On November 2, 2010, CMS posted a pre-publication copy of the CY 2011 Outpatient Prospective Payment System Final Rule, which implements the Affordable Care Act's restrictions on the Stark Law “whole hospital” exception. The final rule limits a physician-owned hospital to the number of operating rooms, procedure rooms and beds it was licensed to operate on March 23, 2010. Moreover, the final rule states that the level of physician ownership may not exceed its March 23, 2010 level.

While a physician-owned hospital may not qualify for the exception if it exceeds its March 23 number of operating rooms, procedure rooms and beds, CMS makes clear that the limit is an aggregate cap of all three. Physician-owned hospitals are free to retire or relocate specific rooms or beds, and open new ones, provided that the total number does not exceed the March 23 level. In states where procedure rooms and operating rooms are not separately licensed, the final rule defines the March 23 level of such rooms as those “in existence and operational” on that date. CMS adopted its proposed definition of procedure rooms as those rooms where catheterizations, angiographies, angiograms or endoscopies are performed.

CMS also adopted its proposal to cap the aggregate percentage of physician ownership in physician-owned hospitals to March 23 levels. CMS acknowledged that while physician ownership levels may fluctuate over time, the hospital must also have at least some physician ownership and a Medicare provider agreement in place by December 31, 2010. Some commenters objected to the timeline, arguing that projects already underway may not be licensed by December 31, 2010. CMS held firm to its proposal, stating that the Affordable Care Act required it.

The final rule is available here. The relevant discussion appears on pages 1715-1760 of the pre-publication copy. The final rule will be published in the November 24, 2010 Federal Register.