Effective January 1, 2011, new federal law and revised CMS rules have amended the “in-office ancillary services” exception to the federal physician self-referral prohibitions (the “Stark Law”) that will impact all medical practices that refer patients for magnetic resonance imaging (MRI), computed tomography (CT) and positron emission tomography (PET) to the extent such services are rendered in the referring physician’s office. Specifically, physicians must now advise patients receiving such imaging referrals that the services can be provided elsewhere and provide the patient with a written list of at least five alternate suppliers of such services within a 25 mile radius of the physician’s office location. Such disclosure must be made to the patient at the time of referral for each imaging service, rather than a single disclosure to cover all imaging services that the patient may receive on a going forward basis. Failure to make appropriate disclosure can lead to a violation of the Stark Law, which will result in repayment of amounts collected, imposition of monetary penalties and potential False Claims Act liability.

Importantly, this requirement only applies to the extent the physician makes a referral for MRI, CT and/or PET Services within the physician’s own office and that the physician makes such a referral in reliance on the Stark Law exception. That requirement does not apply where there is no “referral,” as defined in the Stark Law, or the referral is to an outside supplier. For example, the disclosure requirement would not apply to a radiation oncologist’s request for radiation therapy or other ancillary services necessary or integral to the provision of radiation therapy because such a request does not constitute a “referral” under the Stark Law.

No specific form of disclosure is required. At a minimum, however, the listing must include the name, address and phone number of each alternate supplier, and the list should be updated at least annually to ensure accuracy. If there are fewer than five alternate suppliers within a 25 mile radius of the physician’s office location, the disclosure must list all suppliers present within such radius and if no alternate suppliers exist within the radius, the physician must still disclose that the patient has the option to receive the referred services elsewhere. Although hospitals can be listed as alternate providers of the service, they do not count towards the required five listings. It is important that the medical practice maintain a copy of its disclosure in the patient’s medical record, in order to enable to demonstrate compliance with the disclosure rule. Physician practices that make such referrals will need to develop procedures and forms to comply with these requirements.