A new federal study says that as many as 37 new specialty hospitals could open in the next year or so even if Congress extends the moratorium on physician referral to these niche facilities. If the 18-month moratorium, which officially ended Wednesday, is allowed to expire, "the increase would likely be much greater, but how much greater is uncertain," according to a new report from the Government Accountability Office.
In its third report in recent years on specialty hospitals, the GAO said 26 new specialty hospitals are under development in 10 states, in addition to the 100 niche facilities that have opened since 1990, about 70% of which are owned in part or in whole by physicians.
The agency also said the CMS has received 40 applications from specialty hospitals under development seeking determinations they were grandfathered under the provisions of the Medicare Modernization Act of 2003, which gave the go-ahead to cardiac, surgery and orthopedic centers that were already under development before the moratorium took effect in December 2003. Of those applications, 12 were approved and two were denied, though one facility is appealing that ruling.
The report also indicated that 53 facilities reportedly are currently under development even though they didn't seek exemption from the CMS. That group of facilities, according to the study, could include anywhere from six to 23 specialty hospitals. Though the moratorium expired this week, the CMS has indicated it will not certify any new specialty hospitals until January 2006, imposing a de facto ban while Congress considers the issue.
"Ultimately, the extent to which physicians and other investors are attracted to specialty hospitals, or are deterred by the uncertainty of future federal restrictions or other factors, will decide how quickly the industry grows when the moratorium expires," according to the study.