Senators took on doctors’ billing practices and physician ethics Wednesday, listening as pathologists and dermatologists took opposite sides.

The disagreement centered on a bill (LB513) that would require laboratories to charge patients and insurers directly to avoid the possibility of doctors marking up charges for certain lab work.

It’s an ongoing dispute that the two sides have apparently been unable to resolve for a year and a half.

The bill’s sponsor, Sen. Tony Fulton, said after hearing testimony, he was even more convinced of the need for the bill.

“I’m a new senator and I’m trying to do what is right,” he told the Legislature’s Health and Human Services Committee. “I believe LB513 will, first and foremost, help reduce health care costs.”

And it would help end the divisiveness the issue is causing, he said.

According to testimony, some doctors negotiate discounted prices for Pap tests and biopsies, called anatomic pathology services, and then mark up the cost when billing patients, sometimes by 75 to 100 percent.

A 1984 federal law prohibits the markup practice for Medicare or Medicaid patients. And the American Medical Association has deemed the practice unethical.

But some doctors have continued the markup practice for some patients not receiving Medicare or Medicaid.

Dr. Gene Herbek, a pathologist at Omaha’s Methodist Hospital, said 12 other states, including Iowa, have passed laws against the practice.

Herbek, who supports the bill, said there is frustration within the medical community over the issue and that pathologists have come to the Legislature because attempts to stop the practice through discussions, and to bring the two sides to a mediator, have failed.

“In our mind, this legislation is about a medical code of ethics and helping the medical community in Nebraska clarify once and for all what is and is not acceptable,” he said.

It is clear, he said, that there are doctors in Nebraska intent on protecting the practice.

“We believe it is dishonest,” he said.

But Omaha dermatologist Joel Schlessinger, an opponent of the bill, said the legislation could make the prices of such laboratory services go higher, as they have for Medicare patients.

Schlessinger argued the bill could take away the option for doctors of choosing to use out-of-state pathology labs, even though supporters of the bill say that’s not the case. Only two pathologists in the state specialize in dermatology, he said.

“The current system offers the lowest cost to patients,” he argued.

In trying to understand the issue, senators grilled the doctors on whether they felt the practice was ethical and on what the added charges covered.

Dermatologist Margaret Sutton said she had seen legal opinions that said the practice was completely ethical.

She described LB513 as a protectionist bill that would force doctors to use pathologists in their own network, rather than find the best lab for specific cases.

“I feel I am adding a valued service by allowing access to the best care in the country,” she said.

The practice of billing for pathology services is good for patients, she said, who “don’t want to receive bills from all over the nation from physicians they have never heard of.”

Dr. Les Spry, speaking for the Nebraska Medical Association, which opposes the bill, said he believes the practice is unethical. But the issue should be decided by the state Board of Medicine and Surgery, which regulates physicians, he said, not by the Legislature.

At the same time, he said, pass-through billing should be more transparent, so patients know what they – or their insurance companies – are paying for and are aware of the markup.

Louisville Sen. Dave Pankonin told Spry that after listening to testimony, “I probably have more questions and less respect for your profession.”

Reach JoAnne Young at 473-7228 or jyoung@journalstar.com.