Congressional Democrats move to impose new limits on specialty hospitals

The New York Times on Sunday examined how Democrats -- who for years "have been trying to stop the proliferation of doctor-owned hospitals in the belief that they drive up costs by encouraging doctors to order more procedures" -- have moved to "impose new restrictions on these for-profit hospitals" as part of a Senate supplemental war appropriations bill, although they have "carved out exemptions for a few institutions represented by influential senators and well-connected lobbyists."

According to the Times, the exemptions have "drawn criticism from conservative Republicans, who support unfettered growth of doctor-owned hospitals, and liberal Democrats, who favor stringent rules with no exceptions" (Pear, New York Times, 6/8).

The Senate legislation originally would have banned participation in Medicare and Medicaid by many current or planned specialty hospitals or required physicians with ownership stakes in the facilities to sell some of their shares. However, as a result of an amendment approved last month by the Senate Appropriations Committee, the bill would exempt several specialty hospitals in four states (Kaiser Daily Health Policy Report, 6/3).

Physicians vs. Hospitals

The issue of specialty hospitals "often puts lawmakers in the awkward position of having to choose between doctors and hospitals," the Times reports.

According to the Times, critics, such as the American Hospital Association, maintain that, "when doctors have a financial stake in a hospital, they have an incentive to send patients there because they not only receive professional fees for their services but also can share in hospital profits and see the value of their investment increase," the Times reports. "Such arrangements can lead to greater use of hospital services and higher costs for Medicare and other insurers, say the critics, including many in Congress," the Times reports.

During the past 10 months, the House and Senate on three occasions passed legislation under which physicians could not refer Medicare or Medicaid beneficiaries to hospitals in which they held an ownership stake, but none of those bills became law. The White House opposes such bills over concerns that they "could restrict patient choice without decreasing Medicare costs," and the American Medical Association has taken a similar position on the issue (New York Times, 6/8).

Budget Resolution

In related news, House Budget Committee Chair John Spratt (D-S.C.) on Saturday said the $3.1 trillion fiscal year 2009 budget resolution approved last week by the House and Senate would restore funds for health care and other domestic programs and balance the budget by 2012, the AP/Austin American-Statesman reports. During the weekly Democratic radio address, Spratt said that the resolution would reject reductions in funds for Medicare and Medicaid proposed by President Bush, expand SCHIP and increase funds for the Department of Veterans Affairs health care system by $5 billion next year.

He said, "The federal budget is like a battleship, badly off course. We cannot steer it to balance overnight, but we are moving it in that direction, applying fiscal discipline, but not at the expense of the values and priorities that we as Democrats hold dear" (AP/Austin American-Statesman, 6/7).