Hospital groups take aim at physician-owned facilities

Major hospital groups are pushing back against physician-owned hospitals amid calls to eliminate Medicare's ban on physician self-referral to new POHs and restrictions on their growth. 

In 2010, the Affordable Care Act enacted various protections against POH, including a ban on expanding the capacity of existing Medicare-certified POHs unless they meet certain exceptions and a moratorium on the establishment of new Medicare-certified POHs. 

Eradicating these protections will not generate competition or reduce costs, and lead to an uneven playing field with POHs continuing to leverage their position to cherry-pick patients and defer emergent care to community providers, according to an Oct. 18 blog post written by American Hospital Association Executive Vice President Stacey Hughes and Federation of American Hospitals President and CEO Chip Kahn.

Ms. Hughes and Mr. Kahn outlined five key points to support their argument for maintaining current legislation and not rolling back protections against POHs:

1. POHs do not increase competition and can increase risk for patients. POHs provide limited or no emergency services and instead rely on 911 services when their patients need emergency care, delaying timely access to needed care for patients, according to the authors. 

2. POHs increase government costs. The Stark Law's "whole hospital" exception allowed physicians to refer patients to hospitals in which they had an ownership interest in the entire facility rather than just in a subdivision, such as imaging or surgery. Closing the "whole hospital" exception reduced the federal deficit by $500 million over 10 years, according to the Congressional Budget Office, but federal legislation now under consideration would eradicate those savings and increase the deficit.

3. POHs cherry-pick patients. By cherry-picking patients, POHs create inequities in patient access and choice of care, according to Ms. Hughes and Mr. Kahn. A recent report from consulting firm Dobson DaVanzo & Associates found that POHs had lower Medicaid, dual-eligible and uncompensated care discharges than full-service acute care hospitals and treated far fewer COVID-19 patients than non-POHs, suggesting that they are ill-equipped to handle patient surges and provide the specialized care needed in a public health crisis. Providing access and choice only for the healthiest and wealthiest patients poses integrity, access and health equity risks for the Medicare program and its beneficiaries, the authors said. 

4. POHs do not improve quality. POHs report fewer quality measures are more likely to land in the lowest peer group under CMS' Hospital Readmissions Reduction Program, according to the Dobson DaVanzo report, which outlines that POHs treat fewer patients who are dually-eligible for Medicare and Medicaid and are not subject to many of the quality standards that most full-service acute care hospitals are. Though POHs treat younger, less complex patients with fewer comorbidities, they had higher average readmission penalties, and a far higher percentage of POHs received the maximum payment penalty compared to general acute care hospitals in the same lowest dual-eligible peer group, according to the report. 

5. POHs will not stall or reverse healthcare consolidation. The argument that expanding POHs will reduce consolidation among hospitals and physician offices does not stand up, Ms. Hughes and Mr. Kahn wrote. Physicians are turning to hospitals and health systems for financial security so they can focus more on clinical care and less on the administrative and cost concerns associated with running an independent practice, and most of the consolidation of physician groups comes from private equity firms and payers, not hospitals. 

"Despite efforts to paint hospitals and health systems as the sole cause of physician practice pattern changes, the truth is that commercial insurer policies, such as prior authorization, are creating unworkable environments, forcing physicians to prioritize administrative duties over caring for patients," the authors wrote. 

Copyright © 2024 Becker's Healthcare. All Rights Reserved. Privacy Policy. Cookie Policy. Linking and Reprinting Policy.


Featured Whitepapers

Featured Webinars