Physician Self-Referral

CMS proposes to implement changes enacted in ACA to the "whole hospital" and "rural provider" exceptions in the physician self-referral law that will prohibit their use by new physician-owned hospitals and limit the ability of existing physician-owned hospitals to expand their capacity. The deadline for physician investment and having a provider agreement in place is December 31, 2010. Some commentators had stated that the general eighteen month transition period for requirements may apply, but CMS states that it does not. The cut-off date for allowable physician investment for existing hospitals is March 23, 2010. Existing hospitals cannot add physician owners between March 23, 2010, and December 31, 2010. Regarding expansion of operating rooms, procedure rooms, and beds, the date for determining the baseline numbers is how many are licensed as of March 23, 2010, except for facilities that do not have a provider agreement in place at that time. For those facilities, the baseline numbers are set as of the provider agreement date. CMS states that the number of operating rooms, procedure rooms, and beds is capped as of the governing date, even if a state does not "license" these rooms per se.