Lake Pointe Medical Center has become the first hospital in America to qualify for (i) an exception to (ii) the limitation on the (iii) grandfather exception to the (iv) elimination of the (v) whole-hospital exception to the (vi) Stark Law’s prohibition on physician self-referrals.

The Stark Law generally prohibits a physician from referring Medicare patients to a facility in which the physician has a financial interest.  Once upon a time there was an exception if the facility was a “whole hospital.”  So for several years physician-owned hospitals popped up across the country.

In 2010 Congress eliminated the whole-hospital exception, but with a grandfather exception for existing hospitals.  But there was a limit on the grandfather exception: a grandfathered hospital would lose its exemption if it increased its capacity.

A process for persuading CMS to waive that grandfather limitation has been on the books since 2011, but no hospital has ever successfully completed it—until now.  CMS announced yesterday that it will permit physician-owned Lake Pointe Medical Center, in Rowlett, Texas, to add 36 new beds.  According to CMS, Lake Pointe merits relief from the grandfather limitation because it’s not the only hospital in the county, it’s promised not to discriminate against Medicare or Medicaid patients, and it has the highest percentage of Medicaid admissions in the county.

An exceptional outcome.