Physician-Owned Hospitals

Finally, a prohibition takes effect for physician-owned hospitals to participate in Medicare, unless a facility has a provider agreement prior to February 1, 2010. Hospitals that have a provider agreement prior to February 1, 2010 are "grandfathered"-in to continue to participate in Medicare, with some requirements regarding issues such as conflict of interest. For example, a qualifying hospital must submit to HHS a detailed description of the identities of each physician owner or investor and other owners/investors of the hospital; the procedures in place for disclosing a referring physician's ownership or investor status to a patient; and a requirement that the hospital disclose ownership/investment by physicians on its public website and in its advertising. There are also limitations on expansions of such hospitals with existing provider agreements, but a facility may apply to HHS for an exception.


In other reform news, the U.S. Department of the Treasury has announced a new guidance on the Small Business Health Care Tax Credit (see, DM 12494). In the guidance, Internal Revenue Service Notice 2010-44, explains how a business can determine its eligibility and the credit it can receive.

Important points raised in the guidance include the fact that the new tax credits will not be reduced by a state health care tax credit or subsidy, except in very limited circumstances; that small businesses can receive credit for traditional health insurance coverage and for add-on dental, vision and some other limited-scope coverage if meeting requirements; that employers may choose among three different methods of determining house to maximize their eligible tax credit; and about a special transition relief for tax year 2010 simplifying requirements for a qualifying health insurance offer--for those small businesses that did not meet all the requirements for a qualifying health insurance offer due to the fact that the tax credit was enacted on March 23 of this year.

"Small businesses face unique challenges to providing health insurance for their employees, including higher costs and fewer choices. The small business health care tax credit in the Affordable Care Act provides an important incentive to help small businesses overcome these challenges and cover the cost of health insurance for the hardworking Americans they employ," said Secretary Tim Geithner in a press release.

The Department of the Treasury's announcement: http://www.ustreas.gov/press/releases/tg698.htm

The IRS Notice 2010-44 may be accessed at: http://www.irs.gov/pub/irs-drop/n-10-44.pdf

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