T h i s d o c u m e n t i s s c h e d u l e d t o b e p u b l i s h e d i n t h e F e d e r a l R e g i s t e r o n 0 5 / 1 2 / 2 0 1 4 a n d a v a i l a b l e o n l i n e a t h t t p : / / f e d e r a l r e g i s t e r . g o v / a / 2 0 1 4 - 1 0 8 7 2 , a n d o n F D s y s . g o v2 You may submit comments in one of three ways (please choose only one of the ways listed): 1. Electronically. You may submit electroni c comments on this exception request to http://www.regulations.gov. Follow the instruct ions 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 co mments, see the beginning of the "SUPPLEMENTARY INFORMATION" section.
FOR FURTHER INFORMATION CONTACT: Patricia Taft, (410) 786-4561 or Teresa Walden, (410) 786-3755.3
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 persona lly identifiable or confidential business information that is included in a comment. We post all comments r eceived before the close of the comment period on the following website as soon as possibl e after they have been received: http://www.regulations.gov . Follow the search instructions on that website 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 av ailable for public inspection as they are received, generally beginning approximately 3 w eeks 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 pub lic comments, please phone 1-800-743-3951. I. Background Section 1877 of the Social S ecurity Act (the Act), also known as the physician selfreferral law-- (1) prohibits a phys ician from making referrals fo r 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 bil ling another individual, entity, or third party payer) for those DHS furnis hed 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 loca ted outside of4 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 prov iders (the “rural provider exception”). In order for an entity to qualify for the rural provider excep tion, the DHS must be furnished in a rural area (as defined in section 1886(d)(2) of the Act) a nd substantially all the DHS furn ished by the entity must be furnished to individuals re siding in a rural area. Section 6001(a)(3) of the Pa tient Protection and Affordab le Care Act (Pub. L. 111-148) as amended by the Health Care and Educa tion Reconciliation Act of 2010 (Pub. L. 111-152) (hereafter referred to together as “the Afford able Care Act”) amended the whole hospital and rural provider exceptions to the physician self -referral prohibition to impose additional restrictions on physician ownershi p and investment in hospitals and rural providers. Since March 23, 2010, a physician-owned hospital that seek s to avail itself of either exception is prohibited from expanding facility capacity unle ss it qualifies as an “applicable hospital” or “high Medicaid facility” (as de fined 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 indivi duals and entities in the community in which the provider requesting the excep tion is located must have an opportunity to provide input with respect to the provider’s application for the exception. For further information, visit our website at:http://www.cms.gov/Medicare/Fraud-andAbuse/PhysicianSelfReferral/P hysician_Owned_Hospitals.html

.5 II. Exception Request Process On November 30, 2011, we publis hed a final rule in the Federal Register (76 FR 74122, 74517 through 74525) that, among other things, finalized §411.362(c), wh ich 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 §411.362(c)(5)). We also stated that individuals and entities in the hospital’s comm unity have 30 days to submit comments on the request. Community input must take the form of wr itten comments and may include documentation demonstrating that the physician-owned hospi tal requesting the exception does or does not qualify as an “applicable hospital” or “high Medicaid facility ,” as such terms are defined in §411.362(c)(2) and (3). Although we gave exam ples 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 beneficiar ies of Federal health programs, we noted that 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 (§411.362(c)(5)(ii)). A request for an exception to the facility e xpansion prohibition is considered complete and ready for CMS review if no comments from the community are receiv ed by the close of the 30-day comment period. If we receive timely co mments 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 facil ity capacity, the expansion may6 occur only in facilities on the hospital’s main campus and may not resu lt in the number of operating rooms, procedure rooms, and beds fo r which the hospital is licensed exceeding 200 percent of the hospital’s baseli ne number of operating rooms, procedure rooms, and beds (§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 §411.362(c)(7). III. Hospital Exception Request As permitted by section 1877(i)(3) of the Act and our regulations at § 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, Rowl ett, Texas 75088-4552 (Rockwall County) Basis for Exception Request: High Medicaid Facility We seek comments on this request from i ndividuals and entities in the community in which the hospital is located. We encourage interested partie s to review the hospital’s request, which is posted on the CMS website at: http://www.cms.gov/Medicare/Fraud-andAbuse/PhysicianSelfReferral/P hysician_Owned_Hospitals.html . We especially welcome comments regarding whether the hospital qualifies as a “high Medicaid facility.” Under §411.362(c)(3), a “high Medicaid facil ity” 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 agains t beneficiaries of Federal health care programs and does not permit physicians prac ticing at the hospital to discriminate against such beneficiaries; and7

• 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 a nnual percent of total inpatient admissions under Medicaid that is es timated to be greater than such percent with respect to such admissions for any ot her hospital located in the county in which the hospital is located. We note that our regulations require the re questing hospital to use filed hospital cost report discharge data to estimate its annual pe rcentage of total inpatient admissions under Medicaid and the annual percen tages of total inpatient admissions under Medicaid for every other hospital located in the county in which the hospital is located. Individuals and entities wi shing to submit comments on the hospital’s request should review the “DATES ” and “ ADDRESSES ” sections above and state wh ether or not they are in the community in which the hospital is located. IV. Collection of Information Requirements This document does not impose information co llection and recordkeeping requirements. Consequently, it need not be reviewed by th e 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 05/09/2014 at 8:45 am; Publication Date: 05/12/2014]