Part 3 of 5: Key CMS Amendments to Physician Self-Referral Rules Contained
in the 2009 IPPS
(see part 1 and
The Centers for Medicare and Medicaid Services (“CMS”) published the 2009
Inpatient Prospective Payment Systems final rule (“Final Rule”) in the Federal
Register on August 19, 2008. The Final Rule includes several important changes
to the Stark Act that will likely impact many health care providers. Among the
notable revisions to the Stark Act announced in the Final Rule, CMS reiterated
its intent to conduct an audit of hospital financial relationships with
physicians in the near future.
After withdrawing its information collection request on April 10, 2008, CMS
once again plans to seek information from up to five hundred specialty and
general acute care hospitals about their financial relationships with physicians
by requiring them to complete a comprehensive Disclosure of Financial
Relationships Report (“DFRR”). CMS notes that it has not conducted an audit of
financial relationships between hospitals and physicians since the Stark Act was
The primary purpose of the audit will be to determine if surveyed hospitals
are complying with the Stark Act’s prohibition against physician self-referrals.
CMS also suggested that it would use collected information to inform future
Stark Act rulemaking and reporting requirements. The DFRR Stark Act Compliance
Audit will be a one-time event. CMS, however, stated it would consider future,
separate rule making to institute regular reporting depending upon the
information gathered from the audit.
The most recent draft of the DFRR contains eight worksheets. The first six
worksheets address direct and indirect physician investment and ownership
interests in hospitals. The seventh worksheet requests information about rental,
personal service and recruitment arrangements between hospitals and physicians.
The last worksheet includes a series of questions targeting non-monetary
compensation arrangements and medical staff benefits exceeding approved limits
and charitable donations by physicians to hospitals.
Based upon responses from hospitals and other industry representatives, CMS
has concluded that surveyed hospitals should be able to complete the DFRR in
approximately one hundred hours at a cost of $4,080. These estimates reflect
CMS’s belief that hospitals already maintain the information required to
complete the DFRR, and that the task of completing the report should be largely
administrative (although CMS recognizes that many hospitals may seek assistance
from accountants and lawyers). The time and monetary burden of compiling data
for, and carefully responding to, the survey will likely be substantial.
Additionally, a number of commentators believe that CMS still has not accurately
considered all of the potential costs associated with completing the DFRR.
CMS will require each hospital to complete and return the DFRR within sixty
days of its receipt. The agency has commented that although it has authority to
impose civil monetary penalties of up to $10,000 per day for late responses, it
will not penalize hospitals that fail to respond to the DFRR until after it has
provided a notice letter to hospitals that do not timely return the DFRR.
Additionally, CMS has agreed to grant extensions to hospitals that are able to
show good cause for failing to respond.
Please contact the authors if you have any questions regarding the DFRR.