Congressman Pete Stark has proposed a new piece to the Stark legislation which would eliminate the existing “whole hospital” exception for a physician ownership by inserting a provision into H.R. 3162, the Children’s Health and Medicare Protection Act, which would impose new hospital disclosure requirements and new physician ownership limitations. The text of the provision follows below.
The physician ownership restriction would prohibit ownership by physicians of more than 40% of the total value of the investment interest held in the hospital and prohibit any individual physician ownership of more than 2%, while also prohibiting hospital assistance in financing the investment by the physicians.
The disclosure requirements would mandate that hospitals submit annual disclosure reports to the Secretary of Health and Human Services disclosing physician ownership and that the hospitals’ implement procedures that would require any referring physician owner to disclose to the referred patient the existence and extent of the referring physician ownership interest in the hospital.
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SEC. 651. LIMITATION ON EXCEPTION TO THE PROHIBITION ON CERTAIN PHYSICIAN REFERRALS FOR HOSPITALS.
(a) IN GENERAL.—Section 1877 of the Social Security Act (42 U.S.C. 1395) is amended
(1) in subsection (d)(2)—
(A) in subparagraph (A), by striking "and" at the end;
(B) in subparagraph (B), by striking the period at the end and inserting "; and"; and
(C) by adding at the end the following new subparagraph:
"(C) if the entity is a hospital, the hospital meets the requirements of paragraph (3)(D).";
(2) in subsection (d)(3)
(A) in subparagraph (B), by striking "and" at the end;
(B) in subparagraph (C), by striking the period at the end and inserting "; and"; and
(C) by adding at the end the following new subparagraph:
"(D) the hospital meets the requirements described in subsection (i)(1) not later than 18 months after the date of the enactment of this subparagraph."; and
(3) by adding at the end the following new subsection:
"(i) REQUIREMENTS FOR HOSPITALS TO QUALIFY FOR HOSPITAL EXCEPTION TO OWNERSHIP OR INVESTMENT PROHIBITION.
"(1) REQUIREMENTS DESCRIBED. For purposes of paragraphs subsection (d)(3)(D), the requirements described in this paragraph for a hospital are as follows:
"(A) PROVIDER AGREEMENT.—The hospital had a provider agreement under section 1866 in effect on July 24, 2007.
"(B) PROHIBITION OF EXPANSION OF FACILITY CAPACITY. The number of operating rooms and beds of the hospital at any time on or after the date of the enactment of this subsection are no greater than the number of operating rooms and beds as of such date.
"(C) PREVENTING CONFLICTS OF INTEREST.—
"(i) The hospital submits to the Secretary an annual report containing a detailed description of
"(I) the identity of each physician owner and any other owners of the hospital; and
"(II) the nature and extent of all ownership interests in the hospital.
"(ii) The hospital has procedures in place to require that any referring physician owner discloses to the patient being referred, by a time that permits the patient to make a meaningful decision regarding the receipt of care, as determined by the Secretary,
"(I) the ownership interest of such referring physician in the hospital; and
"(II) if applicable, any such ownership interest of the treating physician.
"(iii) The hospital does not condition any physician ownership interests either directly or indirectly on the physician owner making or influencing referrals to the hospital or otherwise generating business for the hospital.
"(D) ENSURING BONA FIDE INVESTMENT.—
"(i) Physician owners in the aggregate do not own more than 40 percent of the total value of the investment interests held in the hospital or in an entity whose assets include the hospital.
"(ii) The investment interest of any individual physician owner does not exceed 2 percent of the total value of the investment interests held in the hospital or in an entity whose assets include the hospital.
"(iii) Any ownership or investment interests that the hospital offers to a physician owner are not offered on more favorable terms than the terms offered to a person who is not a physician owner.
"(iv) The hospital does not directly or indirectly provide loans or financing for any physician owner investments in the hospital.
"(v) The hospital does not directly or indirectly guarantee a loan, make a payment toward a loan, or otherwise subsidize a loan, for any individual physician owner or group of physician owners that is related to acquiring any ownership interest in the hospital.
"(vi) Investment returns are distributed to investors in the hospital in an amount that is directly proportional to the investment of capital by the physician owner in the hospital.
"(vii) Physician owners do not receive, directly or indirectly, any guaranteed receipt of or right to purchase other business interests related to the hospital, including the purchase or lease of any property under the control of other investors in the hospital or located near the premises of the hospital.
"(viii) The hospital does not offer a physician owner the opportunity to purchase or lease any property
under the control of the hospital or any other investor in the hospital on more favorable terms than the terms offered to an individual who is not a physician owner.
"(E) PATIENT SAFETY.?
"(i) Insofar as the hospital admits a patient and does not have any physician available on the premises to provide services during all hours in which the hospital is providing services to such patient, before admitting the patient:
"(I) the hospital discloses such fact to a patient; and
"(II) following such disclosure, the hospital receives from the patient a signed acknowledgment that the patient understands such fact.
"(ii) The hospital has the capacity to:
"(I) provide assessment and initial treatment for patients; and
"(II) refer and transfer patients to hospitals with the capability to treat the needs of the patient involved.
"(2) PUBLICATION OF INFORMATION REPORTED.—The Secretary shall publish, and update on an annual basis, the information submitted by hospitals under paragraph (1)(A)(i) on the public Internet website of the Centers for Medicare & Medicaid Services.
"(3) COLLECTION OF OWNERSHIP AND INVESTMENT INFORMATION.—For purposes of clauses (i) and (ii) of paragraph (1)(D), the Secretary shall collect physician ownership and investment information for each hospital as it existed on the date of the enactment of this subsection.
"(4) PHYSICIAN OWNER DEFINED.—For purposes of this subsection, the term ‘physician owner’ means a physician (or an immediate family member of such physician) with a direct or an indirect ownership interest in the hospital.".
(b) ENFORCEMENT.
(1) ENSURING COMPLIANCE.—The Secretary of Health and Human Services shall establish policies and procedures to ensure compliance with the requirements described in such section 1877(i)(1) of the Social Security Act, as added by subsection (a)(3), beginning on the date such requirements first apply. Such policies and procedures may include unannounced site reviews of hospitals.
(2) AUDITS.—Beginning not later than 18 months after the date of the enactment of this Act, the Secretary of Health and Human Services shall conduct audits to determine if hospitals violate the requirements referred to in paragraph (1).
