[Congressional Record (Bound Edition), Volume 149 (2003), Part 14]
[Senate]
[Pages 18520-18521]
[From the U.S. Government Publishing Office, www.gpo.gov]




             PRESCRIPTION DRUG AND MEDICARE IMPROVEMENT ACT


                          physician referrals

  Mr. KOHL. Section 453 of S. 1, the Prescription Drug and Medicare 
Improvement Act, makes changes to current law regarding physician 
referrals to hospitals in which they have an ownership or investment 
interest. I would like to engage in a colloquy with my distinguished 
colleagues, Mr. Feingold and Mr. Baucus, the Ranking Member of the 
Senate Finance Committee, related to the ``exception'' language 
included in the bill.
  Specifically, I would like to know whether the ``exception'' language 
is applicable to The Wisconsin Heart Hospital, a hospital which is 
currently under construction in the state of Wisconsin. This facility 
is scheduled to open in January of 2004.
  My understanding is that this provision will not apply to facilities 
which are ``under development'' as of June 12, 2003. The following is a 
summary of the status of the development of The Wisconsin Heart 
Hospital:
  One, architectural plans for the hospital have been completed.
  Two, construction of the facility is approximately 55 percent to 60 
percent complete as of June 12, 2003. This estimate can be supported by 
invoices for materials, labor and planning, as well as the timeline for 
completion dictated by the projected opening date of the hospital. 
Furthermore, more than $13.3 million in construction costs have been 
expended.
  Three, all applicable zoning requirements have been satisfied by 
local governing authorities and can be supported by documentation. In 
addition, The Wisconsin Heart Hospital has committed $260,000 to 
improve the fresh water supply to surrounding community, unrelated to 
the hospital construction.
  Four, State and local building approval processes are ongoing. The 
facility is subject to monthly inspections by state and local 
officials.
  Five, nearly $20 million in equipment purchases and/or vendor 
contract commitments can be documented by officials from the facility.
  Six, medical staff bylaws, policies and procedures have been adopted 
by The Wisconsin Heart Hospital Board.
  Seven, all equity funding has been received. In excess of $35 million 
in temporary debt financing has been secured

[[Page 18521]]

for the facility. Of that $35 million, approximately $10 million has 
been borrowed; the remaining $25 million will be borrowed prior to the 
end of 2003. Permanent bond financing for the facility has already been 
initiated and is expected to be secured by November 2003. This 
permanent bond financing will be used to replace the temporary 
financing referred to above, as well as to provide additional financing 
for the facility.
  Based on the information stated above, is it your understanding that 
the ``exception'' language would apply to The Wisconsin Heart Hospital?
  Mr. BAUCUS. Yes, it was clearly not the intent of the Senate Finance 
Committee in adopting this amendment to apply the prohibition to 
specialty hospitals that already exist or are under construction 
currently. It is my understanding that this provision would only apply 
to hospitals for which plans are not yet significantly underway.
  Mr. KOHL. Additionally, the language of the bill specifically states 
that in determining whether a hospital is ``under development as of 
June 12, 2003, the Secretary shall consider whether . . . necessary 
approvals from appropriate state agencies have been received.'' You are 
probably aware that laws in many states, including Wisconsin, prohibit 
hospitals from receiving a license to operate from relevant state 
agencies until the facility is structurally complete and fully capable 
of operating as a hospital. Would you please clarify the Committee's 
intent with respect to this potential licensure issue for hospitals 
which are already under development
  Mr. BAUCUS. The committee certainly understands that many states will 
not license a hospital as operational until the facility is 
constructed. I believe the committee's intent was to ensure that 
approvals with respect to the construction of the hospital (i.e., 
building permits, etc.) have been secured by June 12, 2003. The lack of 
a license to operate would certainly not prohibit a hospital, which is 
deemed to be ``under development,'' from the purpose of the statute.
  Mr. FEINGOLD. Furthermore, is it the Senator's understanding that for 
facilities falling under the ``Exception'' provision, language speaking 
to the number of ``beds'' would relate to the number of beds a facility 
currently under development expects to license upon completion? When 
fully operational, The Wisconsin Heart Hospital will operate a maximum 
of 52 inpatient beds. State regulation requires the facility to be open 
and operational before any beds can be licensed.
  Mr. BAUCUS. Yes, again, in adopting the amendment, it was the 
understanding of the Senate Finance Committee members that this 
provision would not apply to facilities which are already under 
development.
  Mr. KOHL. I thank my distinguished colleagues for the clarification.

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