Stark Changes Contained in Proposed IPPS Rule

By Davis W. Turner, Vanguard Health Systems, Nashville, TN (dturner@vanguardhealth.com American Health Lawyers Association) and the

CMS posted the proposed FY 2009 Hospital Inpatient Prospective Payment System rule on April 14. Within the 1205 pages are proposed changes to the Stark regulations and solicitation of comments on the Disclosure of Financial Relationship Report (DFRR) information collection instrument.

In 2007, CMS undertook an initiative to collect information on Stark relationships initially from 500 hospitals using the DFRR. The purpose for this information collection was to assist CMS in enforcement of the Stark law and regulations. Eventually, CMS intended to require that all hospitals provide such information on a periodic basis. Before CMS could send out the form, it was required under the Paperwork Reduction Act to obtain clearance from the Office of Management and Budget (OMB). On April 10th, OMB reported that CMS had withdrawn its request for clearance of the DFRR. However, as part of the proposed IPPS rule, CMS is soliciting comments on the following areas of the DFRR:

• Whether the collection efforts should be recurring, and, if so, on what basis (annually, etc.).
• Whether CMS is collecting too much or not enough information, and whether they are collecting the correct (or incorrect) type of information.
• The amount of time it will take hospitals to complete the DFRR and the costs associated with completing the DFRR.
• Whether CMS should direct the DFRR to all hospitals and whether they should stagger the collection so that only a certain number of hospitals are surveyed each year.
• Whether hospitals, once having completed the DFRR, should send in yearly updates and report only changed information.

Once CMS receives and evaluates any comments, it appears that CMS will resubmit some form of the DFRR to OMB for clearance. The current form of the DFRR is attached to the proposed rule.

In addition, the proposed IPPS rule also does the following:

• Proposes two alternative ways to address issues that have arisen with regard to the "stand in the shoes" provisions contained in the Stark Phase III rules.
• Proposes a corollary provision to the Phase III "stand in the shoes" provisions that address the DHS entity standing in the shoes of an organization in which it has a 100% ownership interest.
• Revises the definitions of "physician" and "physician organization."
• Clarifies the period of time for which a physician would be prohibited from referring Medicare patients to an entity for DHS and for which the DHS entity would be prohibited from billing for such DHS (the "period of disallowance") where a financial relationship between the physician and the entity failed to satisfy the requirements of an exception to the prohibition on physician self-referral.
• Solicits comments on whether an exception for gainsharing is appropriate.
• Solicits comments on whether an exception for physician-owned implant and other medical device companies is necessary.

View a copy of the proposed rule.