Dear Colleague:
We urge you to cosponsor the Hospital Fair Competition Act of 2005.As you may know, the Medicare Payment Advisory Commission (MedPAC), theGovernment Accountability Office (GAO) and the Department of Health and Human Services(HHS) have each found that physician-owned specialty hospitals tend to select the healthiest andmost profitable patients, leaving full-service community hospitals to treat a disproportionateshare of less profitable cases, poor patients and the uninsured. This patient selection is the resultof a loophole in Medicare law, and we believe the loophole should be closed.
Current Medicare law generally prohibits physicians from referring Medicare andMedicaid patients to facilities in which they are full or partial owners. Congress enacted the selfreferrallaw in response to several studies showing that physician-owners make more referrals tofacilities they own, and order substantially more services at higher costs. An exception exists,however, if the physician has an ownership interest in the “whole hospital." But physician-ownedspecialty hospitals - those concentrating predominantly or solely on heart, orthopedic, or surgery- are whole hospitals in name only. In fact, they more closely resemble a department orsubdivision within a hospital rather than an actual whole hospital. And the law explicitlyprohibits physician owners from referring patients to a hospital subdivision.
The Hospital Fair Competition Act of 2005 would close this loophole by prohibitingnew specialty hospitals from qualifying for the “whole hospital" exception. Existing specialtyhospitals -- those in operation or under development before November 2003 -- would be able tocontinue operating under certain restrictions.
In addition, the bill would level the playing field between specialty hospitals andcommunity hospitals by eliminating incentives in the payment system to cherry-pick thehealthiest and most profitable patients. Finally, the bill would lift bans in current law to allowhospitals and physicians to share savings if they work together in innovative ways to improve theefficiency of patient care.
We support innovation and competition in health care. But such competition must be fair,conducted on a level playing field. The Hospital Fair Competition Act levels the competitiveplaying field in several areas, and we urge you to support it.
Sincerely,
Charles E. Grassley
Max Baucus
Source: Ranking Member’s News
