• What is an Outpatient Diagnostic Center in Tennessee?
  • July 26, 2005 | Author: Kim Harvey Looney
  • Law Firm: Waller Lansden Dortch & Davis, LLP - Nashville Office
  • The definition of an Outpatient Diagnostic Center (ODC) in Tennessee has undergone several changes in the past year. The changes -- both those proposed and those ultimately adopted -- generated a great deal of attention in the state's healthcare community because of the potential impact the final definition could have on entities wishing to provide diagnostic imaging services. A broader formal definition could have required more diagnostic imaging projects to obtain the Certificate of Need (CON) mandated by the state to establish a healthcare institution. Often time-consuming and typically expensive, the CON process allows opposition to be heard regarding the request. The expansion of the ODC definition would arguably have required physician groups to receive a CON in more situations than currently exist-even when the diagnostic imaging services they provide were part of their practice.

    The changes began with the legislation passed by the Tennessee General Assembly in 2004 requiring outpatient diagnostic centers (ODCs) to be licensed by the Tennessee Department of Health and to comply with certain reporting requirements. The changes concluded with a statutory amendment passed in May 2005 that provided a clearer and more expanded definition of what constituted an ODC.

    The legislation this year was introduced largely due to the inability for agreement to be reached on the ODC definition during the rulemaking hearing process. The definition proposed during the hearing process defined ODCs to include the provision of certain services, including a number of services that had not previously required a CON, including computerized tomography, mammography, percutaneous transluminal coronary angioplasty, nuclear medicine scans, vascular embolization and stereotactic procedures. The proposed definition was widely criticized as being too broad, and the Board ended up removing the definition from the final rule because agreement could not be reached.

    Senator Tim Burchett and Representative Kim McMillan introduced the legislation (SB 795 and HB 1635, respectively) that statutorily defined the term Outpatient Diagnostic Center. The original definition excluded private physician or dental practices only if outpatient diagnostic services were provided exclusively to patients or the private physician or dental practice and if no patients from other private physician or dental practices or healthcare facilities are referred for outpatient diagnostic services.

    Senate Bill 0795-with a compromise, less restrictive ODC definition amendment-was passed by the Senate on May 4, 2005. House Bill 1635 passed the House with amendment on May 18, 2005. The act was signed into law on June 9 by Governor Bredesen and took effect immediately.

    In Tennessee, with the passage of the new law, an ODC is now defined as "any facility providing outpatient diagnostic services, unless the outpatient diagnostic services are provided as the services of another licensed healthcare institution that reports such outpatient diagnostic services on its joint annual report, or the facility is otherwise excluded from this definition." Outpatient diagnostic services are defined as "computerized tomography, magnetic resonance imaging, positron emission tomography, or any other imaging technology developed after the effective date of this act, which provides the same functionality, and for which a certificate of need is required." If a hospital provides outpatient diagnostic services as a department of the hospital and includes that utilization when it reports on the hospital's joint annual report (JAR), then it would not be considered an outpatient diagnostic center.

    Excluded from the definition of an ODC are physician or dental practices that are conducted at a location occupied and controlled by the physician or the dentist, if the outpatient diagnostic services are ancillary to the specialties of the physicians' practice, or are provided primarily for persons who are patients of the physicians or dentists in the practice for purposes other than outpatient diagnostic services. Unfortunately, the statutory amendment did not define or provide any guidance as to how the term "primarily" would be interpreted. Although the recent legislation has expanded the definition of ODCs, the definition is less broad than originally proposed and includes an important exception for physician and dental practices meeting certain requirements.