Lawmakers weigh future of specialty hospital referral ban

MedPAC says the prohibition against physician self-referrals to these facilities should be extended. The AMA argues that it should expire.

By David Glendinning, AMNews staff. March 28, 2005.

Washington -- Congress has begun debating whether to extend an 18-month ban on physician referrals to specialty hospitals in which they have an ownership interest -- an issue that has spurred some conflict within the medical community.

The moratorium, which lawmakers approved as part of the 2003 Medicare reform law, is set to expire on June 8. It bars physician investors from referring Medicare and Medicaid patients to specialty facilities that entered the development stage after Nov. 18, 2003, but exempts hospitals that already existed as of that date.

At least two lawmakers are contemplating offering legislation that would extend the prohibition before it sunsets. Sens. Charles Grassley (R, Iowa) and Max Baucus (D, Mont.), who head the Senate Finance Committee, harbor concerns that these so-called self-referrals create incentives for doctors to shepherd more profitable patients away from full-service community hospitals and toward the specialty facilities in which they hold a stake.

"Physicians may choose where to send a patient based on whether or not they think that patient will profit their hospital," Grassley said. "That's troubling."

Grassley convened one of a pair of recent hearings at which the independent panel that advises Congress on Medicare topics issued a similar warning. Unresolved concerns that this type of physician self-referral could lead to patient access problems and unfair competitive advantages should prompt Congress to extend the ban through the end of 2006, the Medicare Payment Advisory Commission said at the hearings, which were held by the Finance Committee and the House Ways and Means health subcommittee.