On July 31, 2008, CMS published the Medicare IPPS final regulations (note: this is a PDF document that is 1745 pages long; see pages 1191-1210). These final regulations will be published in the Federal Register on August 18, 2008. One of the many items included in these rules is the newest version of the Disclosure of Financial Relationship Report (“DFRR”) rule.

Readers will recall that the DFRR is a Stark compliance audit to be conducted by CMS. The DFRR was originally initiated in May 2007 but was later withdrawn in April 2008. For background on the DFRR please see our DFRR Resource Page.

In the IPPS final regulations, CMS has announced that it is proceeding with the DFRR Stark audit. There are very few changes in the revived DFRR Stark compliance audit.

  • CMS will continue the plan to send the DFRR audit to 500 hospitals across the country.
  • The form of the DFRR audit tool will be the proposed form with some minor revisions. The revised DFRR form will be published separately with CMS’s corresponding Paperwork Reduction Act filing and we will make this form available on our website as soon as possible.
  • Hospitals will continue to have 60 days to respond to the DFRR audit. However, CMS announced that it would not impose the $10,000 per day penalty for failing to respond until (1) issuing a letter to the hospital inquiring the reason for failure to respond and (2) allowing hospital to request an extension for good cause.

In a significant reversal, CMS has retracted the proposal to make the DFRR a permanent, annual reporting mechanism. Rather, the DFRR Stark compliance audit will be a one-time event. However, CMS stated that it would consider future, separate rule-making to institute regular reporting depending on the information gather from the current one-time DFRR Stark compliance audit.

CMS will file a Paperwork Reduction Act notice regarding the new DFRR Stark compliance audit, which will trigger another 30-day period for public comment. We will publish additional information regarding the DFRR form and instructions at that time.