CMS tries to strengthen specialty hospital rules

Washington -- Proposed regulations and new guidance from the federal government aim to address concerns that specialty hospitals are failing to adequately prepare for patient health emergencies.

A proposed Medicare inpatient hospital payment rule released in April would require every facility to inform its patients when physicians have investments in the hospital or when a referring doctor has an ownership stake. The rule also proposes requiring a hospital to let patients know when it does not have a policy that at least one physician must be working at the facility at any given time to handle emergencies.

In a separate guidance document clarifying existing statute, the Centers for Medicare & Medicaid Services in late April reminded hospitals that they are responsible for adequately preparing for medical emergencies. Facilities do not need to have physicians staffed all the time or to maintain emergency departments, but they must be able to evaluate people with emergencies, provide initial stabilizing treatment and transfer patients to other hospitals when needed.

"Any hospital participating in Medicare, regardless of the type of hospital and apart from whether the hospital has an emergency department, must have the capability to provide basic emergency care interventions," said CMS Acting Administrator Leslie V. Norwalk.

Although the proposed rule and the guidance apply to all hospitals that participate in Medicare, the latest developments are in response to recent criticism about physician-owned specialty hospitals.

High-profile patient deaths at such hospitals mobilized opponents of the industry. Two elective surgery patients died after experiencing medical emergencies in separate incidents -- one at a Texas hospital earlier this year and the other at a Portland, Ore., facility in 2005. Both hospitals, which contacted 911 when they were unable to deal with the emergencies, have since closed.

Senate Finance Committee ranking member Charles Grassley (R, Iowa), a critic of specialty hospitals, said the proposed disclosure requirements and the emergency care guidance are good first steps. "Just because a facility calls itself a hospital and has beds to keep patients overnight does not make it a hospital. When Medicare beneficiaries need hospital care, they deserve to be in a place where they can get basic emergency services."

Grassley said the moves don't go far enough, and he called on CMS to be more aggressive in going after specialty facilities that do not meet their Medicare conditions of participation.

The American Hospital Assn. also called the CMS actions inadequate. The AHA renewed its call for a total ban on Medicare physicians' ability to refer patients to hospitals in which they have an ownership interest. Grassley and a number of other lawmakers support such a prohibition.

The American Medical Association and the Physician Hospitals of America, both of which support physician ownership of specialty hospitals, continue to oppose a self-referral ban. These facilities consistently offer high-quality care and encourage community hospitals to do the same, they said. "When patients are offered multiple high-quality options in where to obtain health care, we believe the entire health system benefits through competition that spurs innovation," said AMA President William G. Plested III, MD.

Specialty hospitals give rules a nod

PHA, which represents specialty hospitals, welcomed the guidance and the proposed emergency services disclosure rules. "We are gratified that the requirements apply to all hospitals," said Molly Gutierrez, the organization's executive director. "There is no relationship between hospital ownership and patient safety."

For the same reason, PHA supports the requirement that hospitals disclose physician investment to their patients. The organization also will call on CMS to require community hospitals to disclose their ownership arrangements, said Randy Fenninger, a PHA lobbyist.

CMS at some point might try to strengthen the rules further. In the proposed inpatient payment regulation, the agency asks for comments on whether it should expand the emergency services standards. Medicare could require, for instance, that certain certified clinical personnel be present at all times.

Fenninger noted that any such expansions would likewise have to apply to all hospitals and could pose more of a burden on small or rural community hospitals than on physician-owned specialty facilities.