Physician practices that operate in-office MRI, CT, and PET services must implement a new patient disclosure requirement by January 1, 2011 in order to avoid violations of the federal physician self-referral, or “Stark,” law.

The new disclosure requirement was enacted as part of the Patient Protection and Affordable Care Act. The Centers for Medicare and Medicaid Services (“CMS”) has now published final regulations to implement the requirement in its final 2011 physician fee schedule rule.

The requirement applies to any physician group practice that uses the in-office ancillary services exception under the Stark law to bill for MRI, CT, and PET services referred by any physician who is an owner or employee of the group practice. Beginning January 1, 2011, a referring physician must give each patient referred to the in-office MRI, CT, or PET service a written notice advising that patient that they may receive the same imaging test from a supplier other than the referring physician or his or her practice. The notice must also list at least 5 other suppliers of the test that are located within a 25-mile radius of the physician’s office, and must include at least the name, address, and telephone number of those alternative suppliers. The term “supplier” means solely non-institutional entities, such as other physician offices and independent diagnostic testing facilities, and excludes hospital outpatient departments that may provide the same MRI, CT, or PET service. A practice may include one or more hospitals on their alternative supplier list only so long as the practice also lists at least 5 “suppliers.”

The notice must be provided “at the time of referral.” This will undoubtedly cause practical difficulties, and may demand that office staff read the disclosure orally and send the notice via mail or email to patients who are scheduled for testing over the telephone. The requirement that notice be made at the time of referral also means that it applies to each and every referral for MRI, CT, or PET service. Consequently, furnishing a single notice to all new patients at registration or initiation of treatment will not comply with the law.

CMS has stated that patients need not sign the notice, nor must the notice be a part of each applicable patient medical record. However, physician practices must be able to demonstrate that they provided the notice to each patient at the time of each referral. Consequently, the referring physician or staff must document in some retrievable and verifiable manner that written notice was furnished at the time of each referral.

The notice is necessary to satisfy the Stark in-office ancillary services exception for any MRI, CT, or PET service. Failure to provide written notice to a patient in compliance with the rule means that the physician practice is prohibited from billing for the imaging service and the service is not payable under Medicare. Failure to implement the new law properly can result in overpayment and potential false claims liability for physician practices.

Physician practices that have not already implemented this requirement should quickly develop their alternative supplier lists, create their disclosure form, and integrate the notification into their processes over the month of December to ensure the practice complies with Stark for all in-office MRI, CT, and PET referrals as of January 1, 2011.

A copy of the 2011 final physician fee schedule rule can be found here. For additional guidance or assistance regarding the new disclosure requirement please contact the author or any member of the Dorsey & Whitney health care practice group.