HHS: Specialty hospitals violated Medicare rule

Washington -- A new report outlining violations of health and safety standards at some physician-owned specialty hospitals has lawmakers renewing efforts to ban the facilities.

The Dept. of Health and Human Services Office of Inspector General investigated 109 of the country's orthopedic, cardiac and surgical hospitals and found that more than one-third of them may be in violation of Medicare's conditions of participation.

Eight of the facilities, surveyed on randomly selected days, did not have a registered nurse present or failed to have a physician on duty or on call at all times -- a clear violation of Medicare's rules. In addition, 37 of the facilities had written emergency response procedures that involved calling 911 to stabilize a patient experiencing an emergency. The Centers for Medicare & Medicaid Services says that hospitals are in violation of their conditions of participation if they rely on 911 for initial treatment instead of on their own emergency capabilities.

The OIG concluded that the administration should work to require all hospitals -- not just specialty facilities -- to meet Medicare's hospital staffing rules, to have the capability for evaluation and initial treatment of emergency patients, and to include necessary information in their written policies regarding how to manage medical emergencies. CMS concurred with the findings.

For some lawmakers who have opposed specialty hospitals, the report is more evidence that legislation is required to address the problems.

"This new report documents the significant and potentially life-threatening shortcomings of physician-owned specialty hospitals when it comes to emergency services," said the Senate Finance Committee's top Republican, Charles Grassley of Iowa. "Congress needs to take action to stem the trend before the situation is irreversible."

Physician-owned hospitals respond

Rather than serve as an indictment of physician-owned specialty hospitals, the OIG report provides good recommendations that all hospitals should follow, according to Physician Hospitals of America, which represents the industry. The organization called on the inspector general to expand its review to include community hospitals.

"This study is a snapshot of one small part of the hospital delivery system in this country," said Douglas Johnson, the organization's president. "Congress should not act until it has a more complete picture of the policies and practices of a wide variety of hospitals."

PHA and the American Medical Association have noted that independent studies have shown that specialty hospitals provide top-notch care and garner high patient satisfaction scores. The AMA says the facilities are excellent treatment alternatives to community hospitals for patients and physicians alike.

No hospital should be failing to meet Medicare staffing requirements, and relying on 911 to stabilize a patient is not a good written policy for a facility to have, said Molly Sandvig, PHA's executive director. Nevertheless, she said, the OIG did not determine whether patient safety was ever compromised as a result of the situations that the office encountered.

In addition, CMS is required to review all of the written policies of any hospital that applies to participate in Medicare before the agency gives its approval, Sandvig said. The question remains as to whether CMS knew the hospitals' emergency response policies put them in violation of participation conditions before the OIG became involved.

Sandvig acknowledged that the report could add "more fuel to the fire" on this issue. But at least one lawmaker echoed the specialty hospitals' call for the investigation to be expanded before Congress took any additional steps.

"The study did not examine the emergency services of any other kind of hospital," said Rep. Sam Johnson (R, Texas). "It's unfair to tarnish the reputation of one group when there is no true metric of comparison." His district includes several specialty hospitals.

Community general hospital supporters highlighted the OIG findings about the lack of emergency care offered at specialty hospitals. The OIG found that 45% of the facilities lacked emergency departments altogether. The majority of those with an ED had a department with only one bed. Medicare does not require hospitals to have EDs, but some states do.

Life and death calls

Specialty hospital opponents pointed to two high-profile patient deaths at specialty facilities in recent years to make their case. In both situations, hospital staff members called 911 when they could not treat an elective surgery patient experiencing a medical emergency.

"These ongoing problems can lead to unsafe, life-threatening care in physician-owned specialty hospitals and already have resulted in patient deaths," said Chip Kahn, the Federation of American Hospitals president. "Today's report, as well as ongoing cherry-picking of healthier patients with good health coverage and increased utilization and associated health care costs, underscore yet another reason for Congress to pick up where it left off last year."

Grassley and Sen. Max Baucus (D, Mont.), the Senate Finance Committee's chair, last year attempted unsuccessfully to limit specialty hospitals and have pledged to try again when Congress considers Medicare physician payment legislation this spring. Baucus indicated that he may once again target the facilities through a prohibition on doctors referring patients to hospitals in which they have ownership stakes. If existing specialty hospitals were grandfathered in, such a self-referral prohibition effectively would put a stop to new facilities opening their doors.

Part of the problem in coming down on specialty hospitals is that nobody is sure exactly how many are out there. CMS helped the inspector general find the 109 Medicare-participating specialty hospitals that are known to exist, but the agency is still working on revising its forms to ensure that all such facilities identify themselves as specialty hospitals.