Notice: This HHS-approved document has been submitted to the Office of the Federal Register (OFR) for publication and has not yet been placed on public display or published in the Federal Register. The document may vary slightly from the published document if minor editorial changes have been made during the OFR review process. The document published in the Federal Register is the official HHS-approved document. [BILLING CODE 4120-01-P] DEPARTMENT OF HEALTH AND HUMAN SERVICES Centers for Medicare & Medicaid Services 42 CFR Part 411 [CMS-1720-P] RIN 0938-AT64 Medicare Program; Modernizing and Clarifying the Physician Self-Referral Regulations AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS. ACTION: Proposed rule. SUMMARY: This proposed rule would address any undue regulatory impact and burden of the physician self-referral law. This proposed rule is being issued in conjunction with the Centers for Medicare & Medicaid Services’ (CMS) Patients over Paperwork initiative and the Department of Health and Human Services’ (the Department or HHS) Regulatory Sprint to Coordinated Care. This proposed rule proposes exceptions to the physician self-referral law for certain value-based compensation arrangements between or among physicians, providers, and suppliers. It would also create a new exception for certain arrangements under which a physician receives limited remuneration for items or services actually provided by the physician; create a new CMS-1720-P 2 exception for donations of cybersecurity technology and related services; and amend the existing exception for electronic health records (EHR) items and services. This proposed rule also provides critically necessary guidance for physicians and health care providers and suppliers whose financial relationships are governed by the physician self-referral statute and regulations. DATES : To be assured consideration, comments must be received at one of the addresses provided below, no later than 5 p.m. on [OFR--insert date 75 days after date of publication in the Federal Register]. ADDRESSES: In commenting, please refer to file code CMS-1720-P. Because of staff and resource limitations, we cannot accept comments by facsimile (FAX) transmission. You may submit comments in one of four ways (please choose only one of the ways listed): 1. Electronically. You may submit electronic comments on this regulation to http://www.regulations.gov. Follow the "Submit a comment" instructions. 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-1720-P, P.O. Box 8013 Baltimore, MD 21244-1850. Please allow sufficient time for mailed comments to be received before the close of the comment period. CMS-1720-P 3 3. By express or overnight mail. You may send written comments to the following address ONLY: Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS-1720-P, Mail Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850. 4. By hand or courier. Alternatively, you may deliver (by hand or courier) your written comments ONLY to the following addresses prior to the close of the comment period: a. For delivery in Washington, DC-- Centers for Medicare & Medicaid Services, Department of Health and Human Services, Room 445-G, Hubert H. Humphrey Building, 200 Independence Avenue, SW, Washington, DC 20201 (Because access to the interior of the Hubert H. Humphrey Building is not readily available to persons without Federal government identification, commenters are encouraged to leave their comments in the CMS drop slots located in the main lobby of the building. A stamp-in clock is available for persons wishing to retain a proof of filing by stamping in and retaining an extra copy of the comments being filed.) CMS-1720-P 4 b. For delivery in Baltimore, MD-- Centers for Medicare & Medicaid Services, Department of Health and Human Services, 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: Lisa O. Wilson, (410) 786-8852. Matthew Edgar, (410) 786-0698. 