BLOG: An important notice you may be missing

ByDavid M. Glaser, JD

If your clinic has an MRI or you are a hospital-employed and production-based orthopedic surgeon, then read this.

Physicians who own an MRI (or CT or positron emission tomography [PET]) or those who work for a hospital and hope to receive compensation for services incident to their work need to be aware of a quirk in the Stark law. The 2011 Medicare physician fee schedule implemented a provision in the Affordable Care Act that added a new requirement to the “in-office ancillary exception” to Stark. Under it, you must provide a notice to patients who receive advanced imaging, defined as MRI, CT and PET. The requirement does not apply to other imaging, such as plain film X-ray or ultrasound.

When you tell the patient you are ordering a scan, you must provide the patient with a written list of at least five other suppliers within 25 miles of “the physician’s office location” who provide the type of imaging needed by the patient and tell the patient he or she is free to obtain the scan from any location he or she chooses. If there are fewer than five suppliers in your area, you must list all the suppliers. If there are no suppliers, no notice is required.

Note the rule only requires you to provide notice of “suppliers.” This is a technical Medicare term referring to physician offices and Independent Diagnostic Testing Facilities (IDTFs). The rule does not require you to list hospitals, though you are free to do so. The notice must include the name, address and phone number of each supplier.

Since the notice must be provided at the time of the referral, the requirement is not met if you give the notice to every patient upon check-in or post it on a wall. The notice must be given in writing, so when you notify a patient of the need for a scan by phone, you must mail or email the notice. You do not need to obtain any patient signature. The rule does not limit what you may say in the notice. For example, you may include a statement that you are not endorsing any of the other facilities, and you may notify patients that it is possible that their insurance may not cover scans at the listed suppliers.

So, what does this mean? Any privately owned physician group in an urban area that treats Medicare patients and offers MRI relies upon the in-office ancillary exception, meaning it must provide the notice. In rural areas, there may be some situations where a physician does not rely on the in-office ancillary exception, but many rural practices do rely on the in-office exception. So, if you are in a physician practice, you want to be sure you are providing the notice.

Why should hospital-employed physicians care? Many hospitals have ignored this provision because if the physician’s do not own the hospital, they do not need to rely upon the in-office ancillary exception. That is true. But the in-office ancillary exception offers some unique benefits, such as permitting physicians to be compensated for services “incident to” their services. Under other Stark exceptions, physicians are only allowed to receive credit for work they personally perform.

The in-office exception allows physicians to be compensated for work done by non-physician practitioners incident to the physician’s work. It is important to note that CMS does not believe diagnostic tests are “incident to” a physician’s work, so CMS believes that physicians can never receive credit for lab or imaging. The bottom line is the in-office exception is broader than any other Stark exception and therefore lowers the risk you face a Stark investigation. Therefore, many non-profits may wish to carefully consider whether they may wish to provide the notice despite the challenges associated with doing so.

I do not hear much talk about the benefit of this notice in the health law world. I think a lot of health lawyers have not thought about it. If you are in a health system, I would encourage you to be sure that your general counsel is aware of this issue. If you have questions about this, please email me at dglaser@fredlaw.com.