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State laws and regulations that affect your medical practice


1. May a physician request a consultation from a physician licensed in another state?

Yes. Generally, a physician who is physically located in another jurisdiction but who, through the use of any medium, including an electronic medium, performs an act that is part of a patient care service initiated in Texas, including the taking of an x-ray examination or the preparation of pathological material for examination, and that would affect the diagnosis or treatment of a patient, is considered to be engaged in the practice of medicine in Texas and is subject to appropriate regulation by the State Board of Medical Examiners.

There are, however, exceptions to the foregoing rule which allow for the provision of consultation in limited circumstances. Those circumstances include the following:

A. A medical specialist located in another jurisdiction who provides only episodic consultation services on request to a physician licensed in this state who practices in the same medical specialty;

B. A physician located in another jurisdiction who is providing consultation services to a medical school as defined by Section 61.501, Education Code;

C. A physician located in another jurisdiction who is providing consultation services to the University of Texas M.D. Anderson Cancer Center in Houston, Texas.

D. A physician located in another jurisdiction of a state having borders contiguous with the borders of this state who is the treating physician of a patient and orders home health or hospice services for a resident of this state to be delivered by a home and community support services agency licensed in this state.

TX OCC § 151.056


1. What are the regulations governing the referral of patients by a physician to health care facilities in which the physician has a financial interest?

A. Disclosure.

Under the Texas Workers’ Compensation Act, every health care practitioner must disclose to the Division of Workers Compensation of the Texas Department of Insurance the identity of any health care provider in which the health care practitioner, or the health care provider that employs the health care practitioner, has a financial interest within 30 days of the date the first referral is made unless the disclosure was previously made. This disclosure must be filed for each health care provider to whom an employee is referred .

1. Financial interest for purposes of Section A means:

i. an interest of a health care practitioner, including an interest of the health care provider who employs the health care practitioner, or an interest of an immediate family member of the health care practitioner, which constitutes a direct or indirect ownership or investment interest in a health care provider, or

ii. a direct or indirect compensation arrangement between the health care practitioner, the health care provider who employs the referring health care practitioner, or an immediate family member of the health care practitioner and a health care provider.

2. The health care practitioner's disclosures in paragraphs A must, at a minimum, include:

i. the disclosing health care practitioner's name, business address, federal tax identification number, professional license number, and any other unique identification number;

ii. the name(s), business address(es), federal tax identification number(s), professional license number(s), and any other unique identification number of the health care provider(s) in which the disclosing health care practitioner has a financial interest as defined in subsection (a)(2) of this section; and

iii. the nature of the financial interest including, but not limited to, percentage of ownership, type of ownership (e.g., direct or indirect, equity, mortgage), type of compensation arrangement (e.g, salary, contractual arrangement, stock as part of a salary payment) and the entity with the ownership (disclosing health care practitioner, the health care provider who employs the health care practitioner, or an immediate family member of the health care practitioner).

“Immediate family member” or “member of a doctor's immediate family” means husband or wife; birth or adoptive parent, child, or sibling; stepparent, stepchild, stepbrother, or stepsister; father-in-law, mother-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law; grandparent or grandchild; and spouse of a grandparent or grandchild.

TX. LABOR § 413.041; 28 TAC § 180.24

B. Niche Hospitals.

A physician may not direct or require a patient to obtain health care goods or services from a niche hospital in which the physician or an immediate family member of the provider has a financial interest, unless the provider:

1. discloses to the patient, in writing, that the provider or the provider's family member has a financial interest in the niche hospital; and

2. informs the patient that the patient has the option of using an alternative health care facility.

C. Niche hospital for purposes of Section 1B means a hospital that:

1. classifies at least two-thirds of the hospital's Medicare patients or, if data is available, all patients:

i. in not more than two major diagnosis-related* groups; or

ii. in surgical diagnosis-related groups;

2. specializes in one or more of the following areas:

i. cardiac;

ii. orthopedics;

iii. surgery; or

iv. men's health; and

3. is not:

i. a public hospital;

ii. a hospital for which the majority of inpatient claims are for major diagnosis-related groups relating to rehabilitation, psychiatry, alcohol and drug treatment, or children or newborns; or

iii. a hospital with fewer than 10 claims per bed per year.

TX OCC § 105.002

* “Diagnosis-related group” means the classification system mandated by Medicare regulations for reimbursement purposes that groups patients according to principal diagnosis, presence of a surgical procedure, age, presence or absence of significant complications, and other relevant criteria.

Copyright © Kern Augustine Conroy and Schoppmann, P.C. Used with permission.

Updated 2008

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