The Centers for Medicare & Medicaid Services (CMS) has unveiled its plan to implement a moratorium on physician investment in and referrals to certain specialty hospitals.

Under the proposal, a physician would not be allowed to refer a patient to a specialty hospital in which he or she has an ownership or investment interest. In addition, the hospital may not bill Medicare or any other entity for services provided as a result of a prohibited referral.

The moratorium -- enacted by Congress as part of the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (MMA) -- expressly applies to hospitals that are primarily or exclusively engaged in the care and treatment of patients with cardiac or orthopedic conditions, patients receiving surgical procedures, and patients receiving any other specialized type of services that CMS may designate.

In addition, the law specifies that the following types of hospitals are not subject to the moratorium: psychiatric hospitals, rehabilitation hospitals, children's hospitals, long-term care hospitals, and those cancer hospitals that are not paid under the inpatient hospital prospective payment system.

CMS has decided not to expand the moratorium to other types of specialty hospital services at this time.

The MMA also excludes from the moratorium hospitals that were in operation before or under development as of Nov. 18, 2003.