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The Specter of Mandatory Stark
Reporting Rears its Head (Again)
By Edwin
D. Rauzi and Ingrid
Brydolf
[June 2007]
The Stark Law has long included a
section that authorizes the Centers for Medicare and Medicaid
Services (CMS) to require all entities that participate in the
program to provide information about financial relationships
with physicians. For a time in the 1990’s, CMS (then HCFA)
pursued an initiative that would have required widespread and
mandatory annual reporting (with updates when changes occurred).
That initiative was eventually abandoned. Several years later,
however, CMS promulgated a regulation that defines a response
deadline for requests for information and imposes a fine of
up to $10,000 a day for each day the information is late.
In a little-noticed recent development,
CMS has begun the process to require 500 hospitals to provide
a broad range of detailed information about their financial
relationships with physicians, including copies of documents
that define these relationships. The CEO or CFO will be required
to certify in writing that the submission is “true and
correct to the best of my belief and knowledge.” The notice
appeared in the May 18th Federal Register.
The initiative is part of a filing under the Paperwork Reduction
Act. Before CMS can require an entity to complete and return
a form, it must comply with the process defined in that Act.
The process involves articulating why the information is necessary,
how it will be used, and estimating the burden it will impose
on the recipients. Included in the filing is a copy of the CMS
cover letter, as well as the forms the 500 hospitals will be
required to complete. According to CMS, the information is necessary
“to analyze each hospital's compliance with” the
Stark Law and its implementing regulations.
The survey is described as being an outgrowth of an earlier
survey that focused on specialty hospitals. In 2006, CMS sent
a survey to 500 hospitals soliciting information on physician
ownership and investment. The survey, which was voluntary, was
sent both to physician-owned specialty hospitals and their competitors.
Of the 500, more than half—290—failed to respond.
CMS is uncertain whether those who failed to respond had “tainted
relationships,” so the 290 non-respondents will now be
required to respond under the regulation. A list of the hospitals
that would be included can be constructed by comparing the list
of initial recipients against those who responded. They will
be given 45 days to respond, after which the imposition of the
$10,000 per-day penalty is possible. The method whereby the
additional 210 hospitals will be chosen is not clear.
What is more noteworthy, however, is that the survey has been
expanded to include not only physician ownership and investment
interests, but also compensation arrangements. For each—office
space lease, equipment lease, personal service arrangement,
and recruiting arrangement— the hospital will be required
to provide:
- the physician’s name;
- the physician’s NPI;
- whether the physician is also an owner or investor; and
- a copy of the written agreement that was in force in 2006.
The cover letter notes that CMS has the discretion to share
the information with other agencies.
There is also a second worksheet that asks questions about
compensation related to:
- a one time sale of the physician’s practice or other
property;
- remuneration that did not relate to a designated health
service;
- charitable donations by the physician to the hospital;
- non-monetary compensation that exceeds the $300 limit defined
in the Stark regulations; and
- any other payments made by a physician to the hospital
as compensation for any item or service “not previously
covered.”
For a copy of the packet that the 500 hospitals will receive,
click
here. Scroll down until you find CMS-10236.
Even if you are not one of the “Lucky 500,” you
might want to consider whether your hospital could respond appropriately
and comprehensively in the time allotted. CMS estimates it will
take each hospital four hours to complete the form; we suspect
it will take much, much longer.
For more information, please contact:
Other DWT Contacts:
Jill
H. Gordon, Los Angeles, (213) 633-6800, jillgordon@dwt.com
Lisa
Hayward, Seattle, (206) 622-3150, lisahayward@dwt.com
John Krave, Los Angeles, (213) 633-6800, johnkrave@dwt.com
Steve
Lipton, San Francisco, (415) 276-6500, stevelipton@dwt.com
Kent
B. (Bernie) Thurber, Portland, (503) 241-2300, berniethurber@dwt.com
This advisory
is a publication of the Health Law Group of Davis Wright Tremaine
LLP. Our purpose in publishing this advisory is to inform our
clients and friends of recent legal developments. It is not
intended, nor should it be used, as a substitute for specific
legal advice as legal counsel may only be given in response
to inquiries regarding particular situations.
Copyright 2007, Davis Wright Tremaine
LLP.
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