Marr bill to protect hospitals from unfair competition passes Senate

OLYMPIA — A bill passed Friday by the state Senate would prevent specialty hospitals from luring away the most profitable patients while leaving community hospitals to care for patients with little or no health insurance.

“It is essential that we maintain a level playing field between our existing community hospitals and specialty hospitals,” said Sen. Chris Marr, D-Spokane, the bill’s sponsor. “Without these safeguards, specialty hospitals will be able to cherry-pick the most profitable patients without bearing the burden of caring for patients on Medicare and Medicaid, or who have no insurance. This would saddle our community hospitals with essentially all the patients whose medical coverage pays less than the cost of their actual care.”

Specialty hospitals are an emerging sub-class of hospital primarily or exclusively devoted to cardiac, orthopedic or other specialized categories of service. Statistics show that in states where specialty hospitals have been established, physicians steadily refer healthier and fully insured patients to specialty hospitals, maximizing their profits and leaving community hospitals with the burden of serving unhealthier and uninsured patients.

The spread of specialty hospitals was stemmed by the federal Medicare Modernization Act of 2003, which prohibited physicians from referring patients to specialty hospitals in which they have ownership or investment interests. That moratorium expired in 2005 but was temporarily extended to allow further study.

“The statistics confirm exactly what we feared,” Marr said. “If specialty hospitals are allowed to serve only the most desirable patients, our community hospitals will go into the red and our public health care system will crumble.”

Senate Bill 5398 would require specialty hospitals to:

• satisfy minimum participation rates for providing services to Medicaid and Medicare beneficiaries;
• provide a percentage of the charity care provided by a general hospital in the same health service area;
• provide emergency services 24 hours a day, seven days a week, or otherwise accommodate patients who need emergency services through a transfer agreement with a general hospital; and
• accept the transfer of a patient from a general hospital who requires a category of care provided by the specialty hospital.

SB 5398 passed on a 38-10 vote, with one senator excused. The measure now goes to the House of Representatives; if approved without changes there, it will go to the governor.

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