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August 11, 2006

Specialty hospital report submitted to Congress; calls for DRG tweaks, disclosure, enforcement

HHS announced on August 8 a strategic and implementing plan to address issues regarding physician investment in specialty hospitals (i.e., hospitals exclusively or primarily engaged in caring for cardiac, orthopedic or surgical patients).  The final report and accompanying press release detail the survey results collected (since a significant number of specialty hospitals did not provide answers to key questions about physician ownership, information on ownership is likely somewhat skewed).  Not surprisingly, physician-owned specialty hospitals provide less in the way of emergency services, charity care and Medicaid volume than their acute care counterparts.  The proposed solution to the issue is the panacea du jour around CMS: make DRG payments more accurately reflect the cost of providing care, and the skewed incentives leading to development of specialty hospitals (or nonhospital ASCs and imaging services and, in past years, hospital-based SNFs, etc., etc.) will no longer be operative.  And so the balloon gets pushed in on one side and will no doubt bulge outwards, soon, somewhere on the other side. 

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