ASC Industry Awareness
New ASCs in 2022
ASCs/OBSs/OBLs have enjoyed a stellar year in terms of new facility development. Most new smaller facilities receive very little media attention, but at least 170 new ASCs have been built or proposed in 2022. Twenty-five of those are known to be orthopaedic ASCs. Many of these new centers are located outside of major population centers in less popular surgery center states. December 5 marked the dedication of a new 24,000-square-foot outpatient surgery center in Jefferson City, MO. Some new centers had the additional step of state certificate of need approvals. Alabama’s Certificate of Need Review Board voted unanimously to approve a new 28,000-square-foot center in West Mobile. Atrium Health Wake Forest Baptist also gained state permission to open a $30 million multispecialty center in Greensboro, NC.
Healthcare Industry/Trends
Retail to Medical Space Creativity
Malls and other large retail spaces were already finding it difficult to find tenants before the pandemic hit. Now it is even more difficult. It is time to repurpose those spaces and medical facilities are realizing an ideal opportunity in developing medical malls. Commercial real estate developers are looking for mixed-use opportunities, which offer convenience for patients and less cost for providers than expanding existing facilities. This is a growing phenomenon with 32 enclosed malls in the US containing some level of healthcare services. Gallatin Valley Mall in Bozeman, MT, is undergoing a $50 million mixed-use revitalization project that includes a 45,000 sq. ft. surgery center and clinic. Ground has been recently broken on a new orthopaedic surgery center and clinic in Owensboro, KY – at a former K-Mart in a high foot traffic area.
Prior Authorization Reform Picks Up Steam
Prior authorization reform momentum and insurer pushback is growing every month. US Sen. Roger Marshall, MD, says prior authorization is the “number one physician and administrative concern in America.” A recent survey by the American Hospital Association found that 78% of hospital leaders believe their relationship with payers is worsening, largely due to prior authorization delays and claims denials. The AMA is pushing for a prior authorization fix while payers stress high incidence of evidence-based prior authorizations and barriers to automated prior authorizations. CMS has just proposed a rule to improve the prior authorization process, which is seen as a positive step forward for providers and patients.
Retail Healthcare Advances
Amazon, CVS, and Walgreens are finding ways to tap into the huge US healthcare market by building primary care and home health networks. Amazon Virtual Clinics for common conditions are underway in 32 states and Amazon Pharmacy is contracting its way to becoming the preferred or exclusive pharmacy provider for millions of Americans. The Mark Cuban Cost Plus Drug Company is buying generic drugs from manufacturers and selling them directly to patients online rather than going through an insurer or an intermediary. The cost-reduction effort is gaining a foothold.
Healthcare Digital Transformation Watch
Healthcare IT Can Improve the Patient Experience
Healthcare consumerism is one of several drivers of digitization affecting the patient experience. Price transparency and the ascendancy of high deductible healthcare plans are pushing patients to make much more thoughtful healthcare decisions. Sixty-seven percent of IT healthcare leaders recently polled said they acutely consider patients’ experiences when making technology decisions. Healthcare IT increasingly is acknowledged for its importance to the patient experience, whether it is functioning as an internal department or it is outsourced in some form.
Healthcare M&A, Valuation, Revenue Cycle
PE Deepens and Ortho M&A Shines in 2022
Private equity has made deeper inroads into the ASC industry in 2022, particularly through ASC management companies and larger independent centers. Five known national healthcare startups have also received funding this year. Orthopaedic mergers and acquisitions started slowly in 2022 and ramped up in the last half of the year. Thirteen revenue cycle management companies have engaged in M&A activity the last half of 2022. American biopharmaceutical company Amgen has just agreed to acquire Horizon Therapeutics for $27.8 billion, making it the largest healthcare merger of 2022. On Dec. 2, Advocate Aurora (based in greater Chicago, IL) and Atrium Health (based in Charlotte, NC) completed their merger, which created a combined 1,000 sites of care in a non-contiguous six state region.
Out-of-Network Watch
NSA Leads to 9 Million Averted Surprise Bills and 275 Thousand Arbitration Claims
The offices of both senators Maggie Hassan (D-NH) and Bill Cassidy (R-LA) published information on the benefits of the No Surprise Act (NSA) legislation they led, in a bipartisan effort to curtail surprise medical bills. In its first year, the NSA is estimated to have saved nine million Americans from surprise medical bills though it has also led to 275,000 arbitration claims, ten times what government officials expected. While claims are pending in the independent dispute resolution (IDR) process, providers do not receive reimbursement, so the backlog is creating a new substantial revenue issue. On December 20, a Texas federal court will hear arguments regarding the validity of the IDR. Bipartisan House Ways and Means Committee leaders have also voiced concerns about the IDR, requesting HHS to revisit the rule. So far, HHS has responded by giving providers more time for NSA good faith estimate compliance while considering the IDR.
Legal
Peering into 2023
From the office of Jon Sistare, JD, Attorney at Law
In 2023, expect to see health care policy developments in the following key domains: reproductive rights and gender discrimination, health data privacy, telehealth, and price transparency.
Reproductive Rights and Gender Discrimination
Following the Supreme Court’s decision in Dobbs v. Jackson Women’s Health Organization, agencies have taken a number of actions to provide resources and guidance on health data privacy in accordance with President Joe Biden’s executive order to support access to reproductive health care. In July, the Department of Health and Human Services (HHS) issued guidance and sent a letter to health care providers reminding them of their responsibilities, irrespective of conflicting state laws or mandates, to provide stabilizing medical treatment to pregnant patients under the Emergency Medical Treatment and Active Labor Act (EMTALA).
Health Data Privacy
As a result of the Dobbs decision, the Biden Administration also continues to issue regulations to protect patients’ health data privacy, including reproductive health information. In August, the Federal Trade Commission also issued a notice of proposed rulemaking on the prevalence of commercial surveillance and data security practices, including in the healthcare sector. Most recently, the OCR issued a bulletin to outline the obligations of Health Insurance Portability and Accountability Act of 1996 (HIPAA) on regulated entities when using online tracking technologies and notably includes several examples focused on protecting reproductive health information.
Telehealth
Depending on whether telehealth extensions are included in the fiscal year 2023 appropriations legislation, Congress may act to bolster federal support for telehealth and extend certain Medicare telehealth flexibilities. HHS recently extended numerous telehealth flexibilities in the 2023 Medicare Physician Fee Schedule Final Rule for 151 days after the end of the COVID-19 Public Health Emergency, in alignment with the Consolidated Appropriations Act, 2022.
Price Transparency
In 2023, Congress and the Administration will continue to advance price transparency efforts and urge hospitals to comply with the Hospital Price Transparency Final Rule, which required hospitals to disclose their standard charges and make prices publicly available for consumers. In September, the HHS Office of the Inspector General (OIG) announced that it would review the controls in place at the Centers for Medicare & Medicaid Services (CMS) and statistically sample hospitals to determine whether CMS’s controls are sufficient to ensure that hospital pricing information is readily available to patients as required by law.
At a Glance
ASCs Look to Higher Acuity Service Lines
As a Means to Buffer the Rising Costs of Providing Care
UHC Owes $10M for Underpaying – Again
Marks Second Time UHC Loses to TeamHealth in Court over Underpayments
Public Health Emergency Uncertainty Is Untenable
National Association of Medicaid Directors Wants PHE End Date
Employers Expect 5.4% Health Benefit Cost Rise for 2023
Health Benefit Cost Rose 3.2% in 2022
Average Hospital Stay Lengths Increase by 19% from 2019
Delays in Discharge Can Put Pressure on Healthcare Costs
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