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Moratorium imposed on surgical hospitals
The recently passed Medicare bill would impose an 18-month moratorium on development of new specialty hospitals, including surgical hospitals, and limit expansion of existing ones retroactively beginning Nov. 18, 2003.
Current facilities are limited to either expansion of 50% of their current licensed beds, or five beds, whichever is greater.
"The effect of the moratorium is that it will slow the growth of the industry because there will be relatively few developments during this period of time due to uncertainty," says Michael Lipomi, MSHA, president of the San Diego-based American Surgical Hospital Association and CEO of Stanislaus Surgical Hospital in Modesto, CA. "However, we’re very optimistic that industry will continue to grow in the long term."
There is a grandfather clause in the Medicare bill, but whether that clause is good news is debatable, he says. "The grandfathering language is of concern to us because there is a possibility that facilities that are at some stage of development and have expended large amounts of money may not qualify due to local or state regulations," says Lipomi.
The wording of the bill calls for certain tasks to have taken place in order to be "under development. Some municipalities are backlogged for months on those issues," he notes. "One facility may be just as far along as in another area, but because the zoning council or city council haven’t acted, they may not be grandfathered, but they have spent as much money as another facility that has qualified." The bill calls for two studies on surgical hospitals to be conducted in the next 15 months:
• The Washington, DC-based Medicare Payment Advisory Commission (MedPAC) will study any differences in costs of services furnished to patients in specialty hospitals and general hospitals. Also, MedPAC will study the extent to which specialty hospitals treat patients within certain DRGs, in areas such as cardiology, as compared to specialty and general hospitals. MedPAC also will determine the financial impact of physician-owned specialty hospitals on local full-service community hospitals. The agency also will determine how the current DRG system should be updated to better reflect the cost of providing care in a hospital setting.
"This is in response to the concern that they are underpaying some procedures, overpaying others, and there is cost-shifting going on," Lipomi says. Finally, MedPAC will compare the proportion of patients received, by type of payer, of specialty and full-service hospitals.
• The Department of Health and Human Services will determine the percentage of patients admitted to physician-owned hospitals who are referred by physicians with an ownership interest, as compared to patients referred to full-service community hospitals.
For more information on surgical hospitals, contact:
• Michael Lipomi, MSHA, CEO, Stanislaus Surgical Hospital, 1421 Oakdale Road, Modesto, CA 95355.