Disclosure Requirements for In-Office Ancillary Services Exception to the Prohibition on Physician Self-Referral for Certain Imaging Services

CMS has released their proposed disclosure requirements for In-Office Ancillary Services (IOAS) Exception. Section 1877 of the Act or the physician self-referral law (Stark) prohibits a physician from making referrals for certain “designated health services” (DHS) payable by Medicare to an entity with which he or she has a financial relationship, unless an exception applies. Stark also prohibits the entity from filing claims with Medicare for those DHS rendered as a result of a prohibited referral. However, Stark sets forth the exception that permits a physician in a solo or group practice to order and provide DHS in the office of the physician or group practice, provided that certain specific criteria are met.

Section 6003 of the Patient Protection and Affordable Care Act (PPACA) amends Stark by creating a new disclosure requirement, with respect to referrals for magnetic resonance imaging (MRI), computed tomography (CT), positron emission tomography (PET), and any other DHS specified under Stark, which requires that the physician 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 provide the patient with a list of suppliers who furnish the service in the area in which the patient resides.

CMS is proposing to implement section 6003 of the PPACA by amending §411.355(b) to add new paragraph (b)(7). This new proposed provision, would expand the disclosure requirement to other radiology and imaging services under the DHS category specified in Stark. CMS is currently soliciting comments regarding which other radiology and imaging services that fall under Stark should be included in the disclosure requirement.

Additionally, CMS is proposing that the disclosure notice under §411.355(b)(7), should be written in a sufficient manner to be more reasonably understood by all patients. It is mandatory that the notice 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 should include a list of other suppliers who provide the service being referred. Additionally, in order for the disclosure requirement to be satisfied, CMS proposes that a record of the patient’s signature on the disclosure notification must be maintained as an element of the patient’s medical record.

Section 6003(a) of the PPACA specifies that the referring physician must provide a written list of “suppliers as defined in section 1861(d). Section 1861(d) of the Act defines supplier as “a physician or other practitioner, a facility, or other entity that furnishes items or services under this title.” CMS is proposing that only suppliers be included on the written list. However, CMS is not proposing to permit or require the list to include “providers of services”, which is defined in section 1861(u) of the Act to include hospitals and critical access hospitals, among other facilities.

Additionally, Section 6003(a) of the PPACA also requires that the alternate suppliers specified in the notice provided to the patient must provide the relevant services “in the area in which [the patient] resides.” CMS is therefore proposing that the suppliers included in this notice should be located within a 25-mile radius of the physician’s office location at the time of the referral.

In order to help the patient make an informed decision regarding the physician referral, CMS proposes that the written list include no fewer than 10 suppliers. An exception to this rule is made if there are fewer than 10 other suppliers in the proposed 25-mile-radius. When this occurs, the physician is no longer required to provide a list of alternative suppliers, though, the physician is still required to disclose to his or her patients that the patients may receive the imaging services from another supplier.

With regard to the information on the list, CMS would like to make it mandatory that the physician provide certain information about the listed suppliers, including the name, address, phone number, and distance from the physician’s office location at the time of the referral. However, CMS is not requiring the disclosure requirement for MRI, CT, or PET services furnished on an emergency or time-sensitive basis.

It is important to note that these provisions are not final. CMS is soliciting comments by physicians on all IOAS proposals listed. The new disclosure requirement of section 6003 must be promulgated by regulation. Therefore, CMS is proposing that the new disclosure requirement shall apply only to services furnished on or after the effective date of the final regulation. CMS is proposing that the effective date will be January 1, 2011.

For more information on this topic, feel free to call Carey F. Kalmowitz, Esq. or Adrienne Dresevic Esq. of The Health Law Partners at (248) 996-8510 or (212) 734-0128.