Hospitals should review the information and documents that would be required to respond to CMS and notify physicians of the potential need for their cooperation and assistance.

The Centers for Medicare and Medicaid Services (CMS) announced on December 19, 2008, that it will proceed with its proposal to distribute the Disclosure of Financial Relationships Report (DFRR) to 400 private sector, for-profit and not-for-profit, general acute care and specialty hospitals throughout the United States.  The stated purpose of the DFRR is two-fold:  to identify arrangements that potentially do not comply with federal self-referral laws, including the Stark law, and to identify examples and areas of non-compliance that will aid CMS in future rulemaking.  The DFRR will require detailed information and supporting documentation regarding physician investments in the hospital; hospital-physician joint ventures; and, perhaps most importantly, most physician compensation arrangements with the hospital, including medical directorships, services agreements and on-call arrangements. 

Recipient hospitals will have 60 days to complete and submit the DFRR, which CMS estimates (perhaps optimistically) will take approximately 100 hours.  CMS will provide deadline extensions to hospitals that demonstrate good cause for their tardiness, and has stated that it would first issue letters to tardy hospitals before imposing civil monetary penalties of up to $10,000 for each day beyond the deadline that a DFRR is not submitted. 

Currently, CMS plans to distribute the DFRR as a one-time information collection effort.  However, CMS does not foreclose the possibility of future rulemaking to implement periodic or regular information collection.    

CMS may begin to distribute the DFRRs as early as mid-January 2009.  In light of the estimated time for completion and the brief timeframe in which hospitals must complete the DFRR, hospitals should consider preparing for potential receipt by reviewing the information and documents that would be required to respond to CMS, and notifying physicians of the potential need for their cooperation and assistance.  Gathering accurate data will be essential and will require a search of hospital records.  When either the hospital CEO or CFO signs the DFRR, he or she will be exposed to criminal prosecution if the response is inaccurate.