MHA's Executive Briefing

Gingrich calls limited-service specialty hospitals threat to fair competition

In an opinion piece on limited-service specialty hospitals in the Nov. 12 Washington Post, former House Speaker Newt Gingrich said Congress should “act now to protect our health system by establishing the right rules for fair competition.” He said, “Clearly the danger of community hospitals being undermined and economically crippled while specialty hospitals realize profits not through greater efficiency and effectiveness (which would be good) but through more clever cherry-picking of low-risk, high-profit cases is a real threat to the integrity of the health system. Congress should insist on hospital ownership rules that allow doctors to invest in specialty hospitals in which they do not practice but that forbid doctors from having ownership in a hospital in which they do practice .. What Congress should not do is allow the current market-distorting and community hospital-destroying system to continue unchecked.”

[ via AHA News ]

Data indicate heart hospitals treat healthier patients

Cardiac specialty hospitals treated patients who were less severely ill than those undergoing bypass surgery or angioplasty at general hospitals in the same communities between January 2002 and September 2004, healthcare information and research firm Solucient said. Unadjusted angioplasty mortality was twice as high at general hospitals and patients stayed significantly longer for both procedures, according to an analysis drawing from a database on more than 17 million U..S. discharges annually. Outcomes were similar when the data was adjusted for the number of Medicare procedures at a hospital and patient characteristics such as severity of illness, age, sex and related diagnoses. The difference between adjusted and unadjusted outcomes "strongly implies that specialty hospitals are treating less severely ill patients," a Solucient researcher said in a news release. (via Modern Healthcare)

AMA support for specialty hospitals irks family practitioners

The American Medical Association's support for physician ownership of specialty hospitals threatens to alienate a large section of the organization's core membership - family physicians.

The American Academy of Family Physicians may protest the policy when the AMA gathers in Chicago this week for the annual meeting of its House of Delegates. The AAFP has the most delegate representatives (at 16) of any specialty group. The Government Accountability Office reported recently that as many as 37 new specialty hospitals could open in the next year or so even if Congress extends the moratorium on physician referral to those niche facilities.

Officials with the AAFP sided with AHA rather than AMA on this divisive issue, saying that specialty facilities may threaten community hospitals. The debate over specialty hospitals is one of several hot topics expected to be addressed this week at the meeting. Others include pay-for-performance, liability surcharges in physician offices and a discussion about how the AMA should address concerns of the looming physician shortage. (condensed from an article by Michael Romano, Modern Healthcare, June 13, 2005)

CMS outlines next steps as moratorium on new specialty hospitals expires

To promote "true and fair competition" in hospital services, the Centers for Medicare & Medicaid Services on June 9 said it will review over the next six months its procedures for enrolling specialty hospitals in the Medicare program, and take steps to reform Medicare payments that may give specialty hospitals an unfair advantage over community hospitals. The agency also plans to seek public comment regarding appropriate standards for specialty hospitals, including advice from the Emergency Medical Treatment and Labor Act Technical Advisory Group. CMS said it is instructing its regional offices not to issue new specialty hospital provider agreements or authorize an initial survey by the state survey agency for new specialty hospitals, and that Medicare fiscal intermediaries have been instructed not to process new provider enrollment applications for specialty hospitals until further notice. (via AHA News)

Free-Market Philosophy Doesn't Always Work for Health Care

Steven Pearlstein of The Washington Post writes about limited-service hospitals - and what they mean for the American health care system.

