Extend moratorium on specialty hospitals, says AAFP Board

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Extend moratorium on specialty hospitals, says AAFP Board

BY CINDY BORGMEYER

The AAFP Board of Directors voted in January in favor of extending the national moratorium on specialty hospitals. The recommendation clearly reflects the Academy's stance as an evidence-based organization. Yet the Academy's cautious approach to specialty hospitals puts it at odds with the AMA.

At issue is a congressionally mandated moratorium on new specialty hospitals or expansion of existing specialty hospitals, many of them wholly or partly physician-owned. Originally considered exempt from Stark II prohibitions of physician self-referrals under the "whole-hospital exception," about 100 specialty hospitals have sprung up nationwide since the early 1990s. Then Congress called the halt in December 2003.

The Board recommendation -- developed by the Commission on Health Care Services in consultation with the commissions on Education and on Legislation and Governmental Affairs -- supports extending the moratorium on specialty hospitals beyond its scheduled June 30 expiration. The Board said it would support continuing the freeze on the hospitals until "the AAFP is convinced by evidence of their benefit on the health and well-being of our communities."

The AMA House of Delegates, on the other hand, voted at its December interim meeting to adopt several measures related to physicians' interests in so-called specialty hospitals -- including calling for an immediate end to the moratorium. Visit http://www.aafp.org/fpr/20050100/6.html for news coverage of that meeting.

A tricky issue

According to AAFP Board Chair Michael Fleming, M.D., of Shreveport, La., the issue is far from clear-cut.

"We all have opinions about the appropriateness of this issue and whether it's hurting private hospitals -- particularly the safety net hospitals -- to 'cherry-pick,'" said Fleming. "Some of these specialty hospitals are actually providing excellent, very high-quality care. Some are even owned by the very hospitals that are complaining about them. So it's not a simple issue."

The Government Accountability Office defines specialty hospitals as facilities in which the diagnoses of two-thirds of Medicare patients fall into no more than two major diagnosis-related group classifications or in which at least two-thirds of Medicare patients are classified into surgical DRGs. In making its decision, the Board focused on several key points. Among them:

Specialty hospitals are not bound by the same regulatory requirements, such as the Emergency Medical Treatment and Labor Act, as are community hospitals.
The current DRG system does not fully capture differences in case severity, leaving open the possibility that specialty facilities might accept only patients yielding the highest profit margins.
Specialty hospitals do not support medical education -- including the costs of training residents -- to the same degree community hospitals do.
Specialty hospitals create a potential conflict of interest for physician-owners referring patients to these facilities, and current law does not require full disclosure of this interest to patients.
Congressionally mandated studies by CMS and the Medicare Payment Advisory Commission regarding the impact of specialty hospitals on the viability of community hospitals and the essential services they provide have not yet been completed. Those studies were expected to be completed in early March.

No final word yet

Results of those studies will be key in determining the AAFP's final policy on specialty hospitals, Fleming explained.

"We want to wait to see what these studies show," he said. "The whole moratorium was produced to allow these quality studies to proceed, and I can't think of anything more appropriate. So to do something before that moratorium is over just doesn't make a lot of sense."

In the meantime, physicians interested in reviewing current federal statutes on referral to facilities with which they have financial relationships can go to http://www.cms.hhs.gov/medlearn/refphys.asp. Click on "Specialty Hospital Issues" for resources devoted to this topic.

To reach writer Cindy Borgmeyer, e-mail cborgmey@aafp.org.

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