SEC. 1156. LIMITATION ON MEDICARE EXCEPTIONS TO THE PROHIBITION ON CERTAIN PHYSICIAN REFERRALS MADE TO HOSPITALS.

[a] In General- Section- 1877 of the Social Security Act [42 U.S.C. 1395nn] is amended--

[1] in subsection [d][2]--

[A] in subparagraph [A], by striking 'and' at the end;

[B] in subparagraph [B], by striking the period at the end and inserting '; and'; and

[C] by adding at the end the following new subparagraph:

'[C] in the case where the entity is a hospital, the hospital meets the requirements of paragraph [3][D].';

[2] in subsection [d][3]--

[A] in subparagraph [B], by striking 'and' at the end;

[B] in subparagraph [C], by striking the period at the end and inserting '; and'; and

[C] by adding at the end the following new subparagraph:

'[D] the hospital meets the requirements described in subsection [i][1].';

[3] by amending subsection [f] to read as follows:

'[f] Reporting and Disclosure Requirements-

'[1] IN GENERAL- Each entity providing covered items or services for which payment may be made under this title shall provide the Secretary with the information concerning the entity's ownership, investment, and compensation arrangements, including--

'[A] the covered items and services provided by the entity, and

'[B] the names and unique physician identification numbers of all physicians with an ownership or investment interest [as described in subsection [a][2][A]], or with a compensation arrangement [as described in subsection [a][2][B]], in the entity, or whose immediate relatives have such an ownership or investment interest or who have such a compensation relationship with the entity.

Such information shall be provided in such form, manner, and at such times as the Secretary shall specify. The requirement of this subsection shall not apply to designated health services provided outside the United States or to entities which the Secretary determines provide services for which payment may be made under this title very infrequently.

'[2] REQUIREMENTS FOR HOSPITALS WITH PHYSICIAN OWNERSHIP OR INVESTMENT- In the case of a hospital that meets the requirements described in subsection [i][1], the hospital shall--

'[A] submit to the Secretary an initial report, and periodic updates at a frequency determined by the Secretary, containing a detailed description of the identity of each physician owner and physician investor and any other owners or investors of the hospital;

'[B] require that any referring physician owner or investor discloses to the individual being referred, by a time that permits the individual to make a meaningful decision regarding the receipt of services, as determined by the Secretary, the ownership or investment interest, as applicable, of such referring physician in the hospital; and

'[C] disclose the fact that the hospital is partially or wholly owned by one or more physicians or has one or more physician investors--

'[i] on any public website for the hospital; and

'[ii] in any public advertising for the hospital.

The information to be reported or disclosed under this paragraph shall be provided in such form, manner, and at such times as the Secretary shall specify. The requirements of this paragraph shall not apply to designated health services furnished outside the United States or to entities which the Secretary determines provide services for which payment may be made under this title very infrequently.

'[3] PUBLICATION OF INFORMATION- The Secretary shall publish, and periodically update, the information submitted by hospitals under paragraph [2][A] on the public Internet website of the Centers for Medicare & Medicaid Services.';

[4] by amending subsection [g][5] to read as follows:

'[5] FAILURE TO REPORT OR DISCLOSE INFORMATION-

'[A] REPORTING- Any person who is required, but fails, to meet a reporting requirement of paragraphs [1] and [2][A] of subsection [f] is subject to a civil money penalty of not more than $10,000 for each day for which reporting is required to have been made.

'[B] DISCLOSURE- Any physician who is required, but fails, to meet a disclosure requirement of subsection [f][2][B] or a hospital that is required, but fails, to meet a disclosure requirement of subsection [f][2][C] is subject to a civil money penalty of not more than $10,000 for each case in which disclosure is required to have been made.

'[C] APPLICATION- The provisions of section 1128A [other than the first sentence of subsection [a] and other than subsection [b]] shall apply to a civil money penalty under subparagraphs [A] and [B] in the same manner as such provisions apply to a penalty or proceeding under section 1128A[a].'; and

[5] by adding at the end the following new subsection:

'[i] Requirements To Qualify for Rural Provider and Hospital Ownership Exceptions to Self-referral Prohibition-

'[1] REQUIREMENTS DESCRIBED- For purposes of subsection [d][3][D], the requirements described in this paragraph are as follows:

'[A] PROVIDER AGREEMENT- The hospital had--

'[i] physician ownership or investment on January 1, 2009; and

'[ii] a provider agreement under section 1866 in effect on such date.

