HOUSE BILL REPORT
HB 2669



         As Reported by House Committee On:       
Health Care

Title: An act relating to licensing specialty hospitals.

Brief Description: Licensing specialty hospitals.

Sponsors: Representatives Cody, Green, Morrell, Clibborn, Campbell, Moeller, Priest and Lantz.

Brief History:

Health Care: 1/24/06, 1/31/06 [DPS].

Brief Summary of Substitute Bill
  • Establishes licensing requirements for specialty hospitals related to services for low income patients, emergency services, and financial disclosure.


HOUSE COMMITTEE ON HEALTH CARE

Majority Report: The substitute bill be substituted therefor and the substitute bill do pass. Signed by 9 members: Representatives Cody, Chair; Campbell, Vice Chair; Morrell, Vice Chair; Appleton, Clibborn, Green, Lantz, Moeller and Schual-Berke.

Minority Report: Do not pass. Signed by 5 members: Representatives Hinkle, Ranking Minority Member; Curtis, Assistant Ranking Minority Member; Alexander, Bailey and Condotta.

Staff: Chris Blake (786-7392).

Background:

The federal Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) prohibited physicians from referring patients to certain specialty hospitals in which the physicians have ownership or investment interests. The MMA also prohibited these hospitals from billing Medicare or any other entity for services provided as a result of a prohibited referral. These prohibitions were effective from December 2003 until June 2005. This moratorium applied to new hospitals primarily or exclusively engaged in the care and treatment of patients with cardiac or orthopedic conditions and patients receiving surgical procedures.

During the moratorium, the Federal Centers for Medicare and Medicaid Services (CMS), the General Accounting Office, and the Medicare Payment Advisory Commission (MedPAC) conducted studies of specialty hospitals to determine their impact on general hospitals and the Medicare program. MedPAC released its report to Congress in March 2005 and made several recommendations that would require Congress to take legislative action. Among these, the report recommended that Congress extend the moratorium on specialty hospitals through January 2007. The CMS issued its report in May 2005 in which it decided to administratively continue the moratorium until February 15, 2006. During that time CMS has been reviewing its payment rates and procedures for approving hospitals to participate in Medicare.

In 2005, chapter 39 (SSB 5178), Laws of 2005 was enacted which prohibits the Department of Health (Department) from issuing a license from January 1, 2005, until July 1, 2006, to a specialty hospital in which a physician has an ownership or investment interest. Absent this moratorium, there are no restrictions specific to specialty hospitals under state law, although the establishment and operation of such a hospital is subject to the same Department licensing requirements and regulatory oversight as hospitals in general.


Summary of Substitute Bill:

"Specialty hospitals" are defined as any hospital that is primarily or exclusively engaged in the care and treatment of: (1) patients with a cardiac condition; (2) patients with an orthopedic condition; (3) patients receiving a surgical procedure; and (4) any other specialized category of services that the Secretary of Health and Human Services designates as a specialty hospital.

To receive a license to operate as a hospital, a specialty hospital must be significantly engaged in providing inpatient care, comply with the general licensing standards for hospitals, and provide appropriate discharge planning. In addition, a specialty hospital must:

These requirements do not apply to specialty hospitals that provide only psychiatric, pediatric, long-term acute care, cancer or rehabilitative services. Hospitals licensed prior to January 1, 2006, are exempt from these requirements.

Substitute Bill Compared to Original Bill:

The substitute bill removes the requirement that specialty hospitals participate in the regional trauma system. Specialty hospitals that provide only cancer services are exempt from the specialty hospital licensing requirements.


Appropriation: None.

Fiscal Note: Available.

Effective Date of Substitute Bill: The bill takes effect 90 days after adjournment of session in which bill is passed.

Testimony For: If a nonprofit hospital does not make an adequate margin, it cannot provide the broader services that hospitals provide to the community that do not make money. Specialty hospitals take resources from general hospitals which will reduce their ability to subsidize community safety net programs. Specialty hospitals can focus on profitable procedures as well as patients who are healthier and have better reimbursement. This bill will level the playing field by placing licensing requirements on specialty hospitals.

Testimony Against: The issues surrounding specialty hospitals should not be addressed prior to the report of the Certificate of Need Task Force in November. This bill will make specialty hospitals prohibitively expensive. Specialty hospitals allow physicians greater control over hospital operations, increased productivity, and more flexibility in scheduling. Patients have higher satisfaction rates at specialty hospitals. The availability of specialty hospitals gives physicians a position from which to bargain with community hospitals for better conditions.

Persons Testifying: (In support) Lisa Thatcher and Robb Menaul, Washington State Hospital Association.

(Opposed) Carl Nelson, Washington State Medical Association.

Persons Signed In To Testify But Not Testifying: None.