Sen. Chuck Grassley, Chairman of the Committee on Finance, and Sen. Max Baucus introduced a bill on May 11, 2005, aimed to rein in the growth of physician-owned specialty hospitals. The bill prohibits physicians from referring Medicare and Medicaid patients to new specialty hospitals in which they have an ownership interest. This legislation comes after a March Finance Committee hearing and a series of government reports showing these hospitals treat patients who are less sick and hence more profitable, do not have lower costs than community hospitals, and treat lower shares of Medicaid patients.
The proposed bill, "The Hospital Fair Competition Act of 2005," would indefinitely extend the moratorium on physician referrals to specialty hospitals and add new restrictions on existing hospitals that qualify for the grandfather. Additionally, the bill would require the Centers for Medicare and Medicaid Services (CMS) to make changes to the inpatient PPS payment rates for certain diagnosis-related groups and amend the CMP and Stark laws to authorize certain gainsharing arrangements. These changes would be effective June 8, 2005, regardless of the date of enactment.