The CMS plans to soon release a definition of "specialty hospitals" indicating what types of facilities will be affected by an 18-month moratorium on physician investment in such facilities, Modern Healthcare has learned.
The moratorium, passed last year as part of the Medicare reform law after heavy lobbying by the hospital industry, exempts specialty hospital projects "under development," a term the CMS also will define.
The CMS is expected to release the guidance in the coming weeks in the form of a "change request," which allows for immediate implementation, according to an HHS source familiar with the guidance who requested anonymity. By contrast, the federal regulatory process can take years.
David Hilgers, a healthcare lawyer with Brown McCarroll in Austin, Texas, said the guidance would be significant. "Many hospitals are caught in this moratorium that were not grandfathered in and hopefully this change request will give them the information they need to allow these projects to go on and not leave investors at risk," Hilgers said. "The future of doctor-owned specialty hospitals could hinge on what requirements CMS sets out."
The number of for-profit specialty hospitals, which topped 100 according to a 2003 General Accounting Office report, has tripled since 1990. Most have physician investors. Community hospitals complain that specialty facilities provide only the most profitable services, leaving them with the money-losers.
American Hospital Association Vice President of Executive Branch Relations Mary Beth Savary Taylor said the AHA has met with the CMS and HHS about the guidance.
"Congress was concerned about conflicts of interest by physician investors and proliferation of these specialty hospitals and we've expressed our concern that congressional intent be followed," Savary Taylor said.
Randolph Fenninger, Washington representative for the American Surgical Hospital Association, a lobbying group for specialty surgical hospitals, estimated there are 20 to 30 specialty hospital projects under development, one-third of which may not be far enough along to qualify for an exemption.