A proposed amendment to the Senate's Medicare reform bill, released by Sen. John Breaux (D-La.) on Wednesday, would ban physician ownership of specialty hospitals.
Under current federal law, the so-called Stark law, doctors are barred from referring Medicare patients to health facilities in which they have an ownership stake, but the law makes an exception for a physician's stake in a "whole hospital," not just a hospital department.
A statement from Breaux's office says the proposal, which has not been introduced yet, would clarify the "whole hospital" exception.
The exclusion would no longer be applied to "those circumstances in which a physician's ownership interest is in a hospital that primarily or exclusively is devoted to cardiac, orthopedic, surgical, or other specialties designated by HHS regulation as inconsistent with the original intent of the law," the statement reads.
It adds that the amendment would "allow physician ownership only where a comprehensive spectrum of inpatient and outpatient services are provided and the physician owners' specialty and self-referrals are insignificant in relation to the overall scope of services provided."
Meanwhile, measures to limit physician investment in specialty hospitals are brewing both in the House and in the Centers for Medicare and Medicaid Services.
In the house, a recently reintroduced bill by Rep. Pete Stark (D-Calif.) and Rep. Jerry Kleczka (D-Wis.) would require investment in specialty hospitals to be opened to the public and not just to doctors, as occurs now.
But Rep. Bill Thomas (R-Calif.), chairman of the House Ways and Means Committee, opposes the Stark-Kleczka bill, according to Randy Fenninger, a lobbyist for the American Surgical Hospital Association.
Citing conversations with aides for Thomas, Fenninger says the Ways and Means chairman wants to introduce legislation to discourage specialty hospitals from focusing on less severely ill patients who cost less to treat, leaving sicker patients to acute care hospitals.
A May report by the General Accounting Office stated that specialty hospitals are treating slightly less severe cases. For example, the GAO says 17% of cardiac patients in specialty hospitals are severe cases, compared with 22% in acute care hospitals.
In reaction to this phenomenon, called "skimming," Thomas proposes to reduce Medicare payments to hospitals for less severe cases, Fenninger says.
But Fenninger reports that the American Hospital Association, an opponent of specialty hospitals, opposes Thomas' plan. Fenninger says the plan would lower reimbursements for smaller hospitals with lower acuity, which are AHA members, as well as for specialty hospitals.
In its semiannual regulatory agenda released May 27, CMS announced that it plans to make specialty hospitals ineligible for the Stark "whole hospital" exception.
But Fenninger says since then CMS staff members have suggested to him that the rulemaking process would not proceed until the congressional proposals have been sorted out.