Sens. Grassley, Baucus Introduce Bill That Would Restrict Specialty Hospitals, Alter Medicare Payments

Main Category: Medicare / Medicaid / SCHIP
Article Date: 16 May 2005 - 1:00 PDT

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Senate Finance Committee Chair Chuck Grassley (R-Iowa) and ranking member Sen. Max Baucus (D-Mont.) on Wednesday introduced a bill that would extend a moratorium on the construction of new specialty hospitals, The Hill reports (Young, The Hill, 5/12). A provision in the new Medicare law placed a moratorium on the construction of new specialty hospitals until June 8. In a committee hearing on March 8, the Medicare Payment Advisory Commission recommended that Congress extend the moratorium until Jan. 1, 2007. Some larger, full-service hospitals maintain that specialty hospitals treat the most profitable patients and require them to treat more uninsured patients and Medicaid beneficiaries (Kaiser Daily Health Policy Report, 4/12). Under the Grassley-Baucus bill:

• Specialty hospitals in operation or under development as of Nov. 18, 2003, could continue to operate;
  
  
• Specialty hospitals could not increase their number of physician investors, percentages owned by physicians, or number of services, beds or operating rooms (Rovner, Congress Daily, 5/12);
  
  
• Physicians and specialty hospitals could have "certain coordinated care incentive agreements"; and
  
  
• The HHS secretary would have to make technical improvements in the diagnosis-related group system to reduce payment disparities between specialty and full-service hospitals.
  

The bill would take effect on June 8 regardless of the date of enactment. Baucus said, "I don't think it's fair to promote a system in which physicians can send healthier and more profitable patients to hospitals they own while referring less-profitable patients with more extensive health problems to other institutions. The playing field needs to be level" (CQ HealthBeat, 5/11).

Reaction
Some top House Republicans likely will oppose the legislation. House Ways and Means Committee Chair Bill Thomas (R-Calif.) and House Energy and Commerce Committee Chair Joe Barton (R-Texas) have not taken a public position on the bill. According to the Hill, the influence of Grassley and Baucus is "considerable but not enough to push a moratorium" on the construction of new specialty hospitals and other reforms through Congress. Federation of American Hospitals President Chip Kahn called the bill "the first major, definitive policy statement by any of the major players." A spokesperson for the American Surgical Hospital Association said, "We fully expect (our position) to be received differently in the House" (The Hill, 5/12). The House Energy and Commerce Subcommittee on Health on Thursday will hold a hearing on issues related to specialty hospitals (CQ HealthBeat, 5/11).

"Reprinted with permission from kaisernetwork.org kaisernetwork.org. You can view the entire Kaiser Daily Health Policy Report, search the archives, or sign up for email delivery at http://www.kaisernetwork.org/dailyreports/healthpolicy. The Kaiser Daily Health Policy Report is published for kaisernetwork.org, a free service of The Henry J. Kaiser Family Foundation . © 2005 Advisory Board Company and Kaiser Family Foundation. All rights reserved.

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