Health Law Alert--May, 2008
Alerts and Updates for Clients and Friends of Byrne, Cardenas & Aris, LLP
CMS Proposes Changes to Regulations Requiring Hospital Disclosure of Physician Ownership and Failure to Maintain Physician Presence at the Hospital
On April 30, 2008, the Centers for Medicare & Medicaid Services (CMS) published in the Federal Register its annual proposed inpatient prospective payment systems regulations, which among other things, proposed changes to two important hospital disclosure regulations that were previously effective October 1, 2007. These two disclosure regulations address: (1) physician ownership of hospitals, and (2) whether physicians are present at the hospital 24 hours a day, 7 days a week.
Current Disclosure Regulations
Currently, under 42 CFR §489.20(u) hospitals owned by physicians are required to furnish written notice to all patients at the beginning of their hospital stay or outpatient visit that physicians have an ownership or investment interest in the hospital. The notice must disclose, in a manner “reasonably designed to be understood by all patients,” that the hospital is a “physician-owned hospital” as defined in the regulations. The notice must also state that a list of the hospital’s physician owners or investors is available to the patient upon request. It is important to note that CMS has the authority to terminate a hospital’s Medicare provider agreement for noncompliance with the physician ownership disclosure regulations.
Also, under 42 CFR §489.20(v) hospitals are required to: (1) furnish all patients written notice at the beginning of their inpatient hospital stay or outpatient service if a doctor of medicine or a doctor of osteopathy is not present in the hospital 24 hours per day, 7 days per week, and (2) describe how the hospital will meet the medical needs of any patient who develops an emergency medical condition at a time when no physician is present in the hospital. This required written notice must be provided to all patients at the beginning of their hospital stay or outpatient visit.
Proposed Disclosure Regulations
The proposed regulations modify the current physician ownership and investment disclosure regulations in several important ways. First, the proposed regulation will expand the definition of a “physician-owned hospital” to include hospitals in which an “immediate family member of a physician” has an ownership or investment interest. The regulations define “immediate family member of a physician” in the same manner as it is defined under the physician self-referral Stark law and regulations. Second, the proposed regulation will create an exception to the disclosure requirements for a physician-owned hospital that does not have any physician owners who refer patients to the hospital (and that has no referring physicians who have an immediate family member with an ownership or investment interest in the hospital), provided the hospital makes a written attestation to that effect and maintains such attestation for review by government officials. Third, the proposed regulation specifies that a physician- owned hospital must furnish to patients the list of owners and investors who are physicians (or immediate family members of physicians) at the time the list is requested by or on behalf of the patient. Fourth, and importantly, the proposed regulations will mandate that a physician-owned hospital require all physicians who are members of the hospital's medical staff to agree, as a condition of continued medical staff membership or admitting privileges, to disclose in writing to all patients who they refer to the hospital any ownership or investment interest in the hospital held by themselves or by an immediate family member. The proposed regulations would require that physicians agree to make such disclosures at the time they refer patients to the hospital. It is important to note that under the proposed regulations the physician may be required to provide such written notice weeks before the actual hospital admission depending on the timing of the referral to the physician-owned hospital. If finalized, the proposed regulation could require physician-owned hospitals to amend their medical staff bylaws to include a provision mandating that the physician provide the required written disclosure to the patient at the time of referral or risk loss of medical staff membership or admitting privileges.
The proposed regulations also modify the current disclosure regulations for hospitals that do not maintain 24 hours a day, 7 days a week physician presence in one important way. The proposed regulation will add a new sanction provision, similar to the sanction for failure to comply with the disclosure requirements related to physician-owned hospitals, to permit CMS to terminate the provider agreement of any hospital that fails to comply with the disclosure requirements. The commentary to the proposed regulation also solicits public comments on “whether hospitals should educate patients about the availability of information regarding physician ownership under the proposed disclosure requirements and, if so, by what means (for example, by a posting in the admissions office or in a patient brochure).”
Closing Thoughts
Hospitals should take note of the continuing efforts of CMS to mandate disclosure of physician ownership and investments in physician-owned hospitals as well as their increased attention to patient safety concerns with hospitals that do not have 24 hours per day, 7 days per week physician presence. You may submit comments to the proposed regulations which are due by June 13, 2008. If you have questions or require any further assistance concerning the current or proposed regulations discussed above, or for any other matters, please contact Greg Cardenas or Joe Benbenek .
The entire 412 pages of the proposed regulations can be found at http://edocket.access.gpo.gov/2008/pdf/08-1135.pdf.