The Deficit Reduction Act of 2005 (the “DRA”) mandated that the Centers for Medicare and Medicaid Services (“CMS”) continue to study specialty hospitals and their effect on local community health care delivery. The study was due to be completed by August 8, 2006. However, ranking Senators have asked CMS to collect further data before completing its report. They have expressed concern that the study includes data for states in which specialty hospitals are not allowed to operate and has not included some traditional hospitals that compete directly with specialty hospitals. The DRA permits an extension of the August 8 deadline, however.
The DRA intends for the United States Department of Health and Human Services (“DHH”), through CMS, to develop a strategic plan to address physician investment in specialty hospitals. Congress is interested in knowing to what extent, if any, these hospitals provide care to Medicaid, underinsured and uninsured patients.
CMS Administrator Mark McClellan recently commented that on a related note, the Hospital Inpatient Prospective Payment System (“PPS”) final rule for 2007 is intended to move payments toward costs and quality-based systems. (For example, additional reimbursements can be received for reporting certain quality data). The reason Mr. McClellan gave for this movement is to eliminate incentives for hospitals to focus on particular kinds of care that are more profitable. Apparently, the rule changes to the hospital PPS system are likely to reduce payments to some specialty hospitals.