On Feb. 26, 2025, McGuireWoods successfully assisted a physician-owned hospital in obtaining a favorable advisory opinion from the Centers for Medicare & Medicaid Services (CMS) regarding its proposal to relocate the entire hospital 8 miles from the current location and add an emergency department. CMS had previously only issued 20 opinions since the inception of the advisory opinion process, with the most recent advisory opinion issued in December 2021.
In Advisory Opinion No. CMS-AO-2025-1, CMS determined that after the 8-mile relocation and addition of an emergency department, the hospital would be the same hospital that had physician ownership and a Medicare provider agreement on Dec. 31, 2010, and would consequently still qualify for the exception at 42 C.F.R. § 411.356(c)(3), commonly referred to as the “whole hospital exception,” under the federal Physician Self-Referral Law (Stark Law).
In determining that the hospital would remain the “same hospital,” CMS relied on the fact that, apart from the 8-mile relocation and addition of an emergency department, there would be no other substantial changes, including to the aggregate number of licensed beds, operating rooms and procedure rooms; ownership or leadership; license, Medicare provider agreement or tax identification number; patient base; or name, logo and branding.
Advisory opinions are only binding on the requester, but CMS makes the redacted opinions available to the public to provide guidance on whether a physician’s 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 would be prohibited by the Stark Law.
For additional information about advisory opinion requests, physician-owned hospitals or general Stark Law compliance, please contact one of the authors of this alert.
