MedPAC Recommends Extension of Moratorium on New Specialty Hospitals at Senate Hearing
Congress should extend to Jan. 1, 2007, a moratorium on the construction of new specialty hospitals, according to a recommendation by the Medicare Payment Advisory Commission, the AP/Las Vegas Sun reports.
An amendment in the new Medicare law imposed a moratorium on the construction of new specialty facilities until June 8 in part because some full-service facilities say that specialty centers cater to patients considered the most profitable to treat, leaving full-service hospitals to care for more uninsured patients and Medicaid beneficiaries (Freking, AP/Las Vegas Sun, 3/8).
The amendment also directed MedPAC to study patient selection practices of specialty hospitals and the facilities' costs and efficiency. In addition, the amendment directed CMS to study the quality of specialty facilities and the impact of such facilities on physician referrals.
The MedPAC report, presented to the Senate Finance Committee on Tuesday, states that physician-owned specialty facilities could "corrupt clinical decisions and lead to inappropriate care." The report also said that, relative to full-service hospitals, specialty hospitals generally treat healthier patients, focus on higher-cost procedures, treat fewer Medicaid beneficiaries and do not have lower costs.
The report recommends that Congress recalculate Medicare prospective payments to acute care hospitals to more accurately reflect the cost of care and prevent financial incentives for hospitals to select healthier patients (CQ HealthBeat, 3/8).
While not advocating an outright ban on specialty hospitals, MedPAC Chair Glenn Hackbarth said, "We remain concerned about specialty hospitals even if the payment reforms are enacted. But we're not prepared to recommend that they be outlawed" (Heil, CongressDaily, 3/8).
Also at the hearing on Tuesday, CMS "unexpectedly released" its preliminary report on specialty hospitals. Thomas Gustafson, deputy director of the CMS Center for Medicare Management, said the CMS study shows "measures of quality at [physician-owned] cardiac hospitals were generally at least as good and in some cases better than the local community hospitals."
In addition, "[c]omplication and mortality rates were lower at cardiac specialty hospitals even when adjusted" for patient-sickness levels, he testified. CMS conducted its study by examining six markets, which represent 11 of the 59 cardiac, surgery and orthopedic specialty hospitals approved in 2003 as Medicare providers.
The CMS report also found that doctors who have invested in specialty facilities do not refer patients exclusively to the specialty hospitals but they do refer a greater share of patients to specialty facilities than to full-service hospitals.
Senate Finance Committee ranking member Max Baucus (D-Mont.), who is drafting legislation on specialty hospitals with Committee Chair Chuck Grassley (R-Iowa), called the CMS report "disturbing" and questioned whether CMS had an "ulterior motive" in conducting the study (CQ HealthBeat, 3/8). "When it comes to physician ownership of specialty hospitals, I'm not sure the playing field is level," Baucus said (AP/Las Vegas Sun, 3/8).
Grassley said, "I look forward to producing balanced legislation that preserves quality of care and access for Medicare beneficiaries while ensuring that doctors who own specialty hospitals don't take the most profitable patients, leaving community hospitals vacant."
In related news, the House Ways and Means Health Subcommittee on Tuesday also held a hearing on specialty hospitals.
CQ HealthBeat reports that Republican committee leaders "appear to favor" changes to reimbursement rates to address competition among full-service and specialty hospitals, rather than a permanent ban on specialty hospitals (CQ HealthBeat, 3/8).