California halts sales of discount doctor lists

It's unlawful for a firm to profit by matching poor patients with doctors willing to give them a price break.

By Tanya Albert, amednews staff. Sept. 10, 2001.

The California Attorney General's office in July said companies can't charge indigent, uninsured patients a fee to get names of physicians who will offer discounted services.

The California Medical Assn. has spoken out against the practice since becoming aware that there are companies that offered physicians a chance to have their name, phone number and other information put on a referral list. In essence, the companies worked as a paid broker to link indigent patients with physicians who would offer them a discount.

The company wouldn't charge the physician. Instead, it charged patients an annual subscription fee.

"We believe that referrals should be based on quality," said Frank Staggers Sr., MD, CMA president. "Any deviation from that principle is not in the best interest of patients."

CMA said the program would deter healthy patients from getting adequate health care insurance. Another concern was that the companies were unlicensed and had no regulatory oversight. The association also argued that the for-profit companies were violating several laws that say it's illegal to take payments for referrals because it could result in patient harm and increased health care costs.

"It is not illegal for physicians to give individual charity to patients," Dr. Staggers said. "That is not what we're against. It is when an institution is making a profit."

The attorney general agreed.

"We perceive no basis for the notion that furnishing for a fee a list of physicians based exclusively on their willingness to charge discounted rates to uninsured indigents is something other than a referral proscribed by [the law]," according to the opinion by California Attorney General Bill Lockyer and Deputy Attorney General Anthony S. DaVigo.

It is unclear how many companies were engaged in this type of action. But, Dr. Staggers said, it seemed that the state was seeing the beginning of a trend and was able to stop it before it grew into a larger problem.