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 website 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. Comments received timely will also be available for public inspection as they are received, generally beginning approximately 3 weeks after publication of a document, 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, phone 1-800-743- 3951. CMS-1720-P 5 Acronyms In addition, because of the many organizations and terms to which we refer by acronym in this proposed rule, we are listing these acronyms and their corresponding terms in alphabetical order below: ACO Accountable care organization API Application programming interface ASC Ambulatory surgical center CEC Comprehensive ESRD Care Model CFR Code of Federal Regulations CHIP Children’s Health Insurance Program CISA Cybersecurity Information Sharing Act of 2015 (Pub. L. 114-113, enacted on December 18, 2015) CJR Comprehensive Care for Joint Replacement Model CMP Civil monetary penalty CMS RFI Request for Information Regarding the Physician Self-Referral Law (83 FR 29524) CY Calendar year DHS Designated health services DMEPOS Durable medical equipment, prosthetics, orthotics & supplies DRA Deficit Reduction Act of 2005 (Pub. L. 109-171, enacted on February 8, 2006) DRG Diagnosis-related group EHR Electronic health records CMS-1720-P 6 EKG Electrocardiogram EMTALA Emergency Medical Treatment and Labor Act (Pub. L. 99-272, enacted on April 7, 1986) ERISA Employee Retirement Income Security Act of 1974 (Pub. L. 93–406, enacted on September 2, 1974) ESOP Employee stock ownership plan ESRD End-stage renal disease FFS Fee-for-service FQHC Federally qualified health center FR Federal Register FY Fiscal year HCIC Health care industry cybersecurity HHS [Department of] Health and Human Services HIPAA Health Insurance Portability and Accountability Act of 1996 (Pub. L. 104- 191, enacted August 21, 1996) IPA Independent practice association IPPS Acute Care Hospital Inpatient Prospective Payment System IRS Internal Revenue Service IT Information technology MA Medicare Advantage MIPPA Medicare Improvements for Patients and Providers Act (Pub. L. 110-275, enacted on July 15, 2008) CMS-1720-P 7 MMA Medicare Prescription Drug, Improvement and Modernization Act of 2003 (Pub. L. 108-173, enacted on December 8, 2003) NIST National Institute of Standards and Technology NPP Nonphysician practitioner NPRM Notice of proposed rulemaking OBRA 89 Omnibus Budget Reconciliation Act of 1989 (Pub. L. 101-239, enacted on December 19, 1989) OBRA 90 Omnibus Budget Reconciliation Act of 1990 (Pub. L. 101- 508, enacted on November 5, 1990) OBRA 93 Omnibus Budget Reconciliation Act of 1993 (Pub. L. 103-66, enacted on August 10, 1993) OCM Oncology Care Model OIG [HHS] Office of Inspector General OMB Office of Management and Budget ONC Office of the National Coordinator for Health Information Technology OPPS Hospital Outpatient Prospective Payment System PFS Physician Fee Schedule PHI Protected health information PHSA Public Health Service Act (Pub. L. 178-410, enacted on July 1, 1944) PPS Prospective payment system RFI Request for information RHC Rural health clinic RVU Relative value unit CMS-1720-P 8 SNF Skilled nursing facility SRDP CMS Voluntary Physician Self-Referral Disclosure Protocol I. Background A. Statutory and Regulatory History 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 payable by Medicare to an entity with which he or she (or an immediate family member) has a financial relationship, 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 referred services. A financial relationship is an ownership or investment interest in the entity or a compensation arrangement with the entity. The statute establishes a number of specific exceptions and grants the Secretary of the Department of Health and Human Services (the Secretary) the authority to create regulatory exceptions for financial relationships that do not pose a risk of program or patient abuse. Section 1903(s) of the Act extends aspects of the physician self-referral prohibitions to Medicaid. For additional information about section 1903(s) of the Act, see 66 FR 857 through 858. This rulemaking follows a history of rulemakings related to the physician self- referral law. The following discussion provides a chronology of our more significant and comprehensive rulemakings; it is not an exhaustive list of all rulemakings related to the physician self-referral law. After the passage of section 1877 of the Act, we proposed rulemakings in 1992 (related only to referrals for clinical laboratory services) (57 FR 8588) (the 1992 proposed rule) and 1998 (addressing referrals for all designated health CMS-1720-P 9 services) (63 FR 1659) (the 1998 proposed rule). We finalized the proposals from the 1992 proposed rule in 1995 (60 FR 41914) (the 1995 final rule), and issued final rules following the 1998 proposed rule in three stages. The first final rulemaking (Phase I) was published in the Federal Register on January 4, 2001 as a final rule with comment period (66 FR 856). The second final rulemaking (Phase II) was published in the Federal Register on March 26, 2004 as an interim final rule with comment period (69 FR 16054).