AHA Urges OMB to Block Hospital Reporting to CMS About Financial Ties to Doctors

The American Hospital Association (“AHA”) urged the White House Office of Management and Budget (“OMB”) in a letter dated January 16, 2009 to prevent the Centers for Medicare & Medicaid Services (“CMS”) from implementing a rule requiring up to 400 randomly selected hospitals (including LTACHs) to report information, supply documents, and make certain legal certifications regarding their relationships with physicians in a Disclosure of Financial Relationships Report (“DFRR”). 

CMS has said the DFRR would be used to help determine hospitals’ and doctors’ compliance with the Federal physician self-referral law commonly known as the Stark Law.  However, AHA argued in its letter that even by CMS’s own assessment, the survey would not ”produce reliable information for determining hospital compliance [with the Stark Law] or for any future policy development.” Furthermore, AHA called the reporting requirement unfair because CMS would not use the data to approve hospital financial relationships with physicians.  CMS also suggested that it would use collected information to inform future Stark Law rulemaking and reporting requirements.  Although this Stark Law compliance survey would be a one-time event, CMS has stated that it would consider future, separate rule making to institute regular reporting for select hospitals depending upon the information gathered.

The most recent draft of the DFRR contains eight worksheets. The first six worksheets address direct and indirect physician investment and ownership interests in hospitals.  The seventh worksheet requests information about rental, personal service and recruitment arrangements between hospitals and physicians.  The last worksheet includes a series of questions targeting non-monetary compensation arrangements and medical staff benefits exceeding approved limits and charitable donations by physicians to hospitals.

Based upon responses from hospitals and other industry representatives, CMS has concluded that surveyed hospitals should be able to complete the DFRR in approximately 100 hours at a cost of $4,080. These estimates reflect CMS’s questionable belief that: (i) hospitals already maintain the information required to complete the DFRR, (ii) the task of completing the report should be largely administrative (although CMS recognizes that many hospitals may seek assistance from accountants and lawyers), and (iii) the average hourly bill rate for legal counsel competent in addressing Stark Law issues is $57.  The time and monetary burden of compiling data for, and carefully responding to, the survey will likely be substantially higher. A number of commentators, including the AHA, believe that CMS has not adequately accounted for the costs associated with completing the DFRR.  The AHA, for example, commented that the time needed to complete the DFRR would be at least 200 hours, and would require significant assistance from legal counsel familiar with the complexities of the Stark Law.

CMS would require each hospital to complete and return the DFRR within 60 days of its receipt. The agency has commented that although it has authority to impose civil monetary penalties of up to $10,000 per day for late responses, it would not penalize hospitals that fail to respond to the DFRR until after it has provided a notice letter to hospitals that do not timely return the DFRR. Additionally, CMS has agreed to grant extensions to hospitals that are able to show good cause for failing to respond.

Please  contact me if you have questions about the DFRR, if you require assistance in conducting a Stark Law compliance audit, or if you have general questions about government investigations or compliance with Federal and state physician self-referral laws.

Jason S. Greis
312.849.8217
jgreis@mcguirewoods.com