The 2009 Medicare Inpatient Prospective Payment System regulation, released on July 31, 2008, and to appear in the Federal Register on August 19, 2008, stated that CMS is proceeding with the disclosure of financial relationship report (DFRR) process. Soon, 500 hospitals will be issued a request to fill out a worksheet detailing various financial arrangements such hospitals have with referring physicians and to provide copies of all such agreements. This process has been heavily criticized by the provider community because of the burden placed on the hospitals. CMS is not changing the 60-day response period. However, it has increased the projected number of hours to complete the process from 31 to 100. CMS is also projecting that, on average, the cost associated with each hospital's compliance with this request will be $4,080.

Although the number of hours and cost will vary from hospital to hospital, such cost will depend upon how prepared the hospitals are to respond to CMS's request. As noted in the regulation, CMS presumes that hospitals have a contract management database and a filing process that will make responding to the request less burdensome. Even if hospitals do not suspect that they will be included in the initial 500 hospitals, if they do not have a contract management database or efficient filing system (either centralized or decentralized), such hospitals should start planning now. CMS did state, at this time, that they are not implementing a regular disclosure process similar to the DFRR on an annual or periodic basis.

If a hospital uses a standard contract, like one for leased medical office space or medical directorships, as long as the financial terms are the same, a full copy of each contract will not need to be sent to CMS. If the contracts and financial terms are the same, the hospital will need to provide a template contract and a list of all physicians, including their NPI. If the financial terms vary, however, a full copy of each agreement will need to be produced.

Prior to sending the DFRR letters to the 500 targeted hospitals, CMS must first publish a Paperwork Reduction Act (PRA) notice in the Federal Register. Starting from the publication date of the PRA notice, hospitals will have a 30-day period to submit comments to the Office of Management and Budget (OMB) with their concerns regarding the DFRR process. After this comment period, OMB will likely give CMS approval to begin the DFRR process. CMS will then proceed by sending the DFRR letters to the 500 targeted hospitals.