Senators To Introduce Bill To Extend Moratorium on Construction of New Specialty Hospitals

Senate Finance Committee Chair Chuck Grassley (R-Iowa) and Sen. Max Baucus (D-Mont.), the committee's ranking member, in the next few weeks plan to introduce a bill that would extend a moratorium on the construction of new specialty hospitals, according to committee aides, The Hill reports (Young, The Hill, 4/12).

An amendment in the new Medicare law imposed a ban until June 8 on the construction of new specialty facilities, in part because some larger, 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. In a committee hearing on March 8, the Medicare Payment Advisory Commission recommended that Congress extend the moratorium until Jan. 1, 2007 (California Healthline, 3/9).

Grassley, Baucus, the American Hospital Association and the Federation of American Hospitals have expressed "serious concern" about potential financial conflicts of interests stemming from a federal law that allows doctors to refer patients they treat at community hospitals to specialty hospitals in which they have an ownership stake, The Hill reports.

Community hospitals are required by law to provide emergency care to all patients, regardless of their ability to pay. Some community hospitals maintain that specialty hospitals have an unfair advantage under the Medicare payment system to receive higher sums because they exclusively provide more expensive procedures, according to The Hill.

A bill by Grassley and Baucus might seek to shift Medicare payments from more highly paid categories to those that are reimbursed at a lower rate -- a move that would not require new spending, according to The Hill.

Some specialty hospitals have proposed a joint-venture model, in which community hospitals would own a majority of the specialty facilities and doctors or other investors would own the remainder. Under such a model, hospitals would share in any financial benefits of the facilities.

House Ways and Means Committee Chair Bill Thomas (R-Calif.), House Energy Commerce Committee Chair Joe Barton (R-Texas) and other "key members of the House" have not taken clear positions on the issue, The Hill reports.

According to FAH Vice President Jeff Cohen, for-profit hospitals represented by the group oppose any form of physician self-referral. Cohen said that the industry welcomes specialty hospitals that do not engage in self-referral. Cohen added that the organization recognizes the need for adjusting the Medicaid payment. However, he insisted that payments are unrelated to the referral issue.

Specialty hospitals maintain that they are able to provide superior and more efficient care than community hospitals. The American Medical Association supports the expansion of specialty hospitals, according to The Hill (The Hill, 4/12).