On Tuesday, November 2nd, CMS issued the 2011 Physician Fee Schedule Final Rule.  Embedded in the over 2000 pages of the rule was the amendment to the Stark in-office ancillary services exception.  CMS finalized the rule, required by PPACA (the Healthcare Reform Act), regarding the requirement of physician groups to provide notice of other “suppliers” of CT, MRI and PET services. 

The final rule did not expand the PPACA list of services, and limited the disclosure requirement only to CT, MRI and PET advanced imaging services.  This disclosure requirement applies to all in-office referrals that are categorized as “radiology and certain other imaging services” by the list of CPT/HCPCS Codes (defined in §411.351).  CMS noted that a request by a radiation oncologist for radiation therapy or ancillary services necessary for, and integral to, the provision of radiation therapy is not a “referral” under §411.351, if certain other criteria are satisfied.  The disclosure requirement would therefore not apply if the request is not a “referral.” 

 CMS has also removed CPT code 77014 (computed tomography guidance for place of radiation therapy fields) from the CPT/HCPCS Codes because the service is always integral to, and performed during, a nonradiological medical procedure. 

The disclosure notice should be written in a manner that can be reasonably understood by the patient and must include the following: 

1. Must be in writing;
2. Delivered to the patient at the time of the referral;
3. Must contain a list of 5 alternative suppliers that can provide the same services;
4. These suppliers must be located within a 25 mile radius of the referring physician’s office;
5. The list should include the supplier’s name, address and telephone number.

The rule does allow an exception for providers practicing in areas where less than 5 suppliers are located within a 25 mile radius.  Those providers should list all of the suppliers within the area.  Hospitals are not considered suppliers, but may also be listed (CMS recommends that rural providers list hospitals). 

In the final rule, CMS removed the requirement that the physician group obtain the signature of the patient on the disclosure form.  CMS recommends that the physician be able to document or otherwise establish that he/she has complied with the disclosure requirement.  The disclosure notice must be provided at the time of the referral, which means that providing the notice at the initial visit will not suffice.  The disclosure requirement applies to all services furnished on or after January 1, 2011.

If you would like more information or assistance in drafting a disclosure notice please contact Don Black or Elana Zana.

Earlier this week the Congress passed the Patient Protection and Affordable Healthcare Act, otherwise known as Health Reform.  Included in the Act were instructions to CMS to make changes to the regulations implementing the Stark Self-Referral Act (the “Stark Law”).  These changes will have a direct effect on the financial relationships between physicians and DHS entities such as hospitals. 

 General Overview of the Stark Law

Unless an exception applies, the Stark Law, 42 U.S.C. § 1395nn, prohibits a physician from making a referral to an entity for the furnishing of designated health services (“DHS”) that would otherwise be covered by Medicare if the physician (or an immediate family member) has a financial relationship with the entity.  Further, entities may not submit a claim or bill any payor for DHS furnished pursuant to a prohibited referral.  State Medicaid programs may not receive federal funds for DHS rendered pursuant to referrals that would be prohibited if the services had been covered by Medicare. 

The exceptions are organized into three categories: (i) exceptions for certain services (known as the general exceptions); (ii) exceptions for certain ownership and investment interests; and (iii) exceptions for certain compensation arrangements.  The exceptions typically require contracts between the parties which set out, among other provisions, that any compensation paid between the parties does not take into account the volume or value of referrals or any other business generated between the parties, is based on fair market value, is set in advance, is in writing, and is for at least a one-year term.

New Changes

Section 6409 – Medicare Self-Referral Disclosure Protocol

This section requires that HHS implement a disclosure protocol for actual and potential Stark law violations. This protocol, termed the self-referral disclosure protocol (“SRDP”) must be developed within six months and the instructions must be posted on the CMS website.  The SRDP instructions shall include the name of the specific person or office to whom the disclosures should be made and the implication of the SRDP on any corporate integrity agreements and corporate compliance agreements. 

Importantly, HHS is authorized to reduce the amount due for any violations under the Stark Law.  In evaluating whether to reduce the amounts owed, HHS may consider the following factors:

1)      Nature and extent of the improper or illegal practice;

2)      Timeliness of self-disclosure;

3)      The cooperation in providing additional information; and

4)      Such other factors as HHS deems appropriate. 

HHS is also required to submit a report to Congress on the implementation of the SRDP which shall include the number of providers making disclosures, the amounts collected, the types of violations reported, and such other necessary information to evaluate the impact of the SRDP. 

Section 6001 – Limitation on Medicare Exception to the Prohibition on Certain Physician Referrals for Hospitals

Section 6001 modifies the Stark Law exception that allows physicians to hold an ownership interest in hospitals.  This detailed section limits the expansion of physician owned hospitals, increases disclosure requirements related to physician ownership and provider agreements (including the names of the physicians and the extent of the ownership interest) to patients, on the hospital website, hospital advertising, and in annual statements to HHS, and expands requirements regarding physician ownership in the hospitals. 

Section 6003 – Disclosure Requirements for In-Office Ancillary Services Exception to the Prohibition on Physician Self-Referral for Certain Imaging Services

This section amends the in-office ancillary services exception by requiring a physician making a referral for MRI, CT or PET services (or other services designated by HHS) to inform the patient in writing, at the time of the referral, that these services may be obtained from a person or entity other than the referring physician, a physician within the group practice, or an individual directly supervised by that physician or a physician in the group practice.  In addition, the physician must provide the patient with a list of providers who furnish these services in the area in which the patient resides.  The effective date of the amendment if for services furnished on or after January 1, 2010 (unclear how this applies retroactively).

For more information about Stark or if you have questions please contact Don Black.