The Enemy of My Enemy Is My Friend

We don’t normally think of American Hospital Association and the Federation of American Hospitals as friends.  After all, the AHA represents nonprofits, while the FAH represents for-profits.  But in recent days something has brought them together: their mutual opposition to the physician-owned hospitals’ effort to repeal the ban on new physician-owned hospitals.

The Stark law had a “whole-hospital exception” exempting physician-owned hospitals from the general prohibition on referrals to facility in which the physician had a financial interest.  That exception spawned physician-owned hospitals across the country.  Then in 2010 the Affordable Care Act eliminated the exception, subject to a grandfather provision for existing facilities.  But the grandfather exception contained a catch: a grandfathered facility could not expand its capacity at all.

It’s true that the law has a mechanism for getting a CMS waiver from the nonexpansion requirement.  But in the five years since its enactment, CMS has granted a grand total of one waiver—to Lake Pointe Medical Center, in Rowlett, Texas.

Physician Hospitals of America, representing the country’s physician-owned hospitals, hoped that Congress’s legislative fix of the Sustainable Growth-Rate Formula would include relief from the ban imposed by the ACA.  A proposal to do just that was included in a discussion draft of the legislation.  But the proposal didn’t survive the legislative process.  Why not?  Because the AHA and the FAH put their differences aside and joined together in opposing any relief from the ACA ban.

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