A recently released response to a petition for declaratory statement could lead to difficulty for physician-owned sleep labs in Florida. In responding to a request from Jacksonville Heart Center (Jax Heart), the State of Florida Board of Medicine finds that physicians of physician-owned labs must directly supervise sleep studies.

In a petition to the State of Florida Board of Medicine, Jax Heart inquired as to whether it may operate a sleep study center solely for the use of its patients without running afoul of any provision of Section 456.053, Florida Statutes (Patient Self-Referral Act of 1992). “We asked the Board to help us understand the actual need for a physician to be present in a Declaratory Statement,” said Mark A. Masters, PhD, a licensed psychologist and Chief Administrative Officer for the Jacksonville Heart Center.

In its request, Jax Heart, a group practice comprised of 17 cardiovascular physicians, proposed to establish an eight-bed sleep center as part of its medical practice. The request stated, in part, “A Jax Heart physician will be present on-site and immediately available when sleep studies are performed during normal business hours, 9:00 am until 5:00 pm. For sleep studies performed after normal business hours, a Jax Heart physician would be on-call and immediately available by phone."

In the State of Florida Board of Medicine’s response, the main issue with the request submitted by Jax Heart was whether the sleep center’s services were being conducted under the “direct supervision” of Jax Heart.

The State of Florida Board of Medicine stated, “If the Sleep Center does provide services under the direct supervision of Jax Heart, the Petitioner’s proposed arrangement does not constitute a ‘referral’ that is precluded by Section 458.053(5), Florida Statutes. The Board recognizes that under the current Medicare guidelines, physicians are only required to provide ‘general’ supervision of sleep studies, which means the physician is not required to be physically present during the testing. However, in order to benefit from the exception set forth in Section 458.053(o)3f, Florida Statutes, the services must be provided under the ‘direct supervision’ of the referring health care provider.”

“We found that the law dictated that patients needing a sleep study would be supervised differently depending upon whether the lab was owned by a physician group rather than an IDTF/Hospital,” said Masters. “The need for a different level of supervision did not appear to be based on the needs of the patient.”

Ultimately, the Board found that Jax Heart would not be providing services under the “direct supervision” (meaning supervision by a physician who is present in the office suite and immediately available to provide assistance and direction throughout the time services are being performed), and that Jax Heart’s proposed referral of patients to its sleep center is precluded by Section 458.053(5), Florida Statutes.

“It is also important to note that the declaratory statement did not say that physicians are not able to own their own lab—rather that they must provide direct supervision for patient care in a sleep center,” Masters said. “Secondly, the Board reinforced that physician-owned sleep labs must only treat their patients in the sleep center. This provision would not change even if the Direct Supervision requirement was changed to be an exception.”

“The interpretation will have widespread implications because it requires different supervision for the same test depending upon whether the lab was owned by a physician group rather than an IDTF or hospital based,” Alaa El-Gendy, MD, MSc, FCCP, medical director at Florida Lung & Sleep Associates, Lehigh Acres, Fla, explained. “It was the intent of the Self Referral Act of 1992 to provide guidance to health care providers regarding prohibited patient referrals between health care providers and entities providing health care services and to protect the people of Florida from unnecessary and costly health care expenditures. There are several exceptions to the Patient Self Referral Act; unfortunately, at the time the law was drafted, sleep studies would have been included had someone asked.”

Stemming from the State of Florida Board of Medicine’s reply, investor-owned sleep disorder centers have been contacting physician-owned centers about potential acquisition opportunities, according to El-Gendy. Reacting to a letter he received from a company that aims to establish sleep disorder centers, El-Gendy says, “It was clear that physician-owned labs will be in the way of this company’s growth and the company has landed on a gold mine with physicians who will be struggling to meet the board decision.”

“Based on the findings of this report, physician-owned sleep centers face serious noncompliance issues with the board’s decision,” El-Gendy continued. “The current law is limiting and hindering patient care.”

According to El-Gendy, the American Academy of Sleep Medicine has decided to get involved on a legislative level.

Read the entire decision here.