[Federal Register: April 6, 2004 (Volume 69, Number 66)]
[Rules and Regulations]
[Page 17933-17935]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr06ap04-25]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Parts 411 and 424
[CMS-1810-CN]
RIN 0938-AK67
Medicare Program; Physicians' Referrals to Health Care Entities
With Which They Have Financial Relationships (Phase II); Correction
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Correction of interim final rule with comment period.
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SUMMARY: This document corrects a technical error in the interim final
rule with comment period published in the Federal Register on March 26,
2004, entitled ``Physicians' Referrals to Health Care Entities With
Which They Have Financial Relationships (Phase II).''
EFFECTIVE DATE: This correction is effective July 26, 2004.
FOR FURTHER INFORMATION CONTACT: Joanne Sinsheimer (410) 786-4620.
SUPPLEMENTARY INFORMATION:
I. Background
In FR Doc. 04-6668 of March 26, 2004 (69 FR 16054), there was a
technical error that we are identifying and correcting in the
Correction of Errors section below. (The provisions in this correction
are effective as if they were included in the document published March
26, 2004.)
We inadvertently omitted two sections from the preamble of the
document, ``Section IX. Reporting Requirements'' and ``Section X.
Sanctions.'' We are publishing the omitted sections in this correction.
II. Correction of Errors
In FR Doc. 04-6668 of March 26, 2004 (69 FR 16054), make the
following correction--
On page 16099, column three, before the fourth paragraph, add
``Section IX. Reporting Requirements'' and ``Section X. Sanctions'' to
read as follows:
IX. Reporting Requirements (Section 1877(f) of the Act; Phase II; Sec.
411.361)
[If you choose to comment on issues in this section, please include
the caption ``Reporting Requirements'' at the beginning of your
comments.]
Existing Law: Section 1877(f) of the Act sets forth certain
reporting requirements for all entities providing covered items or
services for which payment may be made under Medicare. Under section
1877(f) of the Act, each entity must report to the Secretary
information concerning the entity's ownership, investment, and
compensation arrangements, including--
(1) The covered items and services provided by the entity, and
(2) The names and unique physician identification numbers
(UPINs) of all physicians who have an ownership or investment
interest in, or a compensation arrangement with, the entity, or
whose immediate relatives have such an ownership or investment
interest in, or compensation relationship with, the entity.
The requirements do not apply to DHS provided outside the United
States or to entities that the Secretary determines provide services
for which payment may be made under Medicare very infrequently.
The required information must be provided in a form, manner, and
at such times that the Secretary specifies. Section 1877(g)(5) of
the Act provides that any person who is required, but fails, to meet
one of these reporting requirements is subject to a civil money
penalty of not more than $10,000 for each day for which reporting is
required to have been made.
The August 1995 final rule with comment period (60 FR 41914),
which applied only to referrals for clinical laboratory services,
addressed the provisions of sections 1877(f) and (g)(5) of the Act
in Sec. 411.361. Section 411.361 stated that the reporting
requirements applied to all entities furnishing items or services
for which payment may be made under Medicare, except for entities
that provide 20 or fewer Part A and Part B services during a
calendar year or DHS provided outside the United States. Entities
were required to submit information to us concerning any ownership
or investment interest or any compensation arrangement, as described
in section 1877 of the Act. We specified that the information
submitted must include at least the following:
(1) The name and UPIN of each physician who has a financial
relationship with the entity;
(2) The name and UPIN of each physician with an immediate
relative (as then defined in Sec. 411.351) who has a financial
relationship with the entity;
(3) The covered items and services provided by the entity; and
(4) With respect to each physician identified under (1) and (2),
the nature of the financial relationship (including the extent and/
or value of the ownership or investment interest or the compensation
arrangement, if requested by us).
Section 411.361 of the August 1995 final rule provided that the
required information must be submitted on a form prescribed by us
within the time period specified by the servicing carrier or
intermediary. Entities were given at least 30 days from the date of
the carrier's or intermediary's request to provide the information.
Thereafter, the entity must provide updated information within 60
days of the date of any change in the submitted information. This
section required the entity to retain documentation sufficient to
verify the information provided on the forms and, upon request, to
make that documentation available either to us or to the Office of
the Inspector General (OIG). Information furnished under Sec.
411.361 was subject to public disclosure in accordance with the
provisions of 42 CFR part 401.
