Laser Eye Surgery Referral Fees Raise Ethical Concern

By Ronald L. Scott
Health Law & Policy Institute

Optometrists have discovered a new way to share in the laser eye surgery boom. In recent years, physicians and optometrists have engaged in a turf war over the performance of laser eye surgery. For example, on February 23, 1988, the Oklahoma Optometry Board decreed that qualified optometrists could use lasers in the practice of optometry. The Optometry Board took the position that the Oklahoma Statutes authorize the use of lasers by licensed optometrists. On January 15, 1992, the Oklahoma Medical Board issued an opinion stating that the performance of laser surgery constituted the practice of medicine. The Medical Board argued that an optometrist who performs laser surgery is practicing medicine without a license. The Medical Board filed an action for a declaratory ruling to determine whether the Medical Board could decree that the use of lasers constituted the unauthorized practice of medicine and ultimately prevailed in a 1995 decision of the Oklahoma Supreme Court. See Bd. of Med.Lic. v. Bd. of Optom., 893 P.2d 498 (Okla. 1995).

Although optometrists have had little success in obtaining the right to perform laser surgery, they have recently found a way to share in the financial boom of laser surgery in a manner that raises troubling ethical issues. The cost of refractive laser eye surgery is rarely if ever covered by medical insurance. It is either specifically excluded, or is considered a cosmetic treatment, similar to the lack of insurance coverage for cosmetic plastic surgery.

Patients in large cities have several options when seeking laser eye surgery. In Houston, Texas, newspapers frequently advertise basic surgery for as little as $800 per eye at clinics that only perform the surgery. Alternatively, a patient may pay as much as $2500 per eye if the surgery is performed by an ophthalmologist in private practice in a non-clinic setting. The more troubling pricing alternative arises where an optometrist refers a patient to a physician for the surgery and receives a financial benefit for the referral. The optometrist and physician agree on a division of labor—and fees. Optometrists reportedly receive as much as $1000 per referral ostensibly for their pre-surgery screening services and post-surgery care. However, the patient may not be aware of the financial details of the arrangement.

The optometrist-physician referral arrangements seem carefully constructed to be at least arguably legal. Since the surgery is not covered by insurance, health care providers are not restrained by referral limitations in their insurance contracts with insurers. Also, providers may escape application of state or federal anti-kickback laws since the government is not a payor for the surgery. Finally, both the optometrist and physician can argue that there is no "referral fee" or "kick-back" to the optometrist, but rather any payment is for services rendered by the optometrist.

Lawyers have successfully used this argument in those states that prohibit lawyers from paying referral fees. Even where the legal ethics rules prohibit the payments, there is usually an exception allowing a referring lawyer to be paid in proportion to his time and responsibility for the matter. Nonetheless, ethically, the patient should be fully informed by both the optometrist and surgeon of any business relationship between the two, and specifically, of any fee-sharing arrangement. Medical and optometry boards need to address and regulate "for-consideration" referrals of this type. Specifically, regulations should require that any referral fees paid to optometrists be limited to the value of services rendered by optometrists, together with full disclosure of the fee-sharing arrangement.