GOP lawmakers are pushing to ease the tight restrictions on physician-owned hospitals imposed by the 2010 healthcare reform law, arguing that the rules are shutting down a valuable source of competition.
“What are the impacts—pro and con—of this discrimination against one model of acute care, and is the current ban based on quality of service or a desire to restrain competition?” Rep. Kevin Brady (R-Texas), chairman of the Ways and Means Committee's subcommittee on health, said during a hearing Tuesday.
The federal Stark law generally prohibits physicians from referring Medicare beneficiaries to a medical facility in which they have a financial stake. However, there was an exception that allowed such referrals to physician-owned hospitals as opposed to imaging facilities or surgery centers.
The Affordable Care Act closed that loophole, significantly limiting the expansion of existing physician-owned hospitals that are reimbursed by Medicare and barring any new ones from joining the program. The provision imposes limits on the number of new operating rooms, inpatient beds and procedure rooms at physician-owned hospitals. The law also restricts physicians' ability to grow their ownership stake in medical facilities.
The American Hospital Association aggressively opposes weakening restrictions. The AHA has long argued that physician-owned hospitals drive unnecessary use of healthcare services and cherry-pick profitable patients.
“Physician self-referral represents the antithesis of competition. Instead, it allows physicians to steer the most profitable patients to facilities in which they have an ownership interest, potentially devastating the healthcare safety net invulnerable communities,” Rich Umbdenstock, president and CEO of AHA, said during the hearing. “Changing current law would not foster competition. Instead, it would only allow these physicians to increase their profits.”
Closing the loophole in the Stark law was expected to reduce the federal deficit by $500 million by 2020, according to a 2010 analysis by the Congressional Budget Office.
Democratic lawmakers indicated during the hearing that they would oppose easing the restrictions.
“My full-service hospitals at home compete on quality of service, geography and reputation, not on whether or not physician owners will win financial gain,” Rep. Mike Thompson (D-Calif.) said. “I worry about changing this law and what it would do to destabilize the continuity of care.”
