Specialty Hospitals 1.2

Medicare Deals Setback to Specialty Hospitals | WSJ | 5.13.05

Medicare dealt a blow to specialty hospitals, as the head of the federal health insurance program for the elderly and disabled said his agency will stop approving new facilities for the rest of the year.

The specialty-hospital industry had hoped that a moratorium on facility construction and expansion, in place since 2003, would end in June. Mark McClellan, the administrator of the Centers for Medicare and Medicaid Services, said his agency will stop processing specialty-hospital applications, which are needed for Medicare reimbursement, while it considers changes to payment rules for the facilities. …

In Congress, a battle is shaping up over whether to pass legislation that will extend the 2003 ban on specialty hospitals. Republican Rep. Joe Barton, (R., Texas), the chairman of the House Energy and Commerce Committee, said he opposes extending the moratorium. In the Senate, the chairman and the ranking member of the Finance Committee — Sens. Charles Grassley (R., Iowa) and Max Baucus (D., Mont.) — this week proposed legislation that would restrict specialty hospitals and would take effect, if passed, in June.

Feds Move Against ‘Specialty Hospitals’ | AP | 5.13.05

The government plans to adjust Medicare payments to remove some financial incentives that have led to a new trend in health care: doctor-owned hospitals that focus on treating more profitable patients.

So-called specialty hospitals often focus on cardiac care, orthopedics or surgery, which tend to net higher reimbursement rates from Medicare.

Construction of about 100 such hospitals nationwide has led to concern that they harm general hospitals’ ability to survive and meet the needs of all patients. As a result, Congress placed a moratorium on construction of new specialty hospitals that expires next month. …

“Physician-owned specialty hospitals have not harmed general hospitals financially,” the American Medical Association said in a statement to the health subcommittee. “They have improved care for Medicare beneficiaries and other patients, and patient satisfaction with these hospitals is extremely high.”

Statement on Grassley-Baucus Bill “The Hospital Fair Competition Act of 2005″ | AHA | 5.11.05

Today’s bill restores fair competition and ensures the best interest of patients always comes first. It will prevent physicians from referring patients to hospitals they own - a practice that creates conflict of interest and prevents fair competition. We applaud Senator Grassley and Senator Baucus for their bold leadership on this vital health care issue.

In many communities across America, the health care safety net is at risk. Because physician owners tend to refer healthier, well-insured patients to the facilities they own, the full-service community hospitals are left to provide essential services that are seldom self-supporting - emergency services, burn units, trauma care and care for the uninsured. Physician owners of limited-service hospitals no longer want to be “on call” to help out in the community hospital’s emergency department. The result? Less access to the care patients may need in an emergency.

Congress has historically been concerned about the practice of physicians referring patients to a facility they own and has weighed in several times to halt that practice. Just recently, some physicians have been exploiting a loophole in current law, which rightly prompted Congress to place a moratorium on physician self-referral to new limited-service hospitals until June 8.

By making today’s bill retroactive, the Senators are sending a clear signal to those who would skirt the moratorium - self-referral must stop. It’s time for Congress to act to prevent conflict of interest in patient care and to save the health care safety net patients rely on. The Grassley-Baucus bill is the right medicine for patient care.

ASHA Sends Response Letter to Senator Grassley Regarding Georgetown Public Policy Report (PDF) | American Surgical Hospital Association | 5.4.05

…The findings are incomplete and absolutely one-sided. I would like to express my disappointment on the apparent lack of input on this issue from the specialty hospital industry. …

It is no surprise that the AMA and ASHA are aligned in this, both being physician constituency groups. Likewise, it is no surprise that AHA is aligned with Congressional posturing and CMS recommendations. The AMA and ASHA are focusing on the “science” and the “flawed” methodologies used in generating the data, as well as, the apparent improved quality in specialty hospitals. Quality is only apparently improved because there is a significant selection bias at play — the very same selection bias that makes general hospitals look worse is the same selection bias that makes specialty hospital look better. The selection bias involves self-referrals from physicians and other entities knowing that the funding is good and the patients are at very low risk for morbidity and mortality. What the general hospitals are left with are those with no or poor funding and significant other health conditions that contribute to higher morbidities and mortalities.

The AMA/ASHA will argue science and quality, and the AHA, Congress, and CMS will argue public policy, economics, and ethics. No doubt the former do not appreciate the weakness of their hand.