Proposed Rule: The January 1998 proposed rule stated that we
were in the process of developing a procedure and form for
implementing the reporting requirements and that we planned to
notify affected parties about the procedures at a later date (63 FR
1703). We stated that, until then, physicians and entities were not
required to report to us. We also noted that the 60-day timeframe
for reporting updated information could be onerous and thus, we
proposed to modify Sec. 411.361 to require entities to report
annually to us updated information regarding their financial
relationships with physicians.
The proposed rule also noted in Sec. 411.361(d) that a
reportable financial relationship was defined as ``any ownership or
investment interest or any compensation arrangement, as described in
section 1877 of the Act.'' Under that definition, we were concerned
that an entity could decide that it fell within one of the
exceptions and thus report no information to us. As a result, we
would have no opportunity to scrutinize the entity's financial
arrangements to determine if that assessment was correct. We
proposed to modify Sec. 411.361(d) to include those relationships
excepted in the statute.
We also proposed that the information that an entity must
acquire, retain, and submit to us if requested, for each physician
identified in the rule, include the nature of the financial
relationship (including the extent and/or value of the ownership or
investment interest or any compensation arrangement).
Final Rule: The final rule generally requires entities to retain
reportable information and furnish it upon request. For reasons set
out in more detail in the responses to comments that follow, we have
reconsidered some of the proposed provisions regarding reporting
requirements.
We have modified the proposed definition of ``reportable
financial relationship'' in Sec. 411.361(d). While we are still
including in the definition those relationships excepted under Sec.
411.355 through Sec. 411.357, we are specifically excluding from
that definition ownership or investment interests in publicly-traded
securities and mutual funds if such interests satisfy the exceptions
in Sec. 411.356(a) or Sec. 411.356(b), respectively. This
exclusion from the definition of reportable financial relationships
for publicly-traded securities and mutual funds is limited to
shareholder information; contractual arrangements concerning these
ownership or investment interests are reportable financial
relationships.
We are also modifying Sec. 411.361(c)(4) to specify that the
information required is only that information that the entity knows
or should know in the course of prudently conducting business,
including, but not limited to, records that the entity is already
required to retain to comply with Internal
[[Page 17934]]
Revenue Service and Securities and Exchange Commission rules and
other rules under the Medicare and Medicaid programs.
We do not intend to develop any forms for the submission of
information. We are requiring that records be retained for the
length of time specified by the applicable regulatory requirements
for the information, including the Internal Revenue Service, the
Securities and Exchange Commission, and the Medicare and Medicaid
programs and be made available upon request. We have dropped the
requirement to report updated information every 12 months.
Comment: Most commenters were concerned that the proposed
reporting requirements were unduly burdensome.
Response: We believe we have significantly reduced the burden on
entities with the modifications we have made to the proposed rule.
Comment: Several organizations requested that we limit the
reporting requirements to only those financial relationships that do
not meet a Stark exception. Of those, half of the commenters asked
that we specifically exempt publicly-traded securities and mutual
funds.
Response: We do not agree that all excepted financial
relationships should be exempt from the reporting requirements. We
are still concerned that an entity could decide that one or more of
its financial relationships falls within an exception, fail to
retain data concerning those financial relationships, and thereby
prevent the government from reviewing the arrangements to see if
they qualify for an exception. However, we are persuaded that, in
the case of shareholder information for ownership interests in
publicly-traded securities and mutual funds that satisfies the
exceptions in Sec. 411.356(a) or Sec. 411.356(b), respectively,
the burden of collecting, retaining, and reporting shareholder
information outweighs the benefit of reviewing it, and the potential
for abuse is minimal. Therefore, we are providing that shareholder
information for ownership interests in publicly-traded securities
and mutual funds need not be reported. Nevertheless, entities must
report other financial relationships with referring physicians who
are shareholders, such as personal services arrangements.
Comment: Several commenters were of the opinion that the
reporting requirements exceeded those in the statute and thus, we
were without statutory authority to impose them.
Response: As explained in the January 2001 final rule, we
believe that the statute allows us to gather information on all
financial relationships without regard to whether the relationships
qualify for an exception. Section 1877(f) of the Act states that
each entity providing any covered items or services for which
payment may be made under Medicare shall provide the Secretary with
information concerning the entity's ``ownership, investment, and
compensation arrangements, including * * * the names and unique
physician identification numbers of all physicians with an ownership
or investment interest (as described in subsection (a)(2)(A)), or
with a compensation arrangement (as described subsection (a)(2)(B)),
in the entity. * * *'' (emphasis added). Thus, we believe the
statute allows us to gather data on financial relationships,
including, but not limited to, financial relationships that do not
qualify for an exception under sections 1877(a)(2)(A) or
1877(a)(2)(B) of the Act.
