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Physician Self Referral

Specialty Hospital Issues

Notification issued March 19, 2004
This publication (see "Downloads" section, below) alerted CMS contractors to the 18-month moratorium on physician referrals to specialty hospitals in which they have an ownership or investment interest. The moratorium was established by section 507 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA), which amended the "whole hospital" and "rural provider" ownership exceptions to the physician self-referral prohibition. The moratorium was in effect from December 8, 2003 through June 7, 2005.

MMA Report to Congress
Section 507 of the MMA established an 18-month moratorium on physician-investor referrals to specialty hospitals.  Under the moratorium, specialty hospitals were prohibited from billing or submitting claims to anyone for DHS furnished as a result of a referral that was prohibited under the moratorium.  The moratorium was effective from December 8, 2003 through June 7, 2005.  Congress mandated that during the moratorium, the Department of Health and Human Services (HHS) conduct a study, focusing on specialty hospital referral patterns, quality of care, and the impact of specialty hospitals on the provision of uncompensated care.   HHS submitted its report and recommendations on May 12, 2005.  In the "Downloads" and "Related Links Inside CMS" sections below, we provide links to the following:

  • Fact Sheet
  • Report to Congress: Study of Physician-Owned Specialty Hospitals
  • Recommendations Regarding Physician-Owned Specialty Hospitals
  • Testimony of Dr. Mark McClellan, May 12, 2005

Suspension of new enrollments
On June 9, 2005, CMS instituted a 6-month suspension in the processing of Medicare enrollment applications (CMS-855As) submitted by specialty hospitals.  Subsequently, CMS issued extensions to the suspension, which Congress continued under section 5006(c) of the Deficit Reduction Act of 2005 (DRA).  The extension set by Congress continues until the earlier of the date that the Secretary submits a final report on physician investment in specialty hospitals (as required under Section 5006(a) of the DRA) or August 8, 2006, unless the Secretary extends the deadline for an additional two months as authorized under section 5006(c)(2).  These temporary suspensions do not apply to those specialty hospitals that submitted a CMS-855A prior to June 9, 2005, or that requested prior to that date an advisory opinion from CMS as to their status under the specialty hospital moratorium.


Notification Issued March 19, 2004 [PDF, 286KB]
MMA Report to Congress [PDF, 1MB]
MMA Recommendations Regarding Physician-Owned Specialty Hospitals [PDF 149KB]
MMA Testimony of Dr. Mark McClellan [PDF 107KB]
Related Links Inside CMS

MMA Fact Sheet
Related Links Outside CMS

There are no Related Links Outside CMS

Page Last Modified: 06/01/2006 12:00:00 AM
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