Health Advisory: CMS Moves Forward With A Modified Disclosure Of Financial Relationships Initiative

As discussed in the Inpatient Prospective Payment System (IPPS)

2009 final rule (final rule) published in the August 19, 2008

Federal Register, the Centers for Medicare and Medicaid Services

(CMS) is moving forward with its Disclosure of Financial

Relationships Report (DFRR) initiative,1 the purpose of

which is to assess compliance with the Stark law by requiring

surveyed hospitals to provide detailed information about their

ownership, investment, and compensation arrangements with

physicians. CMS solicited comments last April about a number of

issues relating to the DFRR. Hospitals, physicians, and other

healthcare providers and suppliers should pay attention to this

initiative whether or not they (or their hospitals) are among those

facilities being asked to complete the survey. Because CMS will use

the results from the DFRR to assess compliance with the Stark law,

we expect that the survey will not be a self-limiting assessment

tool.

The DFRR grew out of a voluntary survey form sent by CMS in June

2006, to 130 specialty hospitals and 322 general acute-care

hospitals. The survey was implemented pursuant to Section 5006 of

the Deficit Reduction Act of 2005 (DRA), with an initial focus on

certain issues relating to physician investment in specialty

hospitals. Of the hospitals receiving the voluntary survey, 290 did

not respond or provided incomplete responses regarding the

financial relationships between the hospitals and physicians.

Due to the limited response, CMS felt that it had not received

enough information through the voluntary process to analyze

physician investment in specialty hospitals, and therefore

developed a new mandatory form called the Disclosure of Financial

Relationships Report (DFRR). In June 2007, utilizing its authority

under Section 1877(f) of the Social Security Act and 42 C.F.R.

§411.361, CMS issued a notice of proposed information

collection regarding the form, which was to be sent to 500

hospitals, including those that were previously sent the voluntary

survey but did not respond. CMS also published a revised version of

the DFRR in September 2007. In accordance with the Paperwork

Reduction Act (PRA), the Office of Management and Budget (OMB) was

required to clear the form. However, the OMB took no action on the

DFRR, and, after several months, on April 8, 2008, CMS withdrew the

DFRR from the OMB's review.

CMS has indicated that it is preparing a revised PRA submission

for the DFRR form, which will be published in...