A transmittal recently published by the Centers for Medicare and Medicaid Services (CMS) requires Medicare administrative contractors (MACs) to inform hospitals about disclosure requirements when a referring physician (or his or her immediate family member) has an ownership interest in the hospital. The transmittal implements the 2009 inpatient prospective payment regulations that require physicians to disclose ownership interests to patients when a physician owner refers a patient to the hospital. The disclosure of physician-ownership information must be given to patients at the beginning of their hospital stay or outpatient visit.

Every hospital must also require each physician on its medical staff to agree, as a condition of continued privileges, to disclose in writing to all patients the physician refers to the hospital any ownership or investment interest in the hospital by the physician or immediate family members. Physicians must make the disclosure at the time of the referral. The purpose of the rule is to allow patients to make informed decisions about their treatment and to decide whether the existence of a financial relationship suggests a conflict of interest that may not be in their best interests.

If a hospital fails to require physicians to make the disclosures of physician ownership, CMS may terminate its provider agreement with the hospital. Hospitals that do not have any physician owners are exempt from these disclosure requirements. The implementation date of this transmittal is June 8, 2009. The CMS transmittal can be found here.