On July 13, 2010, the Centers for Medicare and Medicaid Services (“CMS”) published a proposed rule that would require physicians to disclose to their patient(s), at the time of ordering a CT, MRI or PET Scan service that may be performed in the physician’s office, the name, address, telephone number and distance from the physician’s office of ten (10) competing suppliers of the CT, MRI or PET Scan service where the patient may wish to have the test performed. This proposed rule implements a provision in the Patient Protection and Affordable Case Act (the “PPACA” or “Health Care Reform Legislation”) that mandates the disclosure at the time the test is ordered.
The proposed rule, as drafted, is somewhat less onerous, and more workable, than the language of the specific provision of the Heath Care Reform Legislation that addresses the disclosure requirement. The Legislation provides that the physician must disclose a list of competing suppliers within a certain geographic radius of the patient’s residence. The various ways and locales in which care is delivered under the current landscape would make it onerous, if not impossible, for a physician practice, and, in particular, larger group practices, to know the identity of competing suppliers in the geographic area of some patients’ residences. CMS apparently recognizes this problem, because the proposed rule requires disclosure of competing suppliers within twenty-five (25) miles of the physician’s practice, not within some geographic radius of the patient’s residence.
Although the proposed rule is an improvement over the Health Care Reform Legislation’s language, it should not be finalized as proposed. This is because it creates potentially unintended burdens, both operational and administrative, that physicians will incur in order to comply with it. For example, the rule, as proposed, would require that each time a physician recommends a CT, MRI, or PET Scan, the physician must, at the time of the recommendation, notify the patient of the identity of the competing suppliers and must have the patient sign the notice. The signed notice must be kept in the patient’s chart. There is no exception for orders communicated to a patient by telephone or for emergencies.
Additionally, the rule, as proposed, may result in the unintended consequence of actually increasing the number of CT, MRI and/or PET Scans that physicians who have these services in-office may order.
This proposed rule, and the PPACA provision, itself, are apparently intended to reduce utilization of imaging services under the Stark law exception for in-office ancillary services. The Stark law is a civil law that prohibits the referral by a physician of a Medicare (and, in some instances, Medicaid) patient for the performance of a “designated health service”, including imaging services such as CT, MRI and PET Scans, if the physician has a “financial relationship” with the designated health service provider, unless a specific Stark exception applies. A financial relationship can be an ownership or investment interest or a compensation arrangement.
One Stark exception is the in-office ancillary service exception, which permits a physician, whether a solo practitioner or in a group practice, to “refer” a Medicare patient to the physician’s in-office radiology services, if certain requirements are met. Although such an arrangement is legally permissible, federal regulators have commented on what they believe may be a potential for overuse of the in-office ancillary service exception in the case of imaging services. Certain studies have reported an increase in physician ordering of imaging services when the ordering physician has a financial interest in the provision of the imaging service. This raises the question of whether tests that are ordered for Medicare patients are medically necessary, i.e., whether they are ordered only when they meet Medicare’s “reasonable and necessary” standard for reimbursement.
While one can understand the need to ensure that only medically necessary testing is ordered, this proposed disclosure requirement likely will not have what appears to be the intended effect – a reduction in the number of tests ordered, and, therefore, the number performed. In fact, it may increase the number of procedures ordered. Language in the proposed rule suggests that CMS believes physicians may try to neutralize the intended effect of the rule on their in-office utilization of diagnostic imaging. For example, the proposed rule mentions a concern that the 25-mile radius approach may not be the best one, as physicians in large metropolitan areas may identify suppliers located in the 25-mile “edge,” thus making it more likely that the patient will not choose a competing service. If CMS is concerned that some physicians will manipulate the rule to avoid the loss of referrals, then CMS should consider whether some physicians, as an alternative to losing some in-office referrals, might simply increase the number of orders for imaging services to offset any potential lost referrals resulting from the disclosure of competing services.
CMS also does not take into account the fact that sometimes the patient can have the imaging procedure performed at the ordering physician’s office on the same date the service is ordered. In such a circumstance, and in particular where the patient’s medical condition warrants an expeditious performance of the test, providing a patient a list of other suppliers may actually serve to delay needed care to the detriment of the patient. CMS fails to take into account the benefits of expeditious continuity of care.
Additionally, the proposed rule, as drafted, would create a significant burden on physician practices that is not necessary to achieve the goal of the Health Care Reform Legislation or the proposed rule. If the goal is to achieve a lesser utilization of imaging services, a disclosure requirement, at the time of referral will not help to achieve that goal. This is so because by the time the physician has made the decision to order the MRI, CT or PET Scan and has notified the patient of the order, the patient’s choice of where to have the service performed is not likely to impact whether to have the service performed. In other words, the goal of “controlling” utilization is inconsistent with the proposed means of achieving the goal.
Finally, the proposed rule offers no accommodation for telephone orders. In some cases, a physician has ordered other diagnostic testing, perhaps clinical laboratory procedures, and is awaiting those test results before deciding whether additional testing is needed. In such cases, receipt of the laboratory test results may lead to a telephone call to the patient to recommend imaging as a needed diagnostic tool. To meet the requirement of the proposed rule, the physician would have to either: (1) have the patient return to the physician’s office to receive the referral and sign the disclosure statement, resulting in patient inconvenience, delay in care and an unnecessary office visit; or (2) mail the patient the disclosure statement and follow-up the receipt of the sign statement, which, again, would delay the provision of care, or, at a minimum, significantly burden the physician with the need to conduct continual follow-up until the signed document is returned (if it is ever returned). Neither alternative is desirable.
An alternative mechanism that CMS could adopt to satisfy the Legislation’s requirement would be to require physicians to utilize a blanket notice requirement, similar to the Notice of Privacy Practices that the Health Insurance Portability and Accountability Act of 1966 (“HIPAA”) and the HIPAA privacy regulations require a health care provider to give to a patient on the initial, new patient encounter. The HIPAA requirements also include posting the notice conspicuously in the health care provider’s practice. A patient is asked to sign a written acknowledgment of having received the Notice on the initial, new patient visit. This same type of initial encounter notice and conspicuous posting would serve the intended goal of the Health Care Reform Legislation and the proposed rule in a more effective way than the means identified in the proposed rule, which is to provide the patient notice over and over, on a visit-by-visit basis each time a referral is made. In fact, if the HIPAA-type approach were adopted, patients would receive notice of the right to choose his or her imaging provider well in advance of any testing being performed on any particular occasion, which is the government’s goal. The HIPAA-type advance notice would meet the Legislation’s and CMS’ goal of assisting patients in making informed choices about their health care.