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[Federal Register Volume 79, Number 91 (Monday, May 12, 2014)]
[Notices]
[Pages 26969-26971]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-10872]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

[CMS-1615-NC]

Medicare Program; Request for an Exception to the Prohibition on 
Expansion of Facility Capacity Under the Hospital Ownership and Rural 
Provider Exceptions to the Physician Self-Referral Prohibition

AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.

[[Page 26970]]

ACTION: Notice with comment period.

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SUMMARY: Under section 1877(i) of the Social Security Act (the Act), a 
physician-owned hospital is effectively prohibited from expanding 
facility capacity, unless the Secretary grants the hospital's request 
for an exception to that prohibition after considering input on the 
hospital's request from individuals and entities in the community where 
the hospital is located. The Centers for Medicare & Medicaid Services 
(CMS) has received a request from a physician-owned hospital for an 
exception to the prohibition against expansion of facility capacity. 
This notice solicits comments on the request from individuals and 
entities in the community in which the physician-owned hospital is 
located. Community input may inform our determination regarding whether 
the requesting hospital qualifies for an exception to the prohibition 
against expansion of facility capacity.

DATES: Comment Date: To be assured consideration, comments must be 
received at one of the addresses provided below, no later than 5 p.m. 
on June 11, 2014.

ADDRESSES: In commenting, please refer to file code CMS-1615-NC. 
Because of staff and resource limitations, we cannot accept comments by 
facsimile (FAX) transmission.
    You may submit comments in one of three ways (please choose only 
one of the ways listed):
    1. Electronically. You may submit electronic comments on this 
exception request to http://www.regulations.gov. Follow the 
instructions under the ``More Search Options'' tab.
    2. By regular mail. You may mail written comments to the following 
address ONLY: Centers for Medicare & Medicaid Services, Department of 
Health and Human Services, Attention: CMS-1615-NC, P.O. Box 8010, 
Baltimore, MD 21244-1850.
    Please allow sufficient time for mailed comments to be received 
before the close of the comment period.
    3. By express or overnight mail. You may send written comments to 
the following address ONLY: Department of Health and Human Services, 
Attention: CMS-1615-NC, Mail Stop C4-26-05, 7500 Security Boulevard, 
Baltimore, MD 21244-1850.
    For information on viewing public comments, see the beginning of 
the SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT: Patricia Taft, (410) 786-4561 or 
Teresa Walden, (410) 786-3755.

SUPPLEMENTARY INFORMATION:
    Inspection of Public Comments:
    All comments received before the close of the comment period are 
available for viewing by the public, including any personally 
identifiable or confidential business information that is included in a 
comment. We post all comments received before the close of the comment 
period on the following Web site as soon as possible after they have 
been received: http://www.regulations.gov. Follow the search 
instructions on that Web site to view public comments.
    We will allow stakeholders 30 days from the date of this notice to 
submit written comments. Comments received timely will be available for 
public inspection as they are received, generally beginning 
approximately 3 weeks after publication of this notice, at the 
headquarters of the Centers for Medicare & Medicaid Services, 7500 
Security Boulevard, Baltimore, Maryland 21244, Monday through Friday of 
each week from 8:30 a.m. to 4 p.m. To schedule an appointment to view 
public comments, please phone 1-800-743-3951.

I. Background

    Section 1877 of the Social Security Act (the Act), also known as 
the physician self-referral law--(1) prohibits a physician from making 
referrals for certain ``designated health services'' (DHS) payable by 
Medicare to an entity with which he or she (or an immediate family 
member) has a financial relationship (ownership or compensation), 
unless an exception applies; and (2) prohibits the entity from filing 
claims with Medicare (or billing another individual, entity, or third 
party payer) for those DHS furnished as a result of a prohibited 
referral.
    Section 1877(d)(3) of the Act provides an exception, known as the 
``whole hospital exception,'' for physician ownership or investment 
interests held in a hospital located outside of Puerto Rico, provided 
that the referring physician is authorized to perform services at the 
hospital and the ownership or investment interest is in the hospital 
itself (and not merely in a subdivision of the hospital).
    Section 1877(d)(2) of the Act provides an exception for physician 
ownership or investment interests in rural providers (the ``rural 
provider exception''). In order for an entity to qualify for the rural 
provider exception, the DHS must be furnished in a rural area (as 
defined in section 1886(d)(2) of the Act) and substantially all the DHS 
furnished by the entity must be furnished to individuals residing in a 
rural area.
    Section 6001(a)(3) of the Patient Protection and Affordable Care 
Act (Pub. L. 111-148) as amended by the Health Care and Education 
Reconciliation Act of 2010 (Pub. L. 111-152) (hereafter referred to 
together as ``the Affordable Care Act'') amended the whole hospital and 
rural provider exceptions to the physician self-referral prohibition to 
impose additional restrictions on physician ownership and investment in 
hospitals and rural providers. Since March 23, 2010, a physician-owned 
hospital that seeks to avail itself of either exception is prohibited 
from expanding facility capacity unless it qualifies as an ``applicable 
hospital'' or ``high Medicaid facility'' (as defined in sections 
1877(i)(3)(E), (F) of the Act and 42 CFR 411.362(c)(2), (3) of our 
regulations) and has been granted an exception to the prohibition by 
the Secretary. Section 1877(i)(3)(A)(ii) of the Act provides that 
individuals and entities in the community in which the provider 
requesting the exception is located must have an opportunity to provide 
input with respect to the provider's application for the exception. For 
further information, visit our Web site at: http://www.cms.gov/Medicare/Fraud-and-Abuse/PhysicianSelfReferral/Physician_Owned_Hospitals.html.

