Section 6003 of the Patient Protection and Affordable Care Act, Public Law
111-148 (H.R. 3590) (PPACA) makes a change to the “in-office ancillary services”
exception to the Stark physician self-referral law that impacts physician
practices providing certain radiology services in their offices. In short, the
change requires physicians making a referral for magnetic resonance imaging
(MRI), positron emission tomography (PET), and computed tomography (CT), or
certain other radiology services in their offices, to make a disclosure to the
patient that such services can be provided elsewhere and to include a list of
At the time PPACA was passed, there were questions as to how the new
disclosure requirement would be implemented, including whether the law was
self-effectuating or whether the Centers for Medicare and Medicaid Services
(CMS) would need to first promulgate regulations to make it effective. On June
13, 2010, however, CMS published a proposed rule that included answers to many
questions about how CMS thinks the law is to be implemented. 75 Fed. Reg.
40140-2. This article briefly summarizes the proposed rule.
The Stark physician self-referral law, 42 U.S.C. 1395nn (Stark), prohibits a
physician from making a referral for designated health services to an entity
with which the physician has a financial relationship, unless an exception is
met. For example, where a group practice owns or operates an MRI scanner for the
purposes of providing images to patients of the practice, Stark prohibits a
physician member from making a referral to the group practice for the
performance of an MRI scan, unless an exception is met.
The exception most commonly relied upon by physicians in this scenario is the
in-office ancillary services exception, which is set forth at 42 U.S.C.
1395nn(b)(2). The exception generally requires that the services be furnished by
the group practice in the same building in which the physician furnishes
services (or in a centralized location), and be billed by the physician or group
Section 6003 of PPACA requires the Secretary of Health and Human Services
(Secretary) to include an additional requirement in the in-office ancillary
services exception that, for any referral for MRI, PET, CT, or other radiology
services identified by the Secretary, the referring physician must:
- Inform the patient in writing at the time of the referral that the
patient may obtain the services elsewhere; and
- Include a written list of other providers who furnish the services in
the area where the patient resides.
The proposed rule implements the new disclosure requirement by adding a new
section to the text of the in-office ancillary services exception regulation at
42 C.F.R. § 411.355(b)(7). The elements of the new disclosure requirement as
proposed by CMS are described in further detail below.
January 2011 Effective Date
CMS proposes that the effective date of the new disclosure requirement be
Jan. 1, 2011. It was previously unclear to many observers and industry experts
whether Section 6003 of PPACA was self-effectuating, and many were concerned
that the new disclosure requirement had become effective on March 23, 2010,
when PPACA became law, without any further guidance from CMS. However, CMS expressed its determination
in the proposed rule that the provisions are not self-effectuating, and would
not become effective until after CMS promulgates a final regulation.
Only MRI, CT and PET Services Trigger the Requirement for the Time Being
PPACA requires that the disclosure requirement apply to MRI, CT and PET, and
grants the Secretary the authority to expand the disclosure requirement to
"other radiology services" that are designated health services under Stark.
However, CMS indicates in the proposed rule that it is not inclined to expand
the disclosure requirement at this time.
General Disclosure Requirements
CMS is proposing that the disclosure: (1) must indicate to the patient that
the MRI, CT or PET services being referred may be obtained by a supplier other
than the referring physician or his or her group practice; (2) must include a
list of such other suppliers who provide the services being referred, as well as
each supplier's address, phone number, and distance from the referring
physician; (3) must be given to, and signed by, the patient at the time of
referral; and (4) should be written in a manner sufficient to be reasonably
understood by all patients. CMS proposes that this would apply to all in-office
MRI, CT and PET referrals with no exception for referrals made on an emergency
or time-sensitive basis.
List of Other Suppliers
CMS is proposing that the list of alternative sources of MRI, CT or PET
services being referred include no fewer than 10 other "suppliers" located
within a 25-mile radius of the physician's office location at the time of the
referral. The term “suppliers,” which under the statutory definition includes
entities such as physicians, group practices, and freestanding imaging centers,
is opposed to the term “providers,” which under the statutory definition
includes entities such as hospitals, critical access hospitals, skilled nursing
facilities, and rehabilitation hospitals.
CMS has proposed that no providers would be permitted to be included on the
list. CMS indicates that where there are fewer than 10 other suppliers within
the 25-mile radius, it would be sufficient to simply list all suppliers that
exist within the 25-mile radius. Under circumstances where there are no other
suppliers within the 25-mile radius, CMS proposes that the referring physician
would not have to provide a list, but must still disclose to the patient that he
or she may receive the imaging services from another supplier.
CMS proposes to require referring physicians to maintain a record of the
patient's signature on the disclosure notification, and to include such
disclosure notification in the patient's medical record.
The proposed rule answers many questions regarding how the new disclosure
requirement will be implemented, but raises a number of issues for physicians to
sort out in administering and complying with the new law. For example, how will
physicians identify available suppliers within the 25-mile radius? How will they
determine what types of imaging services those suppliers offer? CMS is accepting
comments on the proposed rule through Aug. 24, 2010. McGuireWoods will monitor
this rulemaking, and publish additional information once the final rule is
If you have any questions about the new disclosure requirement or are
interested in submitting comments to CMS on this matter, please contact one of
the authors listed below or a member of McGuireWoods’