As expected when it pulled Transmittal 187 earlier this year, the Centers for Medicare and Medicaid Services (CMS) has proposed several new performance standards for independent diagnostic testing facilities (IDTFs) in its proposed Medicare Physician Fee Schedule payment update for Fiscal Year 2008 (the “Proposed 2008 MPFS Update”). CMS uses the Proposed 2008 MPFS Update as an opportunity to clarify certain of the IDTF performance standards enacted last year.

Some of the most signifi cant changes in the Proposed 2008 MPFS Update include:

  • Prohibiting an IDTF from sharing space, equipment or staff, or subleasing its operations to another individual or operation;
  • Establishing the initial enrollment date for an IDTF as the later of (a) the date of fi ling of the enrollment application that is subsequently approved by the contractor or (b) the date that the IDTF started rendering services at the location;
  • Modifying the new IDTF insurance requirement so that the Medicare contractor is listed as a certifi cate holder on the insurance policy, promptly notifying the Medicare contractor in writing of any changes to or cancellation of the policy and providing the contact information for the insurance agent and underwriter;
  • Modifying the new IDTF reporting requirement so that changes in ownership, location and general supervision, and adverse legal actions must be reported to CMS within 30 days, with all other changes in the enrollment application to be reported within 90 days;
  • Modifying the current requirement that the IDTF answer benefi ciaries’ questions and respond to questions to require that the IDTF answer, document and maintain certain documentation of benefi ciaries’ questions and responses to their complaints at the physical site of the IDTF;
  • Clarifying that the IDTF supervising physician does not bear overall administrative responsibility for the IDTF and that such responsibility rests with the owners; and
  • Clarifying that the restriction on a supervising physician not providing supervision for more than three sites applies to both fi xed and mobile sites.

Although the scope of the proposed IDTF changes are signifi cantly less expansive than the substantive changes suggested in Transmittal 187, they nonetheless will signifi cantly impact IDTFs. Most conspicuously, if enacted, the proposal will result in IDTFs no longer being able to participate in block leasing or other shared ancillary arrangements. Likewise, given the delays typically encountered with Medicare’s enrollment of IDTFs, Medicare contractors’ increased willingness to reject applications and the requirement that the insurance policy list the Medicare contractor, the new effective date of IDTF enrollment could have a signifi cant financial impact on IDTFs. Finally, although CMS makes clear in its commentary to the regulations that it intends that the restriction on a supervising physician supervising three IDTFs only applies to the provision of general supervision, this distinction is not made in the text of the regulation.