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MedPAC: Extend specialty hospital ban

Ambulatory Surgery Reimbursement Update, March 16, 2005

The Medicare Payment Advisory Committee (MedPAC) has advised the Centers for Medicare and Medicaid Services (CMS) to extend the ban on physician ownership in specialty hospitals.

MedPAC recommended the moratorium extension run until at least January 1, 2007, despite stating in its report that "the financial impact on community hospitals in the markets in which physician-owned specialty hospitals are located has been limited, thus far."

As support for why the moratorium is in need of an extension, MedPAC's report states, "The Commission is concerned with the issue of self-referral and its potential for patient selection and higher use of services.

"We do not know yet if physician-owned hospitals will increase their efficiency and improve quality. We also do not know if, in the longer term, they will damage community hospitals or increase use of services beyond the norm."

The report goes on to say, "The Congress will need time during the upcoming legislative cycle to consider our recommendations and craft legislation, and the Secretary will need time to change the payment system. Continuing the moratorium will allow time for such efforts and time to gather more information."

MedPAC made four other recommendations to CMS, including improving payment accuracy in the hospital inpatient prospective payment system and giving CMS the authority to allow and subsequently regulate gainsharing arrangements between physicians and hospitals.

To view the report, click here (Adobe Acrobat required).

To read testimony to Congress from Glenn M. Hackbarth, chairman of MedPAC, click here (Adobe Acrobat required).

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