Comment: Several commenters suggested that we confine our
requests for information to records that an entity is already
required to retain under Internal Revenue Service, Securities and
Exchange Commission, and Medicare and Medicaid requirements.
Response: We agree with the commenters that these records should
be retained to provide information, upon request, concerning an
entity's financial relationships. However, we are also requiring
that entities retain, and provide upon request, other records that
they know or should know about in the course of prudently conducting
business and that would evidence the nature of the financial
relationships (including the extent and/or value of the ownership or
investment interest or compensation arrangement).
Comment: Three organizations believed that the ``knows or should
know'' standard was too vague to provide guidance concerning which
records should be retained.
Response: We disagree with the commenters. Entities are required
to discern which records they know or should know about in the
course of prudently conducting business on a daily basis. We are
only requiring retention of those records that entities would retain
in the prudent conduct of their business. We are not requiring that
any additional records be created specifically to comply with the
requirements of this rule. We have defined the scope of the required
information and the reportable financial relationships with
sufficient specificity to allow an entity to determine what
information should be retained.
Comment: Two associations believed that 30 days was not enough
time in which to respond to a request for information.
Response: The regulation states that entities must submit the
required information within the time period specified in the
request, but will be given at least 30 days from the date of the
request to provide the information. Since the records requested will
already be retained in the course of conducting business, in most
cases 30 days should be sufficient to collect them in response to a
request. In addition, the rule states that the entity will be given
at least 30 days, leaving open the possibility of a greater period
of time if reasonably necessary.
Comment: Two commenters felt that the information requested
should be confidential.
Response: We are bound to comply with the Freedom of Information
Act (FOIA), (5 U.S.C. Sec. 552), as implemented by the Department's
regulations at 45 CFR part 5 and our own regulations as 42 CFR part
401. To the extent we are obligated to disclose records that we have
received pursuant to the physician self-referral reporting
requirements, we cannot maintain these records as confidential.
However, because Sec. 411.361(e) requires information to be
disclosed to CMS or the OIG, we are modifying Sec. 411.361(g) to
provide that information furnished to either CMS or the OIG will be
subject to public disclosure in accordance with 42 CFR part 401.
Nevertheless, to the extent that reported information is protected
from disclosure under the Privacy Act of 1974 (December 31, 1974,
Pub. L. 93-579), the information will not be disclosed in response
to a FOIA request.
X. Sanctions (Section 1877(g) of the Act; Phase II; Sec. 411.353)
[If you choose to comment on issues in this section, please include
the caption ``Sanctions'' at the beginning of your comments.]
Violations of the physician self-referral prohibition are
subject to the following sanctions: (i) Nonpayment of claims for DHS
furnished as a result of a prohibited referral, and (ii) the
obligation to refund amounts collected as a result of submitting
claims for DHS performed pursuant to a prohibited referral. These
sanctions are addressed in section III.B of the January 1998
proposed rule (63 FR 1695), in section III. A of the Phase I
preamble (66 FR 864), in section II.A of this Phase II preamble, and
in the regulations at Sec. 411.353. We are making no changes to the
sanction provisions in Sec. 411.353. Under section 1877(g)(3) and
(g)(4), individuals and entities that knowingly violate the
prohibition are subject to civil monetary penalties (CMPs). The CMP
sanctions set forth in section 1877(g)(3) and (g)(4) are enforced by
the OIG in accordance with the regulations at 42 CFR part 1003.
III. Waiver of Proposed Rulemaking
We ordinarily publish a notice of proposed rulemaking in the
Federal Register to provide a period for public comment before the
provisions of a notice take effect. We can waive this procedure,
however, if we find good cause that notice and comment procedure is
impracticable, unnecessary, or contrary to the public interest and
incorporate a statement of the finding and the reasons for it into the
notice issued.
We believe that it is unnecessary to subject the correction
identified above to public comment because it merely provides preamble
language that was inadvertently omitted from the regulation preamble.
For this reason, and because the public will have an opportunity to
comment on this section with the interim final rule with comment
period, we find it unnecessary to provide separately the opportunity
for comment on the technical correction made in this notice. Therefore,
we find good cause to waive notice and comment procedures.
(Catalog of Federal Domestic Assistance Program No. 93.774,
Medicare--Supplementary Medical Insurance Program)
[[Page 17935]]
Dated: March 31, 2004.
Ann C. Agnew,
Executive Secretary to the Department.
[FR Doc. 04-7716 Filed 4-1-04; 11:57 am]
BILLING CODE 4120-01-P