II. Exception Request Process

    On November 30, 2011, we published a final rule in the Federal 
Register (76 FR 74122, 74517 through 74525) that, among other things, 
finalized Sec.  411.362(c), which specified the process for submitting, 
commenting on, and reviewing a request for an exception to the 
prohibition on expansion of facility capacity. We specified that prior 
to our review of the request, we will solicit community input on the 
request for an exception by publishing a notice of the request in the 
Federal Register (see Sec.  411.362(c)(5)). We also stated that 
individuals and entities in the hospital's community have 30 days to 
submit comments on the request. Community input must take the form of 
written comments and may include documentation demonstrating that the 
physician-owned hospital requesting the exception does or does not 
qualify as an ``applicable hospital'' or ``high Medicaid facility,'' as 
such terms are defined in Sec.  411.362(c)(2) and (3). Although we gave 
examples of community input, such as documentation demonstrating that 
the hospital does not satisfy one or more of the data criteria or that 
the hospital discriminates against beneficiaries of Federal health 
programs, we noted that

[[Page 26971]]

these were examples only and that we will not restrict the type of 
community input that may be submitted (76 FR 74522). If we receive 
timely comments from the community, we will notify the hospital, and 
the hospital has 30 days after such notice to submit a rebuttal 
statement (Sec.  411.362(c)(5)(ii)).
    A request for an exception to the facility expansion prohibition is 
considered complete and ready for CMS review if no comments from the 
community are received by the close of the 30-day comment period. If we 
receive timely comments from the community, we consider the request to 
be complete 30 days after the hospital is notified of the comments. If 
we grant the request for an exception to the prohibition on expansion 
of facility capacity, the expansion may occur only in facilities on the 
hospital's main campus and may not result in the number of operating 
rooms, procedure rooms, and beds for which the hospital is licensed 
exceeding 200 percent of the hospital's baseline number of operating 
rooms, procedure rooms, and beds (Sec.  411.362(c)(6)). Our decision to 
grant or deny a hospital's request for an exception to the prohibition 
on expansion of facility capacity will be published in the Federal 
Register in accordance with our regulations at Sec.  411.362(c)(7).

III. Hospital Exception Request

    As permitted by section 1877(i)(3) of the Act and our regulations 
at Sec.  411.362(c), the following physician-owned hospital has 
requested an exception to the prohibition on expansion of facility 
capacity:

Name of Facility: Lake Pointe Medical Center
Location: 6800 Scenic Drive, Rowlett, Texas 75088-4552 (Rockwall 
County)
Basis for Exception Request: High Medicaid Facility

    We seek comments on this request from individuals and entities in 
the community in which the hospital is located. We encourage interested 
parties to review the hospital's request, which is posted on the CMS 
Web site at: http://www.cms.gov/Medicare/Fraud-and-Abuse/PhysicianSelfReferral/Physician_Owned_Hospitals.html. We especially 
welcome comments regarding whether the hospital qualifies as a ``high 
Medicaid facility.'' Under Sec.  411.362(c)(3), a ``high Medicaid 
facility'' is a hospital that satisfies all of the following criteria:
     The hospital is not the sole hospital in the county in 
which it is located;
     The hospital does not discriminate against beneficiaries 
of Federal health care programs and does not permit physicians 
practicing at the hospital to discriminate against such beneficiaries; 
and
     With respect to each of the 3 most recent fiscal years for 
which data are available as of the date the hospital submits its 
request, the hospital has an annual percent of total inpatient 
admissions under Medicaid that is estimated to be greater than such 
percent with respect to such admissions for any other hospital located 
in the county in which the hospital is located.
    We note that our regulations require the requesting hospital to use 
filed hospital cost report discharge data to estimate its annual 
percentage of total inpatient admissions under Medicaid and the annual 
percentages of total inpatient admissions under Medicaid for every 
other hospital located in the county in which the hospital is located.
    Individuals and entities wishing to submit comments on the 
hospital's request should review the DATES and ADDRESSES sections above 
and state whether or not they are in the community in which the 
hospital is located.

IV. Collection of Information Requirements

    This document does not impose information collection and 
recordkeeping requirements. Consequently, it need not be reviewed by 
the Office of Management and Budget under the authority of the 
Paperwork Reduction Act of 1995 (44 U.S.C. 35).

V. Response to Public Comments

    We will consider all comments we receive by the date and time 
specified in the DATES section of this preamble, and, when we proceed 
with a subsequent document, we will respond to the comments in the 
preamble to that document.

    Dated: May 6, 2014.
Marilyn Tavenner,
Administrator, Centers for Medicare & Medicaid Services.
[FR Doc. 2014-10872 Filed 5-9-14; 8:45 am]
BILLING CODE P
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