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HB |
802/aHFL #1/aSJC |
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Licensing Requirements For Certain Hospitals |
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(Parenthesis
( ) Indicate Expenditure Decreases)
Responses
Received From
Department
of Health (DOH)
Health
Policy Commission (HPC)
SUMMARY
· Changing the name in the title of Section 1 from “Boutique” to “Certain” hospitals.
· Removing language in legislative findings that indicates that patients are threatened by “boutique” hospitals and that these hospitals would affect the financial viability of hospitals that operate emergency departments.
· Changing the name in Section 1 from “boutique” to “limited service” hospitals.
· Defining “low income patients”
· Removing language pertaining to “cost benefit analysis”.
· Providing for licensure of a hospital on the condition that the hospital maintains and operates and emergency department and participate in the Medicaid, Medicare and county indigent program. Moreover, the hospital must provide emergency care to nonpaying patients and low-income reimbursed patients. The conditions for the latter will be determined by DOH with a statewide hospital organization, the government of the county in which the facilities are located and the affected hospitals; provided that the hospital may appeal the department determination and that the annual cost of care required to be provided shall not exceed an amount equal to 5% of the hospital annual revenue.
· Providing for a health care provider to disclose a financial interest before referring a patient to the hospital.
· Removing language pertaining to suspension of a license when a hospital fails to comply with previously imposed conditions.
Significant Issues of
SJC Amendment
The House Floor Amendment #1 amends Section 1 D
of the bill, which provides conditions for issuance of a license to a general
hospital or boutique hospital to include language that requires a physician
owner to disclose a financial interest in the hospital before referring a
patient to the hospital. Additionally, language is added to the same section of
the bill that the hospital must comply with the same quality standards applied
to other hospitals.
Also, the words “general hospital” are inserted prior to “boutique hospital” in Sections
pertaining to licensure of hospitals.
Synopsis
of Original Bill
House
Bill 802 requires “boutique” hospitals to have the Department of Health (DOH)
conduct a cost-benefit analysis and consider the need for the hospital by the
State and local community. “Boutique” hospitals are defined as new hospitals
(initially licensed after 1/1/03) that limit admissions
according to medical or surgical specialty, type of disease or medical
condition, or hospitals that limit inpatient hospital services to surgical
services or invasive diagnostic and treatment procedures.
Significant
Issues
HB802 requires the Department of Health to
perform a cost-benefit analysis upon receiving the licensure application. The
Department’s analysis must consider:
·
the
need for the hospital by the community and state.
·
the
effects of the hospital on medical care in the local community including the
potential harm to existing facilities.
·
employment
opportunities the applicant may provide.
·
the
identification of any special requirements that would maximize benefits or minimizes
costs.
HB802 requires the Department to not issue a
license unless the hospital agrees to:
·
maintain
an emergency department that provides basic or comprehensive emergency services
comparable to those provided by licensed acute are hospitals.
·
participate
in Medicare, Medicaid, and county indigent programs.
·
provide
emergency services to low income and nonpaying patients in the same proportion
as other local hospitals.
·
comply
with any special conditions identified in the cost benefit analysis.
HB802 notes that after licensure, if the
boutique hospital fails to comply with previously imposed conditions, the
license is suspended until the conditions are met.
The
purpose of HB 802 is to have the DOH conduct a “certificate of need” type
process to determine the need and impact of boutique hospitals on area medical
services. Approved boutique hospitals would require DOH Health Facility
Licensure and Certification Bureau (HFL&C) licensure. Current state
licensure regulations require the minimal provision of emergency services.
According
to DOH the HFL&C Bureau (which licenses and certifies health facilities),
they do not have the qualified staff to do the costs benefits analysis.
Additional workload would require additional FTE to administer the program as
well as to survey and evaluate new facilities, including annual licensure
surveys.
HB802 declares an emergency for the act to take
effect immediately.
FISCAL IMPLICATIONS
There
is no appropriation in the bill to fund the cost benefit analysis.
ADMINISTRATIVE IMPLICATIONS
The
department perceives a need for additional staffing, management personnel, and funds for capital and operating needs.
If
HB 802 were enacted, new regulations would need to be promulgated. The DOH
currently does not conduct cost-benefit analyses nor does it issue certificates
of need. Although HB 802 would require that applicant licensure fees pay the
cost-benefit analysis, there are currently no personnel, resources or
established policies to administer or make such determinations.
DUPLICATION, RELATIONSHIP
Duplicate
of SB767.
Relates to: HB662, Health-Based Business Referrals, which prohibits any physician or physician assistant from referring patients to health care facilities, laboratories or businesses in which the physician or physician assistant has a financial interest.
TECHNICAL ISSUES
Participation
in the Medicare and Medicaid Programs is voluntary and currently not mandated.
The old certificate of need process was discontinued in 1987.
OTHER SUBSTANTIVE ISSUES
The shifting health care landscape in
HPC notes that:
· Consumers and public policymakers have proposed that physician owned surgical hospitals create incentives for physicians to make referrals based on financial arrangements, rather than quality of care considerations. Further, some studies suggest that these arrangements encourage unnecessary duplication and over utilization of services, thereby adding to the escalation of health care costs.
·
The
American Medical Association has in place a detailed code of ethics that binds
all physicians. Section E-8.032
explicitly deals with conflicts of interest that arise over health facilities
owned by physicians. In general, the
code prohibits referrals to such facilities, but also recognizes that in some
situations, facilities may not be built if physicians are not involved in
investing in them. In such a situation,
the code details a number of requirements, including full disclosure, no
non-competition clauses, and financial returns linked to equity in the facility
and not to volume of patients. The AMA
Code of
Ethics is more detailed and more situation-specific than that found in HB662,
and would seem to address both the issue of inappropriate referrals and
responding to communities in need quite well.
·
Specialty
boutique hospitals may drain high-paying, profitable patients away from community
hospitals and force those "department stores" of health care to cut
back on service or go out of business.
·
Patients
who turn to specialty care facilities may benefit from a health perspective. A
facility that revolves around a narrow clinical focus should improve and have
better clinical outcomes than one that does not. Literature in the medical
field is replete with examples of “Centers of Excellence” in which hospitals
and doctors with a higher volume of doing a particular kind of work have better
clinical outcomes than those that do not have commensurate volume.
·
Boutique
hospital supporters say they offer better care for their specialties than general
community hospitals do. With a narrowly focused mission, boutique hospitals can
buy the latest technology sooner and can more intensely focus on that area of
medicine than can general hospitals.
· Skeptics say there is no proof that specialty hospitals provide better care than general hospitals. They also say that diseases often come in pairs and triplets and are often related. That means that a boutique hospital might not be able to treat a patient who has other medical problems, whereas a general hospital could, and that complications will be better managed in facilities with a wide range of services.
AMENDMENTS
HPC suggests amending the bill to provide for :
·
Physician’s discloser of any financial
interest they have in a healthcare organization to which they refer
patients. The AMA Code of Ethics is a
good model for the conditions of acceptable referral and the criteria for disclosure
· Enforcement of the same quality standards of other hospitals. Specialty service settings should be held to the same federal quality standards as a hospital when delivering exact clinical services.