On March 6, 2009, the Centers for Medicare and Medicaid Services (CMS)
transmittal implementing a final rule from the hospital inpatient
prospective payment system (IPPS) for fiscal year 2008 requiring disclosure of
physician ownership or investment in physician-owned hospitals.
Beginning June 8, 2009, Medicare-participating hospitals will be required to
disclose certain physician ownership or investment information to patients when
a referring physician (or his or her immediate family members) has an ownership
interest in a hospital. Physicians also will be required to disclose their (or
their immediate family members) ownership or investment interests in all
hospitals to which a physician refers patients. For purposes of the disclosure
requirements, a physician’s ownership or investment interest may be through
equity, debt, or other means, and includes an interest in any indirect entity
that holds an ownership or investment interest in a hospital.
The final rule’s disclosure requirements are intentionally broad and apply to
all hospitals with physician ownership, including critical access hospitals,
long term acute care hospitals, and specialty hospitals alike. These particular
disclosure rules do not apply to physician-owned ambulatory surgery centers. CMS
stated that these changes are being made for the purpose of allowing individuals
"to make an informed decision regarding their treatment and to decide if the
existence of a financial relationship suggests a conflict of interest that may
not be in the best interest of the patient."
The final rule specifically requires physician-owned hospitals to:
- furnish written notice reasonably designed to be understood by all
patients to each patient at the beginning of the patient’s hospital stay or
outpatient visit that the hospital is a physician-owned hospital. The notice
must disclose the fact that the hospital meets the Federal definition of a
physician-owned hospital and that the list of physician owners or immediate
family members of physicians is available upon request and must be provided
to the patient at the time of the request; and
- require each physician who is a member of the hospital’s medical staff
to agree, as a condition of continued medical staff membership or admitting
privileges, to disclose, in writing, to all patients the physician refers to
the hospital any ownership or investment interest in the hospital held by
the physician (or held by an immediate family member of the physician).
Disclosure must be made at the time of the referral.
The requirement that the notice must be “reasonably designed to be understood
by all patients” suggests that hospitals should have written disclosure
statements in languages used most often by their patient population.
Physician-owned hospitals may also consider amending their (i) medical staff
bylaws, (ii) conflict of interest policies, and (iii) medical staff membership
and credentialing applications and renewal forms to require each physician who
is a member of the medical staff, or who is applying for medical staff
membership or admitting privileges, to give referred patients written disclosure
of the ownership or investment interest in the hospital held by the physician or
the physician’s immediate family member.
Hospitals that fail to comply may face having their provider agreements with
CMS terminated, and physicians who fail to disclose ownership interests could
lose hospital medical staff membership.
A copy of the accompanying Medicare Learning Network article released by CMS
Please contact the authors for more information about this disclosure
requirement or for additional compliance guidance. For more information, visit
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