Michael Lipomi, legislative co-chair and former president of the American Surgical Hospital Association, said June 8 will be a day to celebrate. That is the date an 18-month moratorium on new physician-owned specialty hospitals expires.
"As far as I'm concerned and the association is concerned the moratorium is over on the 8th," Lipomi said.
But while the moratorium imposed by the Medicare Modernization Act of 2003 is set to come to an end, the controversy surrounding physician-owned specialty hospitals is far from being resolved. Furthermore, the outlook on what Congress may do about the issue, if anything, remains unclear. Given the uncertainties, the acute-care hospital and specialty-hospital industries continue to work overtime bending the ears of lawmakers.
At its annual meeting later this month, the board of trustees of the American Medical Association plans to issue a report advocating for the "whole hospital" exception in the Stark law that currently allows physicians to refer patients to specialty facilities in which they have an ownership stake. The AMA report, obtained by Modern Healthcare, said studies by the Medicare Payment Advisory Commission, the CMS and others, suggest competition from specialty hospitals may result in greater efficiency in the healthcare system and benefit patients.
"Although the hospital industry has continued its aggressive campaign to eliminate competition from physician-owned specialty hospitals, much of the new data that have emerged ... have done more to support than to rebut the AMA's policy positions," the report states.
In many ways the June 8 date has lost its relevance. In early May, Senate Finance Committee Chairman Chuck Grassley (R-Iowa) and Sen. Max Baucus (D-Mont.) introduced a bill that would effectively make the moratorium permanent, retroactive to June 8. Under the bill, which has not yet seen any congressional action, the whole-hospital exception given to specialty hospitals would be repealed.
Also, the CMS recently made several proposals that would extend the moratorium another six months. The CMS expects to make changes to the DRG system that would make it more difficult for specialty hospitals to treat only the most profitable patients, addressing a major criticism leveled by general hospitals at specialty hospitals. The agency also wants to make it more difficult for some specialty hospitals to be classified as hospitals for payment purposes.
"CMS action has certainly taken a lot of heat off the date," said Anne Ubl, vice president of federal relations for the American Hospital Association, which supports the Grassley-Baucus bill. "If I were an investor in this arena, I would certainly still feel nervous."
But recent developments in Washington don't bode well for general hospitals. Since Grassley and Baucus introduced their bill in early May, Sen. Jon Kyl (R-Ariz.), chairman of the Senate Republican Policy Committee, has come out against extending the moratorium and Sen. Tom Coburn (R-Okla.) has also suggested he would fight efforts to extend it (May 30, p. 8).
In the House, Rep. Joe Barton (R-Texas) said bluntly that he would not allow his committee to even consider any bill that would extend the moratorium.
But specialty hospitals aren't completely out of danger yet. Despite declaring that June 8 "is a date we're celebrating," Lipomi acknowledged that until the future of the Grassley-Baucus bill is determined, specialty hospitals will be skittish about proceeding too aggressively on plans to expand or recruit investors.