relationships and contracting process to scrutiny under
their compliance programs should do so now.
CMS's
action to put hospital/physician relationships under a
magnifying glass resulted from a congressional directive to
the Department of Health and Human Services in Section 5006
of the Deficit Reduction Act, enacted in February 2006, to
address issues related to physician investment in specialty
hospitals. CMS sought to learn more about the issue by
sending a voluntary survey instrument to 500 hospitals, both
specialty and non-specialty hospitals alike. CMS became
alarmed when 290 of those hospitals failed to submit
information in response to the voluntary survey. “Because we
are unable to determine whether those hospitals that did not
respond to the Deficit Reduction Act (DRA) survey questions
on investment and compensation relationships had tainted
relationships, or whether their non-response was for other
reasons…,” CMS decided to take action. The 290 hospitals
that did not respond will be subject to the new mandatory
disclosure, along with 210 other hospitals selected by CMS.
The
Disclosure of Financial Relationships Process
CMS
will issue a new mandatory disclosure instrument, called the
“Disclosure of Financial Relationships Report” (DFRR). It
consists of six detailed work sheets collecting information
regarding:
-
The hospital's general characteristics
-
A complete disclosure of all hospital ownership interests
(both physician and non-physician)
-
A disclosure
by
all investing physicians
concerning their ownership interests (including loans or
loan guarantees)
-
A disclosure of all leases or “under arrangements”
relationships with physicians or their family members,
-
A
disclosure of virtually
all
other compensation arrangements
between physicians and the hospital, including leases,
medical director agreements, on-call stipends, and even
charitable donations and non-monetary compensation
arrangements, including birthday presents and tickets to
sporting events
The
form also requires supporting documentation to be provided,
including copies of written agreements between the hospital
and its physicians and verification of the fair market value
of certain arrangements.
Recipients of the form will be required to complete it in
hard copy, certify its accuracy by the Chief Executive
Officer (CEO), Chief Financial Officer (CFO), or other
senior officer of the hospital, and return it to CMS
within
45 days of receipt by e-mail.
Hospitals that fail to meet the prescribed time frame will
be subject to civil money penalties of up to $10,000 for
each day the report is delinquent.
The
Significance of DFRR
CMS is
clear that it will use the information collected from the
DFRR to analyze physician investment and compensation
arrangements with hospitals for compliance with the Stark
law. It will accomplish this review through its relationship
with Payment Safeguard Contractors (PSC). Although CMS
promises to protect the DFRRs from disclosure under the
Freedom of Information Act, it acknowledges that the
information may be shared with other “federal agencies and
Congressional Committees.”
Hospitals, therefore, should expect to see more enforcement
of Stark as a result of the DFRR process.
CMS
also commits to use this first DFRR process to propose a
regular financial disclosure process that would apply to all
Medicare participating hospitals in the future. This means
that, even if a hospital dodges the bullet in this first
go-around, it can expect to be required to comply once the
general reporting process is released.
In
instituting the DFRR, CMS is reversing its 2004 position to
stay away from a sweeping reporting requirement. CMS
originally had proposed such a requirement in the 1998
proposed Stark regulations, but backed away from it when
those regulations were finalized in 2004, acknowledging that
a reporting requirement of this magnitude “would not be
particularly helpful to [CMS]” and that “CMS and its
contractors would be overwhelmed by the number of reports
and financial relationships that would need to be analyzed.”
69 Fed. Reg. 16125 (March 26, 2004). It is also noteworthy
that the directive from Congress in the DRA was limited to
physician investment in specialty hospitals
whereas CMS now plans to focus on all formal relationships
and all hospitals.
Seeking information about
all
financial relationships with physicians and their family
members places an enormous burden on hospitals. It means
that they now must have systems to track physician
relationships and processes to ensure that each relationship
complies with Stark. CMS estimates that it will take
approximately four hours to complete the DFRR, however, this
estimate seems exceedingly unrealistic given that the DFRR
seeks financial information and supporting documentation
regarding virtually all financial relationships between a
hospital and its physicians (and their immediate family
members).