'[B] PROHIBITION ON PHYSICIAN OWNERSHIP OR INVESTMENT- The percentage of the total value of the ownership or investment interests held in the hospital, or in an entity whose assets include the hospital, by physician owners or investors in the aggregate does not exceed such percentage as of the date of enactment of this subsection.

'[C] PROHIBITION ON EXPANSION OF FACILITY CAPACITY- Except as provided in paragraph [2], the number of operating rooms, procedure rooms, or beds of the hospital at any time on or after the date of the enactment of this subsection are no greater than the number of operating rooms, procedure rooms, or beds, respectively, as of such date.

'[D] ENSURING BONA FIDE OWNERSHIP AND INVESTMENT-

'[i] Any ownership or investment interests that the hospital offers to a physician are not offered on more favorable terms than the terms offered to a person who is not in a position to refer patients or otherwise generate business for the hospital.

'[ii] The hospital [or any investors in the hospital] does not directly or indirectly provide loans or financing for any physician owner or investor in the hospital.

'[iii] The hospital [or any investors in the hospital] does not directly or indirectly guarantee a loan, make a payment toward a loan, or otherwise subsidize a loan, for any physician owner or investor or group of physician owners or investors that is related to acquiring any ownership or investment interest in the hospital.

'[iv] Ownership or investment returns are distributed to each owner or investor in the hospital in an amount that is directly proportional to the ownership or investment interest of such owner or investor in the hospital.

'[v] The investment interest of the owner or investor is directly proportional to the owner's or investor's capital contributions made at the time the ownership or investment interest is obtained.

'[vi] Physician owners and investors do not receive, directly or indirectly, any guaranteed receipt of or right to purchase other business interests related to the hospital, including the purchase or lease of any property under the control of other owners or investors in the hospital or located near the premises of the hospital.

'[vii] The hospital does not offer a physician owner or investor the opportunity to purchase or lease any property under the control of the hospital or any other owner or investor in the hospital on more favorable terms than the terms offered to a person that is not a physician owner or investor.

'[viii] The hospital does not condition any physician ownership or investment interests either directly or indirectly on the physician owner or investor making or influencing referrals to the hospital or otherwise generating business for the hospital.

'[E] PATIENT SAFETY- In the case of a hospital that does not offer emergency services, the hospital has the capacity to--

'[i] provide assessment and initial treatment for medical emergencies; and

'[ii] if the hospital lacks additional capabilities required to treat the emergency involved, refer and transfer the patient with the medical emergency to a hospital with the required capability.

'[F] LIMITATION ON APPLICATION TO CERTAIN CONVERTED FACILITIES- The hospital was not converted from an ambulatory surgical center to a hospital on or after the date of enactment of this subsection.

'[2] EXCEPTION TO PROHIBITION ON EXPANSION OF FACILITY CAPACITY-

'[A] PROCESS-

'[i] ESTABLISHMENT- The Secretary shall establish and implement a process under which a hospital may apply for an exception from the requirement under paragraph [1][C].

'[ii] OPPORTUNITY FOR COMMUNITY INPUT- The process under clause [i] shall provide persons and entities in the community in which the hospital applying for an exception is located with the opportunity to provide input with respect to the application.

'[iii] TIMING FOR IMPLEMENTATION- The Secretary shall implement the process under clause [i] on the date that is one month after the promulgation of regulations described in clause [iv].

'[iv] REGULATIONS- Not later than the first day of the month beginning 18 months after the date of the enactment of this subsection, the Secretary shall promulgate regulations to carry out the process under clause [i]. The Secretary may issue such regulations as interim final regulations.

'[B] FREQUENCY- The process described in subparagraph [A] shall permit a hospital to apply for an exception up to once every 2 years.

'[C] PERMITTED INCREASE-

'[i] IN GENERAL- Subject to clause [ii] and subparagraph [D], a hospital granted an exception under the process described in subparagraph [A] may increase the number of operating rooms, procedure rooms, or beds of the hospital above the baseline number of operating rooms, procedure rooms, or beds, respectively, of the hospital [or, if the hospital has been granted a previous exception under this paragraph, above the number of operating rooms, procedure rooms, or beds, respectively, of the hospital after the application of the most recent increase under such an exception].

