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Stark Whole Hospital Exception in the Crosshairs Again?


Email Alert

July 27, 2007

A revised version of The Children's Health and Medicare Protection Act of 2007 just emerged from the House Ways and Means Committee with an an amendment introduced by Representative Pete Stark. Along with authorizing State Children's Health Program (S-CHIP) funds and eliminating the scheduled reductions to the physician fee schedule for 2008 and 2009, the bill amends the Stark whole hospital exception. More specifically, the section-by-section analysis states:

Sec. 651. Limitation on exception to the prohibition on certain physician referrals to hospitals. Eliminates the whole hospital exception so that physicians cannot self refer to hospitals in which they have ownership. Applies to all hospitals—not just specialty hospitals. Grandfathers hospitals that were in operation with Medicare provider agreements as of the date of introduction of the bill [July 24, 2007]. Requires grandfathered hospitals to meet standards within 18 months of enactment that include: preventing growth, requiring disclosure of ownership, limiting physician ownership to an aggregate of no more than 40% of the facility and no more than 2% individually, and disclosing to patients if they fail to have 24 hour physician coverage.

If enacted into law, this provision would significantly restrict physician ownership of hospitals and require the restructuring of many existing entities.

Representative Stark chose to attach this whole hospital exception amendment to a bill that has strong support in Congress. To continue federal funding of S-CHIP, the bill must pass by September 30. Notably, the language amending the Stark whole hospital exception is not included in the Senate version of this legislation. The fate of the whole hospital amendment will likely be decided in the Conference Committee.

Access the full text of Bill.

We would like to thank Robert G. Homchick, Esquire (Davis Wright Tremaine, Seattle, WA) for writing this email alert.

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