Death in West Texas Specialty Hospital Raises Questions About Medicare Payments

DEATH IN WEST TEXAS SPECIALTY HOSPITAL RAISES QUESTIONS ABOUT MEDICARE PAYMENTS

U.S. Rep. Pete Stark (D-CA) and U.S. Sens. Max Baucus (D-MT) and Chuck Grassley (R-IA) today reiterated their concerns about physician-owned specialty hospitals.

In a letter to Leslie Norwalk, Acting Administrator for the Centers for Medicare and Medicaid Services (CMS), they asked officials to account for any Medicare dollars that may have gone to a physician-owned specialty hospital in West Texas during a congressionally imposed 18-month moratorium on Medicare payments to these hospitals. Stark is the Chairman of the Ways and Means Health Subcommittee. Baucus is Chairman and Grassley is Ranking Republican of the Senate Finance Committee, which oversees Medicare and Medicaid.

The legislators are making their inquiry following the January 23 death of a patient at the West Texas hospital. The patient suffered respiratory arrest after an elective spinal surgery and, after a 911 call by the specialty hospital, had to be transferred by ambulance to a local community hospital for emergency services.

The government "clearly must take action and ensure that physician-owned facilities that hold themselves out to the public as 'hospitals' have the requisite staff and abilities to ensure that basic lifesaving measures can be employed," wrote Stark, Grassley, and Baucus in a letter sent today to CMS.

Working together, Stark, Baucus, and Grassley have tried to stem the growth of physician-owned specialty hospitals. The legislators have criticized these facilities because, motivated by profit, they focus on only the most profitable services, without providing the full range of services hospitals are expected to provide. In 2003, Congress approved a moratorium on Medicare payments to new physician-owned specialty hospitals as part of the Medicare Prescription Drug, Improvement, and Modernization Act. When this statutory moratorium expired in June 2005, Baucus and Grassley pressed CMS to suspend its enrollment of new facilities. Subsequently, in the Deficit Reduction Act of 2005, Congress prohibited CMS from approving new specialty hospitals until August 2006, when CMS delivered a plan for addressing this issue.

In May 2006, the Senate Finance Committee held a hearing about the dangers posed by specialty hospitals and heard testimony about the death of a patient at a physician-owned surgical hospital in Oregon that had also opened during the statutory moratorium. There, too, the specialty hospital requested 911 emergency services following a surgery. A March 2005 hearing highlighted a report from the Medicare Payment Advisory Commission and prompted Grassley and Baucus to introduce the Hospital Fair Competition Act of 2005. This bill would have prohibited physicians from referring Medicare and Medicaid patients to new specialty hospitals in which they have an ownership interest.

With their request for detailed information from CMS about any Medicare dollars that may have illegally gone to the West Texas hospital, Stark, Baucus, and Grassley said that they are trying to set the payment situation right and to further assess CMS' actions with regard to specialty hospitals.

"The tragic death of another 'specialty hospital' patient highlights the manner in which physician-owned facilities seem to be eroding the quality of health care in America," said Stark. "These facilities present themselves as 'hospitals,' but perform only the most profitable of operations. In so doing, they suck money out of already-strapped community hospitals. When one of their customers demands emergency care, 'specialty hospitals' dump the unprofitable patient back onto the very community hospitals they're helping to bankrupt. If 'specialty hospitals' are unable to provide adequate care to Medicare beneficiaries, we should shut them down."

"I am deeply saddened and also completely outraged to hear of another death of a patient at a specialty hospital," said Baucus. "It really seems to me that if you call a place a hospital, it should have the facilities to handle an emergency, but all this facility could do was call 911. This is a strong reminder that doctors' financial stakes in a hospital can cloud judgment and blur priorities, and we can't let that happen. Patient safety is my number one priority and I am going to continue to work to make sure that when patients enter a hospital, they can be certain they will receive the care they need."

"The fundamental problem with physician-owned specialty hospitals is that decision-making is more likely to be driven by financial interest rather than what is best for the patient," Grassley said. "You see that in the cherry picking of patients and policies where emergencies are to be dealt with by calling 911 to get to the local community hospital. The Centers for Medicare and Medicaid Services have identified some steps they can take to require the disclosure of physician investment, and that should give the agency the basis to take action against doctors who violate physician referral laws. But the law needs to go further. Patients should be informed when their physician's ownership interest in a specialty hospital may influence what type of treatment is provided and where. And going forward, doctors shouldn't be allowed to refer patients to hospitals where those same doctors have an ownership interest."

http://www.house.gov/stark/news/110th/pressreleases/20070208_medicare.htm