Hospital/Physician Relationships will need to pass the transparency test for new Disclosure of Financial Relationships Report ("DFRR")

(PYA Alert dated October 22, 2007)

Attention Hospital Administrators:
The Centers for Medicare and Medicaid Services (“CMS”) has initiated a pilot program entitled The Disclosure of Financial Relationships Report (“DFRR”). Efforts to monitor Anti-Kickback compliance are gearing up and hospitals across the nation are strongly encouraged to ensure they comply with current Stark exceptions. In September 2007, the DFRR began obligating hospitals to report comprehensive information on their financial relationships with physicians under the physician self referral law, 42 U.S.C. § 1395nn (“Stark”). DFRR is an offshoot of the August 2006 “Final Report to the Congress and Strategic and Implementing Plan Required under Section 5006 of the Deficit Reduction Act of 2005”. According to CMS, the DFRR will be used by CMS to obtain information necessary to analyze each hospital’s compliance with Stark and its implementing regulations.

The DFRR will initially be sent to 500 hospitals. The reporting disclosure instrument will be comprised of a set of six detailed worksheets, requiring hospitals to report all:

• Ownership: including loans and loan guarantees from the hospital to physician owners/investors;
• Investments: including leases and “under-arrangement” relationships with physicians; and
• Compensation arrangements with physicians (and their immediate family members*); including space, equipment, personal service and recruitment arrangements.

*Note that an “immediate family member” includes a spouse and the physician’s birth/adoptive/step-/in-law father, mother, child or sibling.

The 500 selected hospitals will have 45 days to complete and submit their DFRR. CMS has indicated that failure to submit a completed DFRR within the 45 day window may result in civil penalties up to $10,000 each day beyond the deadline.

One of our clients’ attorneys and former chair of the Physician Organization Practice Group of the American Health Lawyers Association, Charlene McGinty of McKenna Long & Aldridge, LLP stated, “The timeframe and production requirements will pose a substantial administrative burden on most hospitals. Accordingly, hospitals should begin to prepare their files and carefully review their contractual relationships with physicians (and their immediate family members) to ensure compliance with the Stark law and prepare for any subsequently imposed mandatory reporting requirements.”

CMS has indicated it will eventually seek this information from all Medicare participating hospitals. Please feel free to contact Marty Brown or Lyle Oelrich at (800) 270-9629 with any questions regarding this disclosure initiative.

The information provided via PYA Alert, Tax Planning Alert, or Audit and Accounting Alert should not be construed as accounting, auditing, consulting, or legal advice on any specific facts or circumstances. The contents are intended for general information purposes only.  Please contact us at (800) 270-9629 to discuss your specific situation or to discuss any specific questions you may have.

back to PYA Alerts