Competitive path to better care: A moratorium's end

Congress did the right thing by letting expire the moratorium on physicians referring to specialty hospitals they own.

Editorial. July 4, 2005.

Last month, Congress let expire the 18-month moratorium on physician referrals to specialty hospitals they own, a provision of the 2003 Medicare Modernization Act. In doing so, lawmakers helped create the competition that can mean better patient care.

The 18 months of the moratorium, which effectively shut down construction of new facilities, were to be spent determining the pros and cons of specialty hospitals. Included in that discussion was whether the new facilities had a negative effect on the community hospitals accusing them of cherry-picking profitable patients. Various federal agencies investigated the matter.

As it happened, the arguments favorable to specialty hospitals won out. The Centers for Medicare & Medicaid Services' own studies show that specialty hospitals had lower mortality rates and higher patient satisfaction rates than other facilities.

Also, a study by the Medicare Payment Advisory Commission, which advises Congress on Medicare, found that cost differences at specialty hospitals were not statistically significant compared with full-service hospitals, nor were Medicare costs up in cities that had both facilities. Community hospitals, MedPAC said, did not appear to be suffering financially in the face of specialty hospital competition.