The Medicare Payment Advisory Commission, or MedPAC, is not likely to recommend a ban on specialty hospitals, according to its chair, Glenn Hackbarth, J.D. Instead, the commission will await the results of CMS adjustments to hospitals' Medicare payments, which were proposed to level the playing field between community facilities and specialty hospitals.
Medicare Commission Analysis
Fix Payment Issues Before Considering Specialty Hospital Ban
By Leslie Champlin
4/26/2006
"My personal bias is in favor of more competition, not less," Hackbarth said during an April 19 MedPAC meeting. "To the extent that we identify problems, I always want to … use the least restrictive alternative -- restrictive in terms of reducing competition -- for dealing with the problem. … Given that, my preference has always been first and foremost, let's fix payment problems which level out the playing field."
CMS is seeking comments, until June 12, on its proposed 2007 inpatient prospective payment system rule, which would implement MedPAC's 2005 recommendations. CMS' proposed rules would reconfigure diagnosis-related groups, or DRGs, so they more closely reflect costs rather than hospital charges. Over time, the rules also would reflect case mix and the severity of illness.
That route is just what MedPAC recommended in its March 2005 report to Congress (PDF file: 108 pages / 916 KB. More about PDFs.). The report called for changing the DRGs Medicare uses to reimburse hospitals. The DRGs should be recalibrated to more accurately reflect community hospitals' cost of care and case mix, said the report. Such a change "would significantly, in and of itself, dampen investment in physician-owned specialty hospitals," said Hackbarth.
Specialty hospital supporters say the facilities increase efficiency because operating room schedules aren't hampered by emergency or unscheduled surgeries. Moreover, such facilities enhance quality of care by enabling physicians and staff to focus on specific treatment regimens, say these advocates.
"Focusing on a specific area of service can lead to higher quality and lower costs as a result of more expert and efficient care," said then-AMA Trustee William Plested, M.D., in a March 8, 2005, AMA statement on specialty hospitals. "By performing high volumes of specific services, specialty hospitals can perfect those tasks, increase accountability for the quality of care provided to patients, lower fixed costs and quickly respond to patient needs."
In an April 20 AMA statement, Plested, who is now president-elect of the AMA, praised the most recent MedPAC analysis of specialty hospitals.
"The American Medical Association is pleased with findings from MedPAC's updated analysis, which adds to the growing body of knowledge on the benefit of specialty hospitals," said Plested. "This analysis is good news to everyone who believes competition and choice positively affect the quality of health care."
MedPAC's analysis found that
CMS is seeking comments, until June 12, on its proposed 2007 inpatient prospective payment system rule, which would implement MedPAC's 2005 recommendations. CMS' proposed rules would reconfigure diagnosis-related groups, or DRGs, so they more closely reflect costs rather than hospital charges. Over time, the rules also would reflect case mix and the severity of illness.
That route is just what MedPAC recommended in its March 2005 report to Congress (PDF file: 108 pages / 916 KB. More about PDFs.). The report called for changing the DRGs Medicare uses to reimburse hospitals. The DRGs should be recalibrated to more accurately reflect community hospitals' cost of care and case mix, said the report. Such a change "would significantly, in and of itself, dampen investment in physician-owned specialty hospitals," said Hackbarth.
Specialty hospital supporters say the facilities increase efficiency because operating room schedules aren't hampered by emergency or unscheduled surgeries. Moreover, such facilities enhance quality of care by enabling physicians and staff to focus on specific treatment regimens, say these advocates.
"Focusing on a specific area of service can lead to higher quality and lower costs as a result of more expert and efficient care," said then-AMA Trustee William Plested, M.D., in a March 8, 2005, AMA statement on specialty hospitals. "By performing high volumes of specific services, specialty hospitals can perfect those tasks, increase accountability for the quality of care provided to patients, lower fixed costs and quickly respond to patient needs."
In an April 20 AMA statement, Plested, who is now president-elect of the AMA, praised the most recent MedPAC analysis of specialty hospitals.
"The American Medical Association is pleased with findings from MedPAC's updated analysis, which adds to the growing body of knowledge on the benefit of specialty hospitals," said Plested. "This analysis is good news to everyone who believes competition and choice positively affect the quality of health care."
MedPAC's analysis found that
- heart specialty hospitals' inpatient costs resemble those in other hospitals, but orthopedic and surgical specialty hospitals clearly have higher inpatient costs than (those of) their competitors;
- 70 percent of orthopedic and surgical specialty hospitals have occupancy rates under 35 percent;
- from 1996 to 2004, the rate of cardiac surgeries per capita increased by 5.2 surgeries per 1,000 beneficiaries in markets without physician-owned hospitals and by 7.8 surgeries per 1,000 beneficiaries in markets with physician-owned hospitals, a statistically significant difference;
- the increase in cardiac surgeries associated with physician-owned hospitals may stem from increased surgical capacity associated with building new heart hospitals;
- heart specialty hospitals appear to obtain roughly four-fifths of their patients by capturing market share from community hospitals, but community hospitals report they have expanded other sources of revenue to compensate for much of the revenue lost to specialty hospitals.
In January 2005, AAFP policy called for continuation of the Medicare Prescription Drug, Improvement and Modernization Act of 2003's moratorium on provider enrollment for new specialty hospitals until evidence demonstrated specialty hospitals' benefit to the health and well-being of the community. Congress continued the moratorium in the Deficit Reduction Act of 2005.
