Limitation on Medicare exception to the prohibition on certain physician referrals for hospitals

(a)

In general

Section 1877 of the Social Security Act (42 U.S.C. 1395nn) is amended— (1)in subsection (d)(2)— (A)in subparagraph (A), by striking and at the end; (B)in subparagraph (B), by striking the period at the end and inserting ; and; and (C)by adding at the end the following new subparagraph:

(C)in the case where the entity is a hospital, the hospital meets the requirements of paragraph (3)(D).

;

(2)in subsection (d)(3)— (A)in subparagraph (B), by striking and at the end; (B)in subparagraph (C), by striking the period at the end and inserting ; and; and (C)by adding at the end the following new subparagraph:

(D)the hospital meets the requirements described in subsection (i)(1) not later than 18 months after the date of the enactment of this subparagraph.

; and

(3)by adding at the end the following new subsection:

(i)

Requirements for hospitals To qualify for hospital exception to ownership or investment prohibition

(1)

Requirements described

For purposes of subsection (d)(3)(D), the requirements described in this paragraph for a hospital are as follows: (A)

Provider agreement

The hospital had— (i)physician ownership on September 1, 2008; and (ii)a provider agreement under section 1866 in effect on such date. (B)

Limitation on expansion of facility capacity

Except as provided in paragraph (3), the number of operating rooms, procedure rooms, and beds of the hospital at any time on or after the date of the enactment of this subsection are no greater than the number of operating rooms, procedure rooms, and beds as of such date. (C)

Preventing conflicts of interest

(i)The hospital submits to the Secretary an annual report containing a detailed description of— (I)the identity of each physician owner and any other owners of the hospital; and (II)the nature and extent of all ownership interests in the hospital. (ii)The hospital has procedures in place to require that any referring physician owner discloses to the patient being referred, by a time that permits the patient to make a meaningful decision regarding the receipt of care, as determined by the Secretary— (I)the ownership interest of such referring physician in the hospital; and (II)if applicable, any such ownership interest of the treating physician. (iii)The hospital does not condition any physician ownership interests either directly or indirectly on the physician owner making or influencing referrals to the hospital or otherwise generating business for the hospital. (iv)The hospital discloses the fact that the hospital is partially owned by physicians— (I)on any public website for the hospital; and (II)in any public advertising for the hospital. (D)

Ensuring bona fide investment

(i)Physician owners in the aggregate do not own more than the greater of— (I)40 percent of the total value of the investment interests held in the hospital or in an entity whose assets include the hospital; or (II)the percentage of such total value determined on the date of enactment of this subsection. (ii)Any ownership or investment interests that the hospital offers to a physician owner are not offered on more favorable terms than the terms offered to a person who is not a physician owner. (iii)The hospital (or any investors in the hospital) does not directly or indirectly provide loans or financing for any physician owner investments in the hospital. (iv)The hospital (or any investors in the hospital) does not directly or indirectly guarantee a loan, make a payment toward a loan, or otherwise subsidize a loan, for any individual physician owner or group of physician owners that is related to acquiring any ownership interest in the hospital. (v)Investment returns are distributed to each investor in the hospital in an amount that is directly proportional to the ownership interest of such investor in the hospital. (vi)Physician owners do not receive, directly or indirectly, any guaranteed receipt of or right to purchase other business interests related to the hospital, including the purchase or lease of any property under the control of other investors in the hospital or located near the premises of the hospital. (vii)The hospital does not offer a physician owner the opportunity to purchase or lease any property under the control of the hospital or any other investor in the hospital on more favorable terms than the terms offered to an individual who is not a physician owner. (E)

Patient safety

(i)Insofar as the hospital admits a patient and does not have any physician available on the premises to provide services during all hours in which the hospital is providing services to such patient, before admitting the patient— (I)the hospital discloses such fact to a patient; and (II)following such disclosure, the hospital receives from the patient a signed acknowledgment that the patient understands such fact. (ii)The hospital has the capacity to— (I)provide assessment and initial treatment for patients; and (II)refer and transfer patients to hospitals with the capability to treat the needs of the patient involved. (F)

Limitation on application to certain converted facilities

The hospital was not converted from an ambulatory surgical center to a hospital on or after the date of enactment of this subsection. (2)

Publication of information reported

The Secretary shall publish, and update on an annual basis, the information submitted by hospitals under paragraph (1)(C)(i) on the public Internet website of the Centers for Medicare & Medicaid Services. (3)

