On November 21, 2012, the Alabama Supreme Court announced a modification of the Physician Office Exemption ("POE") to Alabama's Certificate of Need ("CON") rules and regulations. In Ex parte Sacred Heart Health System, Inc. (In re: "Infirmary Health System and South Baldwin Regional Medical Center v. Sacred Heart Health System, Inc."), the court withdrew its March 2, 2012, opinion that had crafted a new test adding a fifth part, and, instead, modified the original four-part test, referred to as "the POE Application Test." The Court indicated that the modified POE Application Test will "provide an objective standard that can be used to determine whether the POE applies to any medical practice, whether the practice is solo or group, large or small, specialized or general."
This case arose when Infirmary Health System and South Baldwin
Regional Medical Center filed an action seeking a declaratory
ruling that Sacred Heart Health System was required to obtain a
certificate of need in order to develop a medical building that
would accommodate physician offices, an outpatient surgery center,
a diagnostic center, a laboratory, and a rehabilitation center.
(The surgery center and rehabilitation center were later dropped
from the project.)
The trial court held that the portion of the building that was to
be occupied by Sacred Heart Medical Group physicians qualified for
the POE and did not require a CON. The court later amended its
judgment to hold that the exemption only applied to the part of the
building where the physicians had previously located their
practices. The Court of Civil Appeals reversed and remanded,
holding that no part of the building qualified for the
exemption.
The Alabama Supreme Court granted certiorari and, in its
opinion, noted that the CON Review Board had previously formulated
a four-part test to determine whether a proposed project qualifies
for the POE. While determining that the four-part test used by the
CON Review Board is still substantially sound, the court made minor
modifications to the test, specifically to the second and third
factors of the test. In doing so, the court reversed the judgment
of the Court of Civil Appeals and remanded the case for analysis
under the new POE Application Test.
Under the current form of the POE Application Test, all four
criteria must be satisfied in order to qualify for the Physician
Office Exemption from CON review. The modified POE Application Test
is as follows:
- The proposed services are to be provided, and related equipment used, exclusively by the physicians identified as owners or employees of the physicians' practice for the care of their patients.
- The proposed services are to be provided, and related equipment used, at any office of such physicians.
- All patient billings related to such services are through, or expressly on behalf of, the physicians' practice.
- The equipment shall not be used for inpatient care, nor by, through, or on behalf of a health care facility.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
