On June 25, 2010, the Centers for Medicare and Medicaid Services (CMS) published the proposed 2011 Medicare Physician Fee Schedule Rule (the "Proposed Rule"). Among its revisions are the proposed regulations implementing Section 6003 of the Patient Protection and Affordable Care Act (PPACA) amending the In-Office Ancillary Services exception (IOAS) to the federal physician self-referral law, commonly referred to as the Stark Law. The proposed regulations, when finalized, will take effect on January 1, 2011, along with the rest of the Proposed Rule. 

The PPACA amended the IOAS to require a referring physician to inform a patient, in writing, at the time of the referral, that the patient may obtain specified imaging services (MRI, CT, and PET), or other designated health services from a person other than the referring physician, a physician in the same group practice as the referring physician, or an individual directly supervised by the referring physician or another physician in the group practice. The PPACA further required a referring physician to provide the patient with a written list of suppliers who furnish such services in the area in which the patient resides.

The Proposed Rule adds a new paragraph (b)(7) to § 411.355(b)(7) of the existing IOAS regulatory exception. As proposed, physicians making in-office self-referrals for MRI, CT and PET services must

• provide the patient with a written notice at the time of the referral that the patient may receive the same services from a supplier other than the self-referring physician;
• include in the notice at least ten other suppliers within a 25 mile radius of the physician's office that can provide the referred service;
• include the name, address, telephone number, and distance from the referring physician's office for each alternative supplier listed;
• retain a record of the disclosure notification, signed by the patient, as part of the patient's medical record.

Also, the notice must be written in a manner that is reasonably understood by all patients.

If the referring physician is located in an area in which fewer than ten alternative suppliers of the service exist within a 25 mile radius, then the physician need not list ten alternatives, but rather all alternative suppliers in the 25 mile radius. If there are no alternative suppliers in the 25 mile radius, then the physician must only inform the patient that he or she may obtain services from another supplier, but need not provide a list of alternatives.

Although within its statutorily granted authority, CMS did not extend services for which disclosure is required beyond MRI, PET, and CT. Nevertheless, CMS is soliciting comments regarding whether other radiology or imaging services should be included in the disclosure requirements.

CMS does not require the alternative list to be focused on suppliers within a particular radius of the patient's residence (as opposed to the physician office). CMS noted that it would be impractical for a physician to prepare a separate list for every area in which his or her patients reside.

In addition, CMS emphasized that the alternative list must consist of "suppliers" (defined at 42 U.S.C. § 1395x(d), "a physician or other practitioner, a facility, or other entity (other than a provider of services) that furnishes items or services . . ."), and not "providers of services" (defined at 42 U.S.C. § 1395x(u), including hospitals, critical access hospitals, and other facilities).

Notably, CMS is not proposing an exception to the disclosure requirement for MRI, CT, or PET services furnished on an emergency or time-sensitive basis. CMS is, however, soliciting comments related to whether there are other procedures in which it may be impractical to provide the written disclosure prior to provision of the imaging services.

The Proposed Rule sets several traps for possible technical Stark Law violations. For example, the following would technically violate the Stark Law under the rule in its proposed form: (1) failing to retain a signed patient disclosure form; (2) failing to obtain a patient signature; (3) providing a list of ten alternative suppliers that does not include an address, telephone number, distance, etc. for one or more of the suppliers; and (4) overlooking or omitting a supplier in a 25 mile radius that has fewer than ten suppliers.

It is important to note that these provisions are not final. CMS will accept comments on the Proposed Rule until August 24, 2010, and will address them in the final rule, estimated for issuance on or about November 1, 2010. Physicians who provide in-office PET, CT, and/or MRI services should contact their health care counsel to submit comments to the Proposed Rule or to obtain guidance on implementation of the required patient disclosures prior to the January 1, 2011 effective date.