Specialty hospital growth put on hold

A Medicare bill sets an 18-month moratorium on referrals to new physician-owned hospitals.

By Markian Hawryluk, AMNews staff. Dec. 15, 2003.

Washington -- The New Albany Plan Commission meets every third Tuesday of the month in the southern Indiana city just across the river from Louisville, Ky. For most physicians, that means nothing. But for a dozen Louisville cardiologists, that schedule may have saved a lot of heartache.

At its Nov. 18 meeting, the commission approved plans for a 40-bed heart hospital to be built by Cardiovascular Hospitals of America and the doctors. That was the last day before an 18-month moratorium on new specialty hospitals.

As part of the Medicare reform legislation passed in November, Congress ordered a temporary ban on physician billing of Medicare or Medicaid for patients treated at any new specialty hospital in which the doctor has a financial interest. Specialty hospitals already in existence or those in development by Nov. 18 would not be subject to the referral moratorium.

The exact terms of the suspension are vague because it gives the Dept. of Health and Human Services some discretion in defining specialty hospitals and what is meant by "under development."

"The difficult part is determining, for the projects that are under way, what tests are going to be used beyond the statute to determine whether or not they fall into the grandfathering provision," said Randy Fenniger, a lobbyist representing the American Surgical Hospital Assn. "We may not have rules to clarify all of this for some time."

Government officials have indicated plans to issue rules implementing the terms of the moratorium. But given the usual pace of rulemaking, that may not happen until well into the 18 months.