• The Medicare Modernization Act imposed a moratorium on specialty hospitals for 18 months that expired in June 2005—some want to make this permanent.
• Prohibiting the operation of specialty hospitals impedes competition—the competition that encourages higher quality and lower costs in health care.
• Efforts to permanently ban specialty hospitals ignore the findings by CMS and MedPAC studies: there is no evidence that specialty hospitals pose harm to community hospitals.
• Both CMS and MedPAC report that an extension of a moratorium is unwarranted.
• Rather than finding harm to community hospitals, CMS discovered that specialty hospitals deliver high quality of care and high levels of patient satisfaction.
• Community hospitals routinely use overpayments on certain cases to “cross-subsidize” their less profitable cases.
• If the Medicare and Medicaid programs are to be viable in the future, we must fix payment system incentives to encourage true competition.
• At issue is the decision of Congress to assert its power to prohibit certain businesses from participating in federal health programs—will Congress allow true competition or embrace the community hospital monopoly on healthcare services?
Impact on Taxpayers:
• Specialty hospitals are an important marketplace innovation that provide high-quality healthcare and present patients with addition choices for meeting their healthcare needs.
• Beyond their own walls, specialty hospitals inject competition and compel community hospitals to become more efficient and to raise their quality bar.
• When healthcare is delivered in an efficient, high-quality manner, consumers, payers and purchasers of healthcare all come out winners.
These Findings Demand a Response:
• Lobby Senator Grassley to remove the specialty hospital prohibition language from the conference report on Budget Reconciliation.
• Continue to message about the importance of encouraging true competition to curb healthcare costs and improve quality.
• The solution is reform of CMS’s outdated payment system for these services—not to extinguish competition in America.
