TITLE V--PROVISIONS RELATING TO PART A
Subtitle A--Inpatient Hospital Services
SEC. 507. CLARIFICATIONS TO CERTAIN EXCEPTIONS TO MEDICARE
LIMITS ON PHYSICIAN REFERRALS.
(a) LIMITS ON PHYSICIAN REFERRALS-
(1) OWNERSHIP AND INVESTMENT INTERESTS
IN WHOLE HOSPITALS-
(A) IN GENERAL- Section 1877(d)(3)
(42 U.S.C. 1395nn(d)(3)) is amended--
(i) by striking `,
and' at the end of subparagraph (A) and inserting a semicolon; and
(ii) by redesignating
subparagraph (B) as subparagraph (C) and inserting after subparagraph
(A) the following new subparagraph:
`(B) effective for the 18-month period beginning on the date of the
enactment of the Medicare Prescription Drug, Improvement, and
Modernization Act of 2003, the hospital is not a specialty hospital (as
defined in subsection (h)(7)); and'.
(B) DEFINITION- Section 1877(h)
(42 U.S.C. 1395nn(h)) is amended by adding at the end the following:
`(A) IN GENERAL- For purposes of this section, except as provided in
subparagraph (B), the term `specialty hospital' means a subsection (d)
hospital (as defined in section 1886(d)(1)(B)) that is primarily or
exclusively engaged in the care and treatment of one of the following
categories:
`(i) Patients with a cardiac condition.
`(ii) Patients with an orthopedic condition.
`(iii) Patients receiving a surgical procedure.
`(iv) Any other specialized category of services that the Secretary
designates as inconsistent with the purpose of permitting physician
ownership and investment interests in a hospital under this
section.
`(B) EXCEPTION- For purposes of this section, the term `specialty
hospital' does not include any hospital--
`(i) determined by the Secretary--
`(I) to be in operation before November 18, 2003;
or
`(II) under development as of such date;
`(ii) for which the number of physician investors at any time on or
after such date is no greater than the number of such investors as of
such date;
`(iii) for which the type of categories described in subparagraph
(A) at any time on or after such date is no different than the type of
such categories as of such date;
`(iv) for which any increase in the number of beds occurs only in
the facilities on the main campus of the hospital and does not exceed 50
percent of the number of beds in the hospital as of November 18, 2003,
or 5 beds, whichever is greater; and
`(v) that meets such other requirements as the Secretary may
specify.'.
(2) OWNERSHIP AND INVESTMENT INTERESTS
IN A RURAL PROVIDER- Section 1877(d)(2) (42 U.S.C. 1395nn(d)(2)) is amended
to read as follows:
`(2) RURAL PROVIDERS- In the case of designated health services
furnished in a rural area (as defined in section 1886(d)(2)(D)) by an
entity, if--
`(A) substantially all of the designated health services furnished by
the entity are furnished to individuals residing in such a rural area;
and
`(B) effective for the 18-month period beginning on the date of the enactment
of the Medicare Prescription Drug, Improvement, and Modernization Act of
2003, the entity is not a specialty hospital (as defined in subsection (h)(7)).'.
(b) APPLICATION OF EXCEPTION FOR HOSPITALS
UNDER DEVELOPMENT- For purposes of section 1877(h)(7)(B)(i)(II) of the Social
Security Act, as added by subsection (a)(1)(B), in determining whether a hospital
is under development as of November 18, 2003, the Secretary shall consider--
(1) whether architectural plans have
been completed, funding has been received, zoning requirements have been met,
and necessary approvals from appropriate State agencies have been received;
and
(2) any other evidence the Secretary
determines would indicate whether a hospital is under development as of such
date.
(1) MEDPAC STUDY- The Medicare Payment
Advisory Commission, in consultation with the Comptroller General of the United
States, shall conduct a study to determine--
(A) any differences in the
costs of health care services furnished to patients by physician-owned specialty
hospitals and the costs of such services furnished by local full-service
community hospitals within specific diagnosis-related groups;
(B) the extent to which specialty
hospitals, relative to local full-service community hospitals, treat patients
in certain diagnosis-related groups within a category, such as cardiology,
and an analysis of the selection;
(C) the financial impact of
physician-owned specialty hospitals on local full-service community hospitals;
(D) how the current diagnosis-related
group system should be updated to better reflect the cost of delivering
care in a hospital setting; and
(E) the proportions of payments
received, by type of payer, between the specialty hospitals and local full-service
community hospitals.
(2) HHS STUDY- The Secretary shall
conduct a study of a representative sample of specialty hospitals--
(A) to determine the percentage
of patients admitted to physician-owned specialty hospitals who are referred
by physicians with an ownership interest;
(B) to determine the referral
patterns of physician owners, including the percentage of patients they
referred to physician-owned specialty hospitals and the percentage of patients
they referred to local full-service community hospitals for the same condition;
(C) to compare the quality
of care furnished in physician-owned specialty hospitals and in local full-service
community hospitals for similar conditions and patient satisfaction with
such care; and
(D) to assess the differences
in uncompensated care, as defined by the Secretary, between the specialty
hospital and local full-service community hospitals, and the relative value
of any tax exemption available to such hospitals.
(3) REPORTS- Not later than 15 months
after the date of the enactment of this Act, the Commission and the Secretary,
respectively, shall each submit to Congress a report on the studies conducted
under paragraphs (1) and (2), respectively, and shall include any recommendations
for legislation or administrative changes.
