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Mandatory Reports to CMS on Hospital Compensation and Investment Relationships with Physicians

Beginning on September 1, 2007, the U.S. Department of Health and Human Services (HHS) will begin sending mandatory disclosure reports (called Disclosure of Financial Relationships Reports” or “DFFRs”) to 500 hospitals it has selected. The DFFRs will be sent to the selected hospitals and will require the hospitals to disclose information concerning their investment and compensation arrangements with physicians. While the DFFRs will be sent electronically, including an Excel spreadsheet and instructions, hospitals will be required to submit a completed hardcopy of the DFFR to the Centers for Medicare & Medicaid (CMS) within 45 days. A civil monetary penalty of up to $10,000 per day can be imposed for each day a report is filed beyond the deadline.

HHS has advised that among the initial 500 hospitals which receive the DFFR will be the 290 hospitals which did not respond to a voluntary survey that it sent to specialty and competitor hospitals in 2006. The 2006 survey was issued to comply with a provision of the Deficit Reduction Act of 2006 aimed at addressing issues related to physician investment in specialty hospitals.

The information collected from the DFFRs will be used by HHS to analyze all investment interests and compensation arrangements between each of the 500 hospitals and their respective physicians.

While only the selected 500 hospitals will receive the first DFFRs, HHS has previously announced that all hospitals will be required to provide information periodically concerning their investment and compensation relationships with physicians. So, even if your hospital is not among the first to receive the DFFR, good compliance practice suggests you should not wait to compile and organize information about all of your investment and compensation arrangements with physicians. For more information about preparing for the DFFR, contact our Health Law experts.

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