The process has been a little like "doing the ‘hokey-pokey'". The federal agency that regulates the Medicare and Medicaid programs and the providers of care under those programs has gone back and forth (putting its "right foot in" and then its "right foot out") on when and how to require disclosure by hospitals of financial relationships with physicians and their family members in any sort of methodical way. The "right foot" appears to be "in" again.
The Centers for Medicare and Medicaid Services, known as CMS, does have general regulatory authority to require an entity to provide information about its financial relationships with physicians. This has typically been done on a case-by-case basis or in the course of an audit. In May 2007, however, CMS proposed mandatory disclosure of all such relationships on a more sweeping basis through a new instrument called the "Disclosure of Financial Relationships Report" (DFRR). At that time the DFRR consisted of six work sheets to collect information about the hospital generally, hospital ownership interests, investing physicians and their interests (including loans or loan guarantees), leases and all other compensation arrangements with physicians and their family members, including medical director agreements, on-call stipends, charitable donations and non-monetary compensation arrangements, such as birthday presents and tickets to events. Supporting documentation (e.g., copies of contracts) was also required.
After considering public comments, CMS published a revised version of the DFRR in September 2007 and was, ostensibly, ready to go. But in April 2008, CMS withdrew the DFRR and survey package from review by the Office of Management and Budget and then revisited the issue in the annual proposed rule updating the Medicare Inpatient Prospective Payment System (IPPS) that was released on April 14, 2008 and published in the federal register on April 30, 2008.
The currently proposed DFRR now has eight worksheets to be submitted under a certification signed by an officer of the hospital along with supporting documentation, such as copies of each hospital-physician agreement. CMS proposes initially to require 500 hospitals (representing 8-10% of the general acute care and specialty hospitals in the U.S.) to complete and return the DFRR within 60 days of the date of the letter. Untimely responses will trigger civil monetary penalties of $10,000 per day. CMS assumes that hospitals already maintain the requested information and estimates that it will "only" take a hospital about 31 hours to complete the DFRR. This estimate is a dramatic increase from the four hours CMS initially estimated for completion.
CMS plans to review the results from the initial 500 hospitals and determine whether to propose an annual disclosure requirement for all hospitals and whether to promulgate additional rules regarding physician-hospital financial relationships.
CMS asked for comments by June 13, 2008 about several items: (a) whether the collection effort should be recurring and, if so, should it be on an annual or other periodic basis; (b) whether the DFRR collects too much or not enough information and whether CMS is collecting the right or wrong kind of information; (c) the amount of time it will take hospitals to complete the DFRR and the costs associated with completing it as well as how much time CMS should give hospitals to complete and return their responses; (d) whether CMS should send the DFRR to all hospitals, and, if so, whether it should be staggered so that only a certain number of hospitals are subject to it in a given year; and, finally, (e) whether hospitals should have to send in yearly updates to the DFRR once they have completed it and they should only have to report information that has changed.
This effort to more intensely scrutinize hospital/physician relationships resulted from a congressional directive to the US Department of Health and Human Services in Section 5006 of the Deficit Reduction Act, enacted in February 2006, to address issues regarding physician investment in specialty hospitals. CMS elected to take it further. CMS sent a voluntary survey instrument to 500 specialty and non-specialty hospitals, became concerned when 290 of those hospitals failed to provide any information and decided to pursue a broad, mandatory survey of hospitals. One of the concerns is that, although CMS promises that it intends to protect the DFRRs (and all those proprietary contracts) from disclosure under the Freedom of Information Act, this may not always be possible, and CMS specifically acknowledges that the information may be shared with other Federal agencies and with Congressional committees, as permitted or mandated by law.
Hospitals and physicians have always had to comply with regulatory requirements in their financial relationships with each other, but have never had to report in such a detailed and potentially sweeping way. The American Hospital Association and other associations have provided comments to CMS, vociferously objecting to the comprehensiveness of the DFRR review and the need to provide such substantial documentation, and urging CMS to curtail its strategy to addressing the limited charge from Congress with respect to physician investment in specialty hospitals. All are hopeful these comments will have some mitigating effect on the final regulations.
If the DFRR survey does proceed as described, any hospital that is selected as part of the initial 500 will want to document how much time it takes to respond to the survey and let CMS and its associations know. Any such hospital may want to share its experience generally with others in its associations so that further advocacy efforts may be undertaken.
Hospitals should take this opportunity to scrutinize all of their physician financial relationships, contracting processes and documentation to make sure they comply with Stark, fraud and abuse and other regulations. All hospitals should make sure that they have a system in place to track, not only contracts, but all financial benefits provided to physicians and their family members, no matter how small, and mechanisms and processes to make sure that such benefits and financial relationships do not run afoul of any laws or regulations.
Physicians also need to be aware that, in addition to the hospital, they, too, will be held responsible if their financial arrangement with a hospital violates Stark, and to understand that, if their hospital is required to report through the DFRR process, the privacy of that physician's financial information will be further eroded.
Finally, it is reasonable to expect that more enforcement efforts will be forthcoming if the DFRR process is actually undertaken. And certainly none of this will be as much fun as the "hokey-pokey".
This article is intended to serve as a summary of the issues outlined herein. While it may include some general guidance, it is not intended as, nor is it a substitute for, legal advice. Your receipt of Good Company or any of its individual articles does not create an attorney-client relationship between you and Sheehan Phinney Bass + Green or the Sheehan Phinney Capitol Group. The opinions expressed in Good Company are those of the authors of the specific articles.
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