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CMS Alert: Independent Diagnostic Testing Facilities

Published: August 1st, 2007
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The Centers for Medicare and Medicaid Services (“CMS”) recently proposed new federal regulations, and is presently soliciting public comments concerning a number of new and modified performance standards applicable to Independent Diagnostic Testing Facilities (“IDTFs”) and their supervising physicians. Certain of these proposed rules, if adopted, could have a dramatic impact on individuals operating or looking to operate or acquire diagnostic imaging facilities and other medical ventures which are required to be enrolled as an “IDTF” with the Medicare Program. Physicians or organizations currently leasing or sub-leasing any facilities, equipment or personnel from an existing IDTF and/or physicians serving or considering serving as a supervising physician of an IDTF would also be affected by adoption of the proposed rules. The following is a summary of the proposed rules and changes by CMS.

Prohibition on IDTF Sharing Arrangements. CMS has proposed prohibiting IDTFs from sharing any of their office facilities, equipment, medical staff or other personnel with any other individual or organization, including prohibiting IDTFs from leasing or subleasing any of their office facilities, equipment and/or personnel to any other individual or organization. If adopted, all existing lease or sharing arrangements for office facilities, equipment and/or personnel between existing IDTFs and any other individual or organization will be required to be terminated as a condition of such IDTFs remaining enrolled in the Medicare program.

In addition, while this new proposed performance standard is currently slated to apply only to fixed based (physical site) IDTFs, CMS is also seeking public comments on establishing a similar “no sharing” rule for mobile IDTFs. If expanded to mobile IDTFs, those mobile imaging facilities and other mobile facilities currently enrolled in the Medicare program as IDTFs will no longer be permitted to be leased to any other individual or organization.

Prohibition on Retroactive Billings. Currently, IDTFs are legally permitted to retroactively bill Medicare for services which they provide to Medicare beneficiaries before they submit a Medicare enrollment application or before they are approved to participate in the Medicare Program. CMS is now proposing that a fixed “initial date of enrollment” be established for all newly enrolled IDTFs, and that newly enrolled IDTFs be precluded from billing the Medicare Program for any services which they may otherwise render to a Medicare beneficiary before their “initial date of enrollment”. Under the new proposed performance standard, the “initial date of enrollment” for newly enrolled IDTFs will be the later of: (i) the date the IDTF’s owners submit a duly completed and signed Medicare enrollment application to the local Medicare contractor, provided that such application is able to be processed and is subsequently approved by the local Medicare contractor; or (ii) the date such IDTF commences rendering services at its new practice location.

Supervising Physician Responsibilities/Elimination of Administrative Responsibility. Under the current IDTF performance standards regulations which went into effect January 1, 2007, supervising physicians of IDTFs are responsible for the overall operation and administration of their IDTFs, including employment of personnel competent to perform test procedures, and for assuring compliance by their IDTF with applicable regulations. This performance standard has been interpreted as shifting the overall administrative responsibility for IDTFs from their owners or other administrative staff to the IDTF’s supervising physicians. CMS has indicated that it did not intend for the current performance standard regulations to shift such responsibility from the owners or administrative staff of IDTFs to the IDTF’s supervising physicians and, to prevent such standard from continuing to be misinterpreted, CMS is now proposing to delete this performance standard in its entirety.

For further information concerning the above-described proposed IDTF performance standards or further information concerning existing IDTF performance standards, please contact one of the members of Dean Mead’s Health Law Department.