Senate panel hears testimony on physician-owned limited-service hospitals

In a written statement May 24 to a congressional subcommittee examining "the competitive effects of specialty hospitals," AHA said Congress should protect patient care and promote fair competition in the health care marketplace by barring physicians from referring patients to new limited-service hospitals they own. The AHA told the Senate Homeland Security and Governmental Affairs Federal Financial Management subcommittee that physician self-referral raises serious concerns about conflict of interest, patient selection, quality oversight, and community access to vital services such as trauma and burn care, adding that payment changes recently recommended by the Medicare Payment Advisory Commission are "a viable option" but not enough to address such problems. Testifying at the hearing, MedPAC Executive Director Mark Miller noted that the commission is recommending an 18-month moratorium on new physician-owned limited-service hospitals, in addition to the payment changes, due t o unresolved questions about quality and efficiency at limited-service hospitals and their impact on community care. However, Sen. Tom Coburn, R-OK, subcommittee chairman, questioned the need for a moratorium, which proponents of specialty hospitals testified could stifle competition and innovation in health care. (via AHA News)

CMS issues long-awaited report on limited-service hospitals

Testifying at a congressional hearing on May 12, Centers for Medicare & Medicaid Services Administrator Mark McClellan, M.D. released the agency’s congressionally mandated report on physician-owned limited-service hospitals. The report calls for a series of payment changes to reduce incentives for physician owners of specialty facilities to target healthier patients and select conditions, and closer scrutiny of whether facilities meet CMS' definition of a hospital. McClellan said CMS would instruct its fiscal intermediaries not to process any applications from new limited-service hospitals for Medicare participation, effectively barring any new specialty hospitals, for the next six months, while CMS further studies and works to implement its recommended changes. (via AHA News)

Congressional panel examines impact of physician-owned hospitals

The proliferation of physician-owned limited-service hospitals is leading to a "systematic dismantling of the community health safety net," John Hornbeak, president and CEO of Methodist Healthcare System of San Antonio, told members of the House Energy and Commerce Health subcommittee on May 12. Hornbeak, who was among those invited to testify before the panel on physician-owned specialty hospitals, said the physician owners of limited-service facilities are carving out hospital departments and "masquerading" as full-service hospitals to circumvent current self-referral law; chipping away community hospitals’ resources by cherry-picking more profitable, better insured patients; and creating emergency call coverage problems. He said payment changes recommended by the Medicare Payment Advisory Commission are not enough to solve the problem and called for a permanent ban on physician self-referral to new specialty facilities they own. Several panel members, however, expressed concerns about the potential of a moratorium to stymie competition and innovation in health care, and committee Chairman Joe Barton, R-TX, said the committee would not consider legislation to extend the moratorium, which expires June 8. (via AHA News)

Bill would make specialty-hospital ban permanent

A bill introduced by Sens. Chuck Grassley (R-Iowa) and Max Baucus (D-Mont.) would permanently exclude specialty hospitals from the "whole-hospital" exemption in physician self-referral law, establishing a powerful disincentive for new physician investment in specialty hospitals. The exclusion would not apply to specialty hospitals already in operation or determined by HHS to be "under development" before Nov. 18, 2003. The legislation, known as the Hospital Fair Competition Act of 2005, also would greenlight gain-sharing between hospitals and physicians, or "coordinated care incentive arrangements," and order an examination or recalculation of DRG weights. HHS would establish gain-sharing criteria allowing hospitals to "align incentives and benefit from hospital cost-containment measures, as long as financial incentives affecting physician referrals are minimized and such arrangements do not compromise quality of care." The changes would be effective June 8, regardless of the date the law is enacted. (via Modern Healthcare)

AHA to Congress: Ban physician self-referral to new limited-service hospitals

Congress should permanently ban physicians from referring patients to new limited-service hospitals they own in order to help preserve community care, prevent conflict of interest and promote fair competition, the AHA said in a statement submitted March 22 to the Senate Finance and House Ways and Means committees. The AHA statement follows March 8 Finance and Ways and Means hearings, in which community hospital leaders faulted limited-service hospitals for “cherry picking” healthier, higher-paying patients. In its statement to the committees, AHA said it is time to stop these hospitals from taking advantage of a loophole in the federal physician self-referral law’s “whole hospital” exception. The AHA said that “physician ownership and patient referral lead to very serious concerns about the health and economic interests of a community, including higher health care costs, duplication of services, patient and service selection, reduced emergency rooms coverage, inappropriate use of procedures, and more.” A congressionally imposed moratorium on physician self-referral to new specialty hospitals is set to expire June 8.