EMTALA and Physician-Owned Specialty Hospitals

[CAL/AAEM News Service]

EMTALA and Physician-Owned Specialty Hospitals

PHYSICIAN-OWNED SPECIALTY HOSPITALS 
MARK B. MCCLELLAN, MD, PHD, ADMINISTRATOR, CMS
SENATE FINANCE COMMITTEE

Source: CMS (http://www.cms.hhs.gov/apps/media/press/release.asp?Counter=1860)
Date: May 18, 2006


Chairman Grassley, Senator Baucus, distinguished Committee members, thank you for
inviting me to testify today about the Centers for Medicare & Medicaid Services’ (CMS)
role in ensuring its beneficiaries have access to quality health care.  Through our
payment systems and quality efforts, CMS is working to promote a level playing field for
all health care providers, including both community hospitals and physician-owned
specialty hospitals. 

At CMS our chief concerns are the quality of care for people with Medicare and Medicaid
and the efficiency of Medicare and Medicaid spending.   We make no differentiation in the
application of our quality standards whether a facility is rural or urban, or for-profit
or not-for-profit.  Through Medicare’s conditions of participation requirements and the
survey and certification process, CMS monitors and enforces quality requirements for all
hospitals.  If necessary, CMS has the authority to terminate a hospital’s participation
in the Medicare program; and, CMS recently used this authority to put a facility in
Oregon on track for such action. 

CMS also is actively working to ensure payments for services promote quality and
accurately reflect the cost of providing care.   As you know, how Medicare pays for
medical services can significantly impact quality and medical costs for our beneficiaries
and our overall health care system.  With a reimbursement system based on admissions and
procedures and not outcomes or efficiency, the current system may pay for services that
are ineffective, inefficient and out-of-date, instead of recognizing and encouraging
quality care that prevents complications and errors.  Moving toward a performance-based
payment system could potentially enhance fair competition across health care settings. 
By leveling the financial playing field for all hospitals, Medicare payments to hospitals
will more accurately reflect actual resource needs.  This can be achieved, in part, for
example, by reconfiguring payments to better recognize severity of illness.  CMS also is
considering ways to improve patient safety and the Medicare payment system by addressing
“never events,” which are serious, preventable medical errors.  

Public disclosure of hospital pricing and quality data also has the potential to spur
quality improvements at all hospitals.   Quality and cost information is increasingly
available and being used by patients to create a health care system that is more
transparent.  We hope that this will eventually provide every patient with an opportunity
to get a clear idea of the quality of providers and the price of treatment options
available to them and will help them to make an informed choice about their own health
care.  And people may find more opportunities to save when they use such information
effectively.

In addition to promoting quality at all hospitals and improving the accuracy of
Medicare’s payment systems, CMS has responded to questions raised by Congress regarding
physician-owned specialty hospitals.  Last year, CMS completed a study on referral
patterns and quality in physician-owned specialty hospitals, finding that certain
specialty hospitals delivered high quality care that was as good as or better than their
competitor hospitals.  CMS also implemented a moratorium for new specialty hospitals
included in the Medicare Modernization Act (MMA).  This moratorium began on December 8,
2003 and ended on June 8, 2005.  During that period of time, new physician-owned
specialty hospitals (excluding those physician-owned specialty hospitals that were found
to be “under development” as of November 18, 2003) were unable to take advantage of the
“whole hospital exception” of the physician self-referral statute.  In other words, these
physician-owned specialty hospitals were prohibited from billing Medicare for services
furnished to patients referred to the specialty hospital by a physician-owner.  The
moratorium did not prevent such hospitals from opening and receiving a Medicare provider
number.  It also did not absolutely prevent the physician-owned specialty hospital from
billing Medicare during the moratorium for services furnished to patients referred to the
specialty hospital by non-owner physicians.  Following this moratorium, CMS went even
further, suspending the enrollment of new specialty hospitals, while reviewing the
Agency’s enrollment procedures.  The Deficit Reduction Act (DRA) built on this action,
continuing the enrollment suspension until CMS developed a strategic and implementing
plan regarding physician investment in specialty hospitals.

CMS Clarifies EMTALA Responsibilities in Proposed Rule

Many specialty hospitals, especially orthopedic and surgical hospitals, do not have
emergency departments.   As a result, there has been some confusion regarding whether
these facilities are required under the Emergency Medical Treatment and Labor Act
(EMTALA) to accept an appropriate transfer of an individual from a requesting hospital. 
The FY 2007 IPPS proposed rule clarifies that all hospitals (including specialty
hospitals) with specialized capabilities must accept, within the capacity of the
hospital, appropriate transfers of unstable individuals covered by EMTALA, without regard
to whether the hospital has an emergency department.  This clarification of current
policy may result in an increase in the number of specialty hospitals accepting transfers
of individuals with emergency conditions on nights and weekends.  This clarification was
recommended by the Secretary’s EMTALA Technical Advisory Group.  The community hospital
associations have supported this position.  Public comments on the proposed rule are due
by June 12, 2006.  


For the complete testimony, please visit:
(http://www.cms.hhs.gov/apps/media/press/release.asp?Counter=1860)



Cyrus Shahpar & Brian Potts 
Managing Editors, CAL/AAEM News Service
University of California, Irvine

The CAL/AAEM Archives are available at: http://maillists.uci.edu/mailman/public/calaaem/


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