Officials at specialty hospitals are discussing ways to deal with an 18-month moratorium on new specialty hospitals and limits on existing specialty hospitals that are expected to be passed as part of the Medicare prescription drug bill.
The measure, unveiled by a House-Senate conference committee on Thursday and approved by the House on Saturday, is expected to be approved by the Senate in the next day or two.
The moratorium--effective retroactively, as of last Tuesday--would seem to put the brakes on plans for at least 26 specialty hospital projects now under way. But it would not apply to projects that are substantially "under development" at the time of deadline, according to a copy of the conference committee's report.
Also, there are ways to restructure projects so they can go forward, according to experts and other officials at a meeting of the American Surgical Hospital Association in San Diego this weekend.
Rather than prevent a specialty hospital from opening, the measure would bar physicians who invest in it from billing Medicare for services performed at the specialty hospital.
Mark Anderson, M.D., an Irvine, Calif. neurosurgeon who attended the meeting, says he will go ahead with plans for a 40-bed specialty hospital in Irvine, even though planning missed last Tuesday's deadline. To conform with the provision, Anderson says he and more than 20 other investing doctors plan to not admit their Medicare patients to the new hospital.
Meanwhile, Scott Becker, an attorney with McGuire Woods Ross & Hardies in Chicago, suggests that doctors could continue to indirectly invest in a surgery hospital still in planning by owning the real estate and leasing it to a firm that actually owns the hospital.
Becker says the leasing doctors would not break the law if they charge fair market value for the real estate, but the arrangement might be unpalatable to them because it prevents them from sharing profits from the venture.
Rusty Shelton, president and CEO of ReSurge Hospitals, a surgery hospital developer in Hyde Park, Utah, says plans for a specialty hospital could be expanded into a fuller-service hospital by adding substantial nonsurgical services, thus avoiding the measure altogether.
The moratorium is limited to hospitals that are "primarily or exclusively" involved in cardiac care, orthopedics or another procedure, the report says. Becker says "primarily" probably means that more than half of the hospital's business must be in one specialty.
The congressional measure also affects existing specialty hospitals, preventing them from increasing beds by more than 50% or five beds, whichever number is greater. Existing hospitals also could not increase the net number of physician-investors--meaning that if one investor is added, another one has to give up his or her share.
Becker says there are several unanswered questions in the legislation. For example, he says it is unclear whether a group practice investing in a facility would violate the provision if it added members to the group.
He says that if investors are not sure whether their plans conform to the law, they can arrange for a declaratory judgment in federal court. He says a declaratory judgment could cost $100,000 in legal fees and take 60 to 90 days to obtain.