2011 Proposed Physician Fee Schedule – Stark In-Office Ancillary Changes

The Patient Protection and Affordable Care Act (PPACA) created a new disclosure requirement for the in-office ancillary services exception to the Stark Law. The in-office ancillary services exception to the Stark Law permits a physician in a solo or group practice to order and provide designated health services, 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. The exception limits who can furnish the service, where the services must be performed and who can bill for the service. Under the new disclosure requirement imposed by the PPACA, with respect to referrals for MRI, CT and PET, the referring physician must 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 and must provide the patient with a list of suppliers who furnish the service in the area where the patient resides.

In June 2010, the Centers for Medicare and Medicaid Services (CMS) published the 2011 Proposed Physician Fee Schedule, which includes provisions implementing this new disclosure requirement. CMS proposes that the only services triggering the disclosure requirement would be MRI, CT and PET; however, CMS solicited comments on whether to expand the services to other radiology and imaging services. Additionally, the notice must be written in a manner sufficient to be reasonably understood by all patients and must be given to the patient at the time of the referral. Although, the notice must indicate to the patient that the services may be obtained from a person other than the referring physician or his or her group practice and include a list of suppliers who provide the service being referred, nothing on the disclosure notice or list may indicate to the patient that he or she must receive imaging from a supplier on the list if not receiving the service from the referring physician. The term suppliers is defined as "a physician or other practitioner, facility or other entity (other than a provider of services) that furnishes items of services under the Social Security Act." CMS proposes that only suppliers be included on the written list, and that providers of services, such as hospitals or critical access hospitals, not be permitted or required.

CMS determined that it would be an administrative burden on the physicians or group practices to require the list of suppliers to be in the area in which the patient resides because the physicians and group practices would have to create multiple lists. Instead, CMS proposes that the suppliers included in the notice should be located within a 25-mile radius of the physician's office location at the time of the referral. CMS solicited comments on the 25-mile radius requirement, specifically with respect to having the same standard for urban and rural areas. CMS indicates that the written notice must include no fewer than 10 other suppliers, and it also solicited comments on whether providing a list of 10 suppliers is sufficient. The list of suppliers must include the name, address, phone number and distance from the physician's office. In areas where there are not 10 suppliers in the 25-mile radius, then the list must include all of the suppliers present in a 25-mile area. If no other suppliers of the imaging services being referred exist within the 25-mile radius, CMS states that the physician need not provide a list of alternative suppliers, but the physician must still disclose to his or her patient that they may receive the imaging services from another supplier. Lastly, the physicians and group practices must maintain documentation of the disclosure through patient signatures on the disclosure notification and such record must be maintained in the patient's medical record. CMS sought comments on whether this recordkeeping requirement is too burdensome.

CMS does not propose any exception for imaging services furnished on an emergency or time-sensitive basis, but is soliciting comments on whether there are other procedures or circumstances in which it may be difficult or impractical to provide the written disclosure prior to the provision of such services. CMS does entertain the notion of alternative implementation methods and seeks comments on this issue. One possibility would be to require a "reasonable" list of other suppliers with general requirements for the disclosure to patients, and providing that compliance with the more specific requirements set forth in the CMS proposal will be deemed to be a "reasonable" disclosure.

The deadline for submitting comments to CMS was August 24, 2010. CMS proposes that the disclosure requirement shall apply to services furnished on or after the effective date of the final regulation, and proposes an effective date of January 1, 2011 for the final regulation.

For more information on the in-office ancillary services exception to the Stark Law, please contact Kevin Woodhouse.

Sept. 15, 2010

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.