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CMS Issues Proposed Rule on In-Office Ancillary Services Disclosure Requirement

07.16.10

On June 25, 2010, the Centers for Medicare and Medicaid Services (CMS) released a proposed rule for the Medicare Physician Fee Schedule for 2011. Among other things, the proposed rule details the disclosure requirements that were added to the Stark Law in-office ancillary services exception by the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (collectively, the "Act"), which were signed into law last March. The proposed disclosure rule would require physicians to inform patients of the availability and location of other nearby providers when referring patients for certain diagnostic imaging services.

General Disclosure Requirement

Under Section 6003 of the Act, in order to qualify for the in-office ancillary services exception, if a physician refers a patient for magnetic resonance imaging (MRI), computed tomography (CT), or positron emission tomography (PET) services or any other radiology or imaging services that have been designated by the Secretary of the Department of Health and Human Services (the "Secretary"), the physician must inform the patient in writing at the time of the referral that the patient may obtain the recommended services from a person other than the referring physician or someone in the physician's group practice and provide the patient with a list of suppliers who furnish those services in the area in which the patient resides. In the proposed rule, CMS indicated that while it had the authority to expand the disclosure requirement beyond the specific imaging services listed in the Act, it was not inclined to do so at this time. CMS did, however, solicit comments on whether any additional radiology or imaging services should be covered by the regulation, and, as a result, depending on the comments CMS receives, the disclosure requirement could be expanded in the future.

Content of Notice

In addition to discussing the scope of the disclosure requirement, the proposed rule provides guidance on the content of the required notice. Because one of the primary purposes of the disclosure requirement is to ensure that patients have the information they need to make informed decisions about their healthcare, CMS stated that in addition to the general requirements set forth in the Act, the disclosure notice must be written in a way that can be reasonably understood by all patients. CMS also added that the notice may not indicate or otherwise suggest that the patient must obtain the recommended imaging services from the physician or any supplier that is included on the physician's list.

Alternate Suppliers

With respect to alternate suppliers, the proposed rule would require physicians to provide patients with the names, addresses, and telephone numbers of at least 10 other suppliers that provide the recommended imaging services and are located within a 25-mile radius of the physician's office, at the time the referral is made. (The Act referred to the distance from the patient's address, which CMS apparently realized would be impracticable.) While a physician would not be required to list the 10 closest suppliers, the physician would be required to specify the distance between each of the suppliers on the list and the physician's office location. Because the Act speaks in terms of "suppliers," the proposed rule would not require or allow "providers of services," such as hospitals, critical access hospitals, and nursing homes, to be included on the list. If there are fewer than 10 alternate suppliers located within 25 miles of the physician’s office, the proposed rule would require the physician to list all of the suppliers of the recommended imaging services who are located within a 25-mile radius of the physician's office. If no other suppliers of the service are located with 25 miles of the physician's office, the physician would not be required to provide a list of alternate suppliers, but he or she would be required to notify his or her patients that they could receive the recommended services from another supplier.

Documentation

Under the proposed rule, physicians would be required to maintain a copy of the patient’s signature on the disclosure notice as a part of the patient’s medical record. CMS did express some concern that the documentation requirement might be administratively burdensome on physicians, and, as a result, is soliciting comments for other ways to document the required disclosure notices.

Effective Date

When the Act was adopted in March, there was some concern that, in light of the language and dates used in the Act, CMS would make the new disclosure requirement retroactive to January 1, 2010. CMS concluded, however, that the statutory provisions containing the disclosure requirement were not self-executing and that the disclosure requirement would only become effective after the Secretary had promulgated an implementing regulation. CMS is proposing that the disclosure requirement become effective January 1, 2011, along with the other provisions of the proposed Medicare Physician Fee Schedule rule for 2011.

CMS has requested comments on the proposed rule and will consider comments submitted until August 24, 2010. Waller Lansden is soliciting comments on the proposed rule, and we will provide these comments to CMS.

For more information, please contact Brandon Schirg or any member of the Waller Lansden Healthcare practice at 800-487-6380.

The opinions expressed in this bulletin are intended for general guidance only.  They are not intended as recommendations for specific situations.  As always, readers should consult a qualified attorney for specific legal guidance.