November 15, 2023

ASC Industry Awareness

More ASCs than CMS Estimates Headed into 2024

Ambulatory Surgery Center Association uses CMS data to compile information on numbers of ASCs in the US (map) and (per state per capita list). That list includes approximately 6,000 Medicare certified ASCs/OBSs/OBLs, etc. If we include all ASCs regardless of Medicare status, that number shoots up to over 11,000. October was another solid month for ASCs in the US, with 15 new centers of various specialties and ownership models on the books. Incredibly, headed into 2024, 80% of surgeries are being performed in the outpatient setting.

Hospitals and ASCs

The number of hospital systems owning ASCs is rising. Seventy-one percent of hospital leadership survey respondents indicate that the need to increase outpatient surgical capacity is a main driver in adding ASCs. Hospitals prefer to have ownership stakes greater than 50%, which effectively keeps a lid on how many ASCs they will develop because independent physicians and other partners also see benefits in maintaining higher ownership stakes. Inpatient orthopedic surgical volume has fallen rapidly over the past few years, adding to the financial pinch hospitals sense and need to overcome. Richmond, VA is seeing a bit of a feeding frenzy among hospitals vying for new outpatient surgery centers as state law, inpatient volume, and demographics combine to create opportunity.


Healthcare Industry/Trends

Challenges with Medicare Advantage (MA)

Medicare Advantage programs are in the federal government’s crosshairs for overreaching on claims denials, putting providers and patients in a bind. Commercial insurers are making 2.5 times as much on Medicare Advantage members as they make on their regular private-sector subscribers. Medicare Advantage has become so cumbersome and denial-happy that doctors are ceasing to accept it. CMS is proposing to put more subscriber protections against predatory marketing and current prior authorization practices into play. House Democrats are asking CMS to consider whether they have gone far enough for 2024, wanting CMS to address Medicare Advantage plans’ increasing dependence on AI to guide denials. As the US federal government is tightening reimbursements for health insurers, Cigna is looking to divest its’ MA business.

Pharmacy Contractions

Over four thousand CVS, Rite Aid, and Walgreens pharmacists and technicians participated in a 3-day planned walkout that began October 30, to highlight understaffing which is causing overwork. That is a minor contraction, by comparison. In mid-October, Rite Aid, the third largest US standalone pharmacy chain, filed for bankruptcy and will close 400-500 of its 2,200 stores as part of its restructuring. This action is being fueled by opioid lawsuits and falling sales. CVS and Walgreens are also preparing to close over a thousand stores between them starting in 2024, as they experience less foot traffic and more competition from online pharmacies and large retail stores.


Healthcare M&A, Valuation, Revenue Cycle

Healthcare AI: Helpful, Worrisome, or Both?

Artificial intelligence (AI) tools are becoming ubiquitous, often operating in the background of our digital daily activities. However, ubiquity does not confer acceptance and helpfulness in all circumstances and the AI hype vs. reality gap in healthcare is real. Recent surveys indicate that people are significantly more comfortable with healthcare AI use for administrative functions than for treatment decisions. Seventy-five percent of survey respondents say providers should notify patients anytime AI is used. Physicians are divided in their concern about AI’s employment. An AI pain recognition system made news in October for its ability to identify and manage patient pain, leading to shorter hospital stays.


Out-of-Network Watch

Medicare Advantage Increasingly Out-of-Network (OON)

Multiple hospitals and healthcare systems are facing contracting challenges with a wide variety of Medicare Advantage (MA) plans for 2024. Baptist Health, based in Louisville, KY, is struggling in contract discussions with Humana (also based in Louisville) and UHC. As of January 1, state retirees at ECU Health in Greenville, NC will be OON with Humana Medicare Advantage plans. Genesis HealthCare System in the Zanesville, OH region will be OON with both Anthem and Humana Medicare Advantage plans in 2024. Southeast Georgia Health System in the coastal Georgia area will also be OON in 2024 with Wellcare Medicare Advantage. Senators Widen, D-OR, Bennet, D-CO, and Tillis (R-NC) have introduced a bill to protect seniors from unexpected health care costs and to press insurers to maintain accurate provider directories.



HHS Directives in the New AI Executive Order

   From the office of Jon Sistare, JD, Attorney at Law

On October 30, 2023, President Joe Biden signed the first ever Executive Order (EO) that specifically directs federal agencies on the use and regulation of Artificial Intelligence (AI).

Of particular note to the health industry is Section 8 of the EO, which provides specific guidance for the US Health and Human Services Department (HHS) and the recognition that regulation of AI will have an impact the development of new drugs and devices, how patients receive healthcare, and how safe their data is.

Specific HHS directives include:

  • Within 90 days of the Executive Order, HHS must create, in consultation with the Department of Defense and Veterans Affairs, an HHS AI Task Force. This HHS AI Taskforce must develop, within a year, a “strategic plan that includes policies and frameworks – possibly including regulatory action, as appropriate – on responsible deployment and use of AI and AI-enabled technologies in the health and human services sector.”
  • Within 180 days of the EO, HHS must design a strategy to “determine whether AI-enabled technologies in the health and human services sector maintain appropriate levels of quality.” In other words, HHS must direct the participating agencies, such as FDA, with a focus on premarket review and post market monitoring.
  • Within 180 days of the EO, HHS must develop steps to be taken in order to advance compliance with federal nondiscrimination laws by “health and human service providers” that use AI and receive federal financial assistance.
  • Within 365 days from the EO, in consultation with the Department of Defense and the Secretary of Veterans Affairs, HHS is directed to establish an AI safety program to work in partnership with Patient Safety Organizations.
  • Within 365 days of the EO, HHS must develop a strategy for regulating the use of AI in the drug development process.

Any of these initiatives could work their way into the daily life of any medical practices in the US. Medical practices are advised to learn about these initiatives and to ensure their information systems, and the people who operate them, are trained to spot potential abuses of AI that are only meant to disrupt the provider-patient relationship.


At a Glance

CMS Seeking to Boost Hospital Transparency Further
2024 Price Transparency Fact Sheet

‘Thin Gruel’ Physician Reaction to -3.4% Decrease
CMS 2024 Medicare Physician Payment Rule