'[ii] 100 PERCENT INCREASE LIMITATION- The Secretary shall not permit an increase in the number of operating rooms, procedure rooms, or beds of a hospital under clause [i] to the extent such increase would result in the number of operating rooms, procedure rooms, or beds of the hospital exceeding 200 percent of the baseline number of operating rooms, procedure rooms, or beds of the hospital.

'[iii] BASELINE NUMBER OF OPERATING ROOMS, PROCEDURE ROOMS, OR BEDS- In this paragraph, the term 'baseline number of operating rooms, procedure rooms, or beds' means the number of operating rooms, procedure rooms, or beds of a hospital as of the date of enactment of this subsection.

'[D] INCREASE LIMITED TO FACILITIES ON THE MAIN CAMPUS OF THE HOSPITAL- Any increase in the number of operating rooms, procedure rooms, or beds of a hospital pursuant to this paragraph may only occur in facilities on the main campus of the hospital.

'[E] CONDITIONS FOR APPROVAL OF AN INCREASE IN FACILITY CAPACITY- The Secretary may grant an exception under the process described in subparagraph [A] only to a hospital--

'[i] that is located in a county in which the percentage increase in the population during the most recent 5-year period for which data are available is estimated to be at least 150 percent of the percentage increase in the population growth of the State in which the hospital is located during that period, as estimated by Bureau of the Census and available to the Secretary;

'[ii] whose annual percent of total inpatient admissions that represent inpatient admissions under the program under title XIX is estimated to be equal to or greater than the average percent with respect to such admissions for all hospitals located in the county in which the hospital is located;

'[iii] that does not discriminate against beneficiaries of Federal health care programs and does not permit physicians practicing at the hospital to discriminate against such beneficiaries;

'[iv] that is located in a State in which the average bed capacity in the State is estimated to be less than the national average bed capacity;

'[v] that has an average bed occupancy rate that is estimated to be greater than the average bed occupancy rate in the State in which the hospital is located; and

'[vi] that meets other conditions as determined by the Secretary.

'[F] PROCEDURE ROOMS- In this subsection, the term 'procedure rooms' includes rooms in which catheterizations, angiographies, angiograms, and endoscopies are furnished, but such term shall not include emergency rooms or departments [except for rooms in which catheterizations, angiographies, angiograms, and endoscopies are furnished].

'[G] PUBLICATION OF FINAL DECISIONS- Not later than 120 days after receiving a complete application under this paragraph, the Secretary shall publish on the public Internet website of the Centers for Medicare & Medicaid Services the final decision with respect to such application.

'[H] LIMITATION ON REVIEW- There shall be no administrative or judicial review under section 1869, section 1878, or otherwise of the exception process under this paragraph, including the establishment of such process, and any determination made under such process.

'[3] PHYSICIAN OWNER OR INVESTOR DEFINED- For purposes of this subsection and subsection [f][2], the term 'physician owner or investor' means a physician [or an immediate family member of such physician] with a direct or an indirect ownership or investment interest in the hospital.

'[4] PATIENT SAFETY REQUIREMENT- In the case of a hospital to which the requirements of paragraph [1] apply, insofar as the hospital admits a patient and does not have any physician available on the premises 24 hours per day, 7 days per week, before admitting the patient--

'[A] the hospital shall disclose such fact to the patient; and

'[B] following such disclosure, the hospital shall receive from the patient a signed acknowledgment that the patient understands such fact.

'[5] CLARIFICATION- Nothing in this subsection shall be construed as preventing the Secretary from terminating a hospital's provider agreement if the hospital is not in compliance with regulations pursuant to section 1866.'.

[b] Verifying Compliance- The Secretary of Health and Human Services shall establish policies and procedures to verify compliance with the requirements described in subsections [i][1] and [i][4] of section 1877 of the Social Security Act, as added by subsection [a][5]. The Secretary may use unannounced site reviews of hospitals and audits to verify compliance with such requirements.

[c] Implementation-

[1] FUNDING- For purposes of carrying out the amendments made by subsection [a] and the provisions of subsection [b], in addition to funds otherwise available, out of any funds in the Treasury not otherwise appropriated there are appropriated to the Secretary of Health and Human Services for the Centers for Medicare & Medicaid Services Program Management Account $5,000,000 for each fiscal year beginning with fiscal year 2010. Amounts appropriated under this paragraph for a fiscal year shall be available until expended.

[2] ADMINISTRATION- Chapter 35 of title 44, United States Code, shall not apply to the amendments made by subsection [a] and the provisions of subsection [b].