Update on New Disclosure Requirements for In-Office Ancillary Services Exception to Stark Law

The Patient Protection and Affordable Care Act (PPACA) created new disclosure requirements for the in-office ancillary services exception to the Stark Law. The in-office ancillary services exception permits a physician in a solo or group practice to order and provide designated health services (DHS), other than most durable medical equipment and parenteral and enteral nutrients, in the office of the physician or group practice, provided that certain criteria are met. PPACA added a disclosure requirement for any referrals made for MRI, CT, PET and any other DHS specified by the Secretary of the Department of Health and Human Services. Under the new law, a physician referring such services would be required to inform a patient in writing at the time of the referral that the patient may obtain the service from a person other than the referring physician or someone in the physician's group practice. The physician must also provide the patient a list of suppliers who furnish the service in the area in which the patient resides.

In June 2010, the Centers for Medicare and Medicaid Services (CMS) published the 2011 Proposed Physician Fee Schedule (referred to as the "Proposed Rule"), which included proposed regulations implementing the new disclosure requirements. Ice Miller previously published a summary of those proposed regulations. On Nov. 2, 2010, CMS placed the Physician Fee Schedule Final Rule with Comment Period (referred to as the "Final Rule") on display at the Federal Register. The Final Rule implements the new disclosure requirements. The following briefly summarizes the differences between the disclosure requirements under the Final Rule and the proposed disclosure requirements under the Proposed Rule.

The following elements of the Proposed Rule were finalized without change in the Final Rule:

1) the disclosure requirements apply exclusively to MRI, CT and PET;

2) the disclosure must be given in writing at the time of referral in a manner sufficient to be reasonably understood by all patients;

3) the disclosure must list the appropriate number of suppliers;

4) the disclosure must include the name, address and telephone number of the suppliers;

5) all suppliers listed must be located within a 25-mile radius of the physician's office; and

6) the effective date of the rule is Jan. 1, 2011.

After a period of public comment on the Proposed Rule, CMS made several changes which were finalized in the Final Rule. First, the Proposed Rule proposed that the disclosure list 10 alternate suppliers located within a 25-mile radius of the physician's office at the time of the referral, unless there are fewer than 10 suppliers in the 25-mile radius, in which case the physician must list all suppliers up to 10 in that area. The Final Rule reduces the number of suppliers to five. Second, CMS clarified that hospitals and other providers may also be listed on the disclosure; however, the number of hospitals and other providers listed would not count toward the requisite number of suppliers. An alternative to the foregoing which was raised under the Proposed Rule (i.e., that a "reasonable" list be provided to patients) was rejected.

Third, the Proposed Rule would have required that the list of alternate suppliers also include the distance from the referring physician's office to the alternate suppliers office. The Final Rule removes this requirement entirely. Finally, the Final Rule removes the requirement under the Proposed Rule that the physician obtain the patient's signature on the notice and retain a copy of the disclosure in the patient's medical record.

In the Proposed Rule, CMS sought comment on whether there were procedures or circumstances under which it would be difficult or impractical for the mandatory disclosure to be given prior to the provision of the services. Several comments proposed an emergency or time-sensitive exception to the rule. CMS did not incorporate any such exception into the Final Rule.

If you have any questions on the Final Rule, please contact Kevin Woodhouse or Paul Hogan.

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice.  The reader must consult with legal counsel to determine how laws or decisions discussed herein apply to the reader's specific circumstances.