitting a written request un
4der sub. (3). A health care provider making a referral under this subsection shall pro
5vide the patient with information concerning all reasonably available alternative fa
6cilities.
SB640,11,9 7150.888 Evasion. No health care provider may enter into an agreement or ar
8rangement with another person that provides for the other person to make a referral
9that the health care provider is prohibited by this subchapter to make directly.
SB640,11,16 10150.89 Advisory opinions. A health care provider may request in writing
11that the commission provide an advisory opinion concerning whether a referral to an
12entity violates this subchapter. The opinion of the commission requested under this
13section shall be presumptively correct. If the commission does not provide the opin
14ion within 90 days after receiving the written request the health care provider may
15make the referral and the referral shall not be considered to be a violation of this sub
16chapter.
SB640,11,18 17150.892 Rule-making authority. The commission shall promulgate rules
18that it determines are necessary to administer this subchapter.
SB640,11,20 19150.894 Penalties. Any person violating this subchapter or a rule promul
20gated under this subchapter shall forfeit $20,000 for each violation.
SB640, s. 2 21Section 2. 441.07 (1) (f) of the statutes is created to read:
SB640,11,2322 441.07 (1) (f) Any act that violates subch. V of ch. 150 or a rule promulgated
23under subch. V of ch. 150.
SB640, s. 3 24Section 3. 446.04 (4m) of the statutes is created to read:
SB640,12,2
1446.04 (4m) Violating subch. V of ch. 150 or a rule promulgated under subch.
2V of ch. 150; and
SB640, s. 4 3Section 4. 447.07 (3) (km) of the statutes is created to read:
SB640,12,54 447.07 (3) (km) Violated subch. V of ch. 150 or a rule promulgated under subch.
5V of ch. 150.
SB640, s. 5 6Section 5. 448.01 (11) of the statutes is renumbered 448.01 (11) (intro.) and
7amended to read:
SB640,12,88 448.01 (11) (intro.) "Unprofessional conduct" means those any of the following:
SB640,12,11 9(a) Those acts or attempted acts of commission or omission defined as unprofes
10sional conduct by the board under the authority delegated to the board by s. 15.08
11(5) (b) and any.
SB640,12,12 12(b) Any act by a physician or podiatrist in violation of ch. 161 or 450.
SB640, s. 6 13Section 6. 448.01 (11) (c) of the statutes is created to read:
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