Medicare Compliance & Reimbursement

Find out what CMS has proposed and what this new Stark reporting mandate could portend.

Picture this: A Medicare patient goes to see a physician who orders a medically necessary MRI or CT scan. The patient receives the service in the physician practice's imaging center housed in the same office suite.

Watch out: That commonplace self-referral may soon no longer comply with the Stark in-office ancillary services exception -- not if the physician fails to inform the patient in advance about his financial interest in the imaging service. The written disclosure also has to let the patient know that she can get the imaging service(s) from other nearby suppliers.

What and when: The Affordable Care Act (ACA) implements the self-disclosure requirement for MRI, CT, PET scans, and "any other designated health services that the Secretary of HHS determines appropriate." The ACA specified Jan. 1, 2010 or after as the implementation date for the new disclosure requirement, which attorney Julie Kass says generated "a lot of debate." But CMS said in its CY 2011 proposed physician fee schedule update that the requirement will go into effect on Jan. 1, 2011, adds Kass, with Ober/Kaler in Baltimore. CMS publishes the final physician fee schedule rule in November.

The proposed physician fee schedule rule addressed a number of other uncertainties, including the following:

"CMS proposed rule solicits comments as to whether 10 is too burdensome and whether the 25-mile radius is appropriate," adds Kass. She notes that "CMS is always concerned that providers would somehow try and game the system and list the 10 suppliers that are the farthest away."

Kass doesn't believe physicians have a legal obligation to implement the self-disclosure before the final regulations go into effect on Jan. 1. But they should start considering how to do that lest they "come up short" then, she urges.

Also: Some state laws may already require self-disclosures for ancillary services, Kass cautions. "And many physician practices as a routine matter disclose their ownership interest" in a service to which the practice is referring a patient, she observes. Pittsburgh, Pa. attorney Michael Cassidy, in fact, sees that strategy as being a smart PR and business move.

CMS proposes that physicians maintain "a record of the patient's signature on the disclosure notification" as "an element of the patient's medical record." In addition, attorney Robert Markette Jr., in Indianapolis, Ind., advises physicians to document in a patient's clinical record each time they provided the disclosure.

The reporting requirement represents an effort to "create a more even playing field between physician (non-radiology) office-based imaging facilities and the freestanding and radiologist-owned imaging centers," says attorney Daniel Melvin, with McDermott Will & Emery LLP in Chicago, Ill. "The perception, of course, is that the physician-owned imaging facilities have an unfair competitive advantage..."

Melvin predicts the disclosure mandate may cause some physicians to exercise more caution about advanced imaging utilization. But "by and large," Melvin doesn't anticipate seeing "a material change in utilization patterns as a result of the notice requirement."

The Stark self-disclosure requirement will cause patients to have more information, says Kass. "But it's unclear whether it will have any effect on reducing the amount of physician-owned imaging services."

There's a bigger concern for physician practices with in-office imaging, in Melvin's view. And that's "the threat of changes to the Stark law that would require practices to close down their advanced imaging services," he says. If Congress and HHS decided to take that tack, however, Melvin expects existing in-house imaging facilities would receive grandfather protection.

Reasoning: The Medicare Payment Advisory Commission (MedPAC), according to its recent reports, appears to be "convinced that in-office advanced imaging increases utilization and costs unnecessarily," Melvin observes. Thus, "it just seems a matter of time [before] Congress and/or HHS will narrow the exception, or perhaps, as an alternative or an interim step, require pre-authorizations for advanced imaging to control utilization."