ASC Industry Developments and Trends: Summer Highlights

October 18, 2018

We’re still trying to catch our breath from what turned out to be quite a very busy and active summer for the ASC industry. There were major proposed rules and announcements that will likely drive significant new trends and that reflect developments gaining momentum.

Here are some of the most substantial ASC news from the summer, summarized to help you keep current on the trends and developments that may soon impact your center — if they’re not doing so already.

1. CMS releases 2019 proposed Medicare payment rule. In July, the Centers for Medicare & Medicaid Services (CMS) issued its proposed payment rule for ASCs (and hospital outpatient departments (HOPDs)). Key take takeaways include the following:

  • Perhaps the most significant news was CMS’s proposal to update the ASC payment system using the hospital market basket update rather than the Consumer Price Index for all urban consumers (CPI-U) for 2019 through 2023. The hospital market basket more accurately reflects cost changes (increases) in ASCs. If approved, this change should help increase payments.
  • CMS proposed to allow procedures with a device offset percentage of greater than 30% to qualify as device-intensive procedures, down from 40%. ASCA CEO William Prentice summarizes this development as follows: “This means that if the device portion of the overall procedure equals 30% percent or more of the total cost in the HOPD, the total device cost will be included in the reimbursement rate when the procedure is performed in the ASC.” If, the rule is adopted as proposed, ASCs would gain a net increase of 142 new device-intensive procedures that they could afford to provide for Medicare beneficiaries. This would grow the approved list from 154 to 296 device-intensive procedures.
  • CMS proposed to add 12 cardiac catheterization procedures to the ASC-covered procedures list. This is significant for a few reasons. Even if these procedures are not approved, the proposal indicates that CMS is viewing more cardiac procedures as safe to perform in ASCs. This should encourage private payers to seriously consider providing coverage for these procedures, which we saw when CMS started proposing the addition of spine procedures. If these 12 cardiac procedures are approved, it’s likely that their Medicare reimbursement would initially be too low for ASCs to seriously consider performing them on Medicare patients, and low reimbursement may keep some private payer reimbursement too low as well. But assuming reimbursement increases in the coming years, these procedures should become more viable.
  • There were no new proposed total joint replacement codes. While unfortunate, this was not unexpected. But this development should do little or nothing to stifle the rapid growth of total joints in ASCs.
  • CMS proposed significant changes to the ASC Quality Reporting (ASCQR) Program, recommending the removal of eight measures over a two-year period. CMS did not propose to mandate implementation of the Consumer Assessment of Healthcare Providers and Systems Outpatient and Ambulatory Surgery Survey (OAS CAHPS), but indicated it still planned to require ASCs to eventually use a form of the survey.

2. House passes Ambulatory Surgical Center Payment Transparency Act of 2018. Also in July, the US House of Representatives passed the Ambulatory Surgical Center (ASC) Payment Transparency Act of 2018 (H.R. 6138). Key takeaways include the following:

  • It would require the expert outside advisory panel that reviews the Medicare prospective payment system for HOPD services to include at least one ASC representative.
  • It would also require CMS to (finally) specify the criteria used to exclude certain procedures from the list of Medicare-covered procedures for ASCs.

If eventually approved as law, these changes would strengthen the ASC industry position when arguing for reimbursement and procedure changes that would be beneficial for centers.

3. CMS proposes to reduce regulatory burdens. In mid-September, CMS proposed a rule that it would said would “… reform Medicare regulations that are identified as unnecessary, obsolete or excessively burdensome on healthcare providers and suppliers.” Key takeaways for ASCs include the following:

  • CMS is proposing to remove provisions requiring centers to establish a written transfer agreement with a hospital or that all ASC physicians have admitting privileges in a hospital. CMS notes that EMTALA rendered such transfer and admitting privileges unnecessary.
  • CMS is also proposing to eliminate current requirements that a physician (or other qualified practitioner) conduct a complete comprehensive medical history and physical assessment on every patient not more than 30 days before the date of the scheduled surgery. Furthermore, CMS is considering allowing ASCs to establish and implement a policy that identifies patients who require an H&P assessment prior to surgery — a welcomed change.
  • There were also several proposed changes to emergency preparedness, including requiring facilities to review their emergency program at least every two years (rather than annually) and no longer include documentation of efforts to contact local, tribal, regional, state and federal emergency preparedness officials as well as requiring outpatient providers to conduct one testing exercise annually rather than two. Fewer requirements should help ASCs save money and free up time for other projects.

4. CMS expands oversight of accreditation organizations. Although technically not a summer announcement, CMS recently announced plans to what it describes as “improve” oversight of those accreditation organizations which have received deeming authority from CMS. The three ways it will do so are described as follows:

  • public posting of accreditation organization performance data;
  • redesigned process for accreditation validation surveys; and
  • release of the annual report to Congress.

These efforts are intended to provide greater transparency to consumers and help accreditation organizations improve their surveying performance. They should also help ASCs gain a better understanding of their accreditation organization choices.

5. KKR acquires Envision. In June, private equity firm KKR & Co. announced it would acquire Envision Healthcare Corp. Envision is a provider of physician-led services and post-acute care, and ambulatory surgery services that was formed in 2016 when a staffing company merged with ASC operator AmSurg.

The acquisition, which was recently completed, seems to indicate sustained interest in ASCs from private equity companies. In 2017, KKR acquired Covenant Surgical Partners and Bain Capital acquired HIG Capital’s stake in Surgery Partners. Physicians Endoscopy has been partially owned by private equity firms for many years. It will be interesting to see what significant private-equity investments come to fruition over the next year.

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