As of October 1, 2007, all hospitals that have physician ownership are required to furnish written notice to their patients at the beginning of a hospital stay or outpatient visit. The notice must disclose the fact that the hospital meets the definition of a "physician-owned hospital." In addition, the hospital must provide a list of the hospital’s physician owners upon request. The notice must be provided to the patients at the first contact between the hospital and the patient. CMS believes this is usually when the hospital sends a package of information regarding scheduling, pre-admission testing and registration for a planned hospital admission or outpatient service.

These rules do not apply simply to specialty hospitals. Rather, a "physician-owned hospital" is defined as any participating hospital in which a physician or physicians have an ownership or investment interest. This ownership interest may be held directly or indirectly, and may be through any means, including equity or debt. The only exception for physician ownership is ownership in publicly traded securities or mutual funds. Hospitals not providing these disclosures may have their Provider Agreement terminated. Lack of disclosure procedures is also a basis to deny a Provider Agreement.

The CMS final Inpatient Prospective Payment System regulations, in which these notice rules are contained, also created a provision that requires hospitals that do not have physicians on-site at the hospital 24 hours per day 7 days per week, to provide notice to patients. The notice must explain how the hospital will meet the medical needs of patients who develop emergency medical conditions at a time when no physician is present in the hospital.

Ober|Kaler's Comment: Compliance with this rule may be especially difficult for hospital systems where a physician may have an ownership interest in an entity that owns a hospital rather than the hospital itself. Hospitals will need to carefully assess whether any of their ownership is held indirectly by physicians.