Exception to prohibition on expansion of facility capacity

(A)

Process

(i)

Establishment

The Secretary shall establish and implement a process under which an applicable hospital (as defined in subparagraph (E)) may apply for an exception from the requirement under paragraph (1)(B). (ii)

Opportunity for community input

The process under clause (i) shall provide individuals and entities in the community that the applicable hospital applying for an exception is located with the opportunity to provide input with respect to the application. (iii)

Timing for implementation

The Secretary shall implement the process under clause (i) on November 1, 2009. (iv)

Regulations

Not later than November 1, 2009, the Secretary shall promulgate regulations to carry out the process under clause (i). (B)

Frequency

The process described in subparagraph (A) shall permit an applicable hospital to apply for an exception up to once every 2 years. (C)

Permitted increase

(i)

In general

Subject to clause (ii) and subparagraph (D), an applicable hospital granted an exception under the process described in subparagraph (A) may increase the number of operating rooms, procedure rooms, and beds of the applicable hospital above the baseline number of operating rooms, procedure rooms, and beds of the applicable hospital (or, if the applicable hospital has been granted a previous exception under this paragraph, above the number of operating rooms, procedure rooms, and beds of the hospital after the application of the most recent increase under such an exception). (ii)

Lifetime 100 percent increase limitation

The Secretary shall not permit an increase in the number of operating rooms, procedure rooms, and beds of an applicable hospital under clause (i) to the extent such increase would result in the number of operating rooms, procedure rooms, and beds of the applicable hospital exceeding 200 percent of the baseline number of operating rooms, procedure rooms, and beds of the applicable hospital. (iii)

Baseline number of operating rooms, procedure rooms, and beds

In this paragraph, the term baseline number of operating rooms, procedure rooms, and beds means the number of operating rooms, procedure rooms, and beds of the applicable hospital as of the date of enactment of this subsection. (D)

Increase limited to facilities on the main campus of the hospital

Any increase in the number of operating rooms, procedure rooms, and beds of an applicable hospital pursuant to this paragraph may only occur in facilities on the main campus of the applicable hospital. (E)

Applicable hospital

In this paragraph, the term applicable hospital means a hospital— (i)that is located in a county in which the percentage increase in the population during the most recent 5-year period (as of the date of the application under subparagraph (A)) is at least 150 percent of the percentage increase in the population growth of the State in which the hospital is located during that period, as estimated by Bureau of the Census; (ii)whose annual percent of total inpatient admissions that represent inpatient admissions under the program under title XIX is equal to or greater than the average percent with respect to such admissions for all hospitals located in the county in which the hospital is located; (iii)that does not discriminate against beneficiaries of Federal health care programs and does not permit physicians practicing at the hospital to discriminate against such beneficiaries; (iv)that is located in a State in which the average bed capacity in the State is less than the national average bed capacity; and (v)that has an average bed occupancy rate that is greater than the average bed occupancy rate in the State in which the hospital is located. (F)

Procedure rooms

In this subsection, the term procedure rooms includes rooms in which catheterizations, angiographies, angiograms, and endoscopies are performed, except such term shall not include emergency rooms or departments (exclusive of rooms in which catheterizations, angiographies, angiograms, and endoscopies are performed). (G)

Publication of final decisions

Not later than 60 days after receiving a complete application under this paragraph, the Secretary shall publish in the Federal Register the final decision with respect to such application. (H)

Limitation on review

There shall be no administrative or judicial review under section 1869, section 1878, or otherwise of the process under this paragraph (including the establishment of such process). (4)

Collection of ownership and investment information

For purposes of subparagraphs (A)(i) and (D)(i) of paragraph (1), the Secretary shall collect physician ownership and investment information for each hospital. (5)

Physician owner defined

For purposes of this subsection, the term physician owner means a physician (or an immediate family member of such physician) with a direct or an indirect ownership interest in the hospital.

(b)

Enforcement

(1)

Ensuring compliance

The Secretary of Health and Human Services shall establish policies and procedures to ensure compliance with the requirements described in subsection (i)(1) of section 1877 of the Social Security Act, as added by subsection (a)(3), beginning on the date such requirements first apply. Such policies and procedures may include unannounced site reviews of hospitals. (2)

Audits

Beginning not later than January 1, 2010, the Secretary of Health and Human Services shall conduct audits to determine if hospitals violate the requirements referred to in paragraph (1).