Physicians with financial investments in certain healthcare facilities have again come under legislative fire from House Democrats.
Reps. Pete Stark (D-Calif.) and Jerry Kleczka (D-Wis.) on Tuesday introduced a bill to forbid physicians from referring patients to specialty hospitals in which doctors received a preferential investment opportunity. A similar bill was introduced in July 2001, but never passed.
The sponsors, both members of the House Ways and Means health subcommittee, argue that physicians have taken advantage of a legal loophole around laws, called Stark I and Stark II, that prohibit doctors from referring patients to facilities from which they gain financial benefit.
Stark and Kleczka also said the exception for "whole hospitals" allows specialty and surgical hospitals to skim the most lucrative procedures from nearby full-scale hospitals.
Under the Stark-Kleczka bill, physicians could refer patients to hospitals they own, but only if their investment was purchased on terms open to the general public. Failure to comply would result in up to $15,000 in civil penalties per referral and up to $100,000 for each "referral scheme."
"We enacted laws strictly limiting physician self-referral because we know that physician ownership affects physician behavior, leads to over-utilization of services and sometimes the provision of unnecessary or inappropriate care," Stark said in a written statement. "Now, the same phenomenon is occurring in the boutique hospital industry because physicians have found a loophole in the law."
Ways and Means Chairman William Thomas (R-Calif.) also is interested in the growing impact of specialty hospitals but has taken a different tack to investigate the issue, requesting a study from congressional investigators at the General Accounting Office. A partial report is expected in mid-April.
The American Surgical Hospital Association, based in San Diego, Calif., had hoped Stark and Kleczka would wait for the findings of the GAO study before re-introducing their bill, says ASHA lobbyist Randy Fenninger.
"ASHA continues to be very concerned by the efforts to shut down the industry, which is essentially what enactment of that law would do," Fenninger says. "We believe we offer a superior model for surgical care. Innovation is good, and stifling it is not."
Fenninger said the full Ways and Means committee will determine whether the measure moves forward. If it does, he expects it would be folded into a larger Medicare reform package only after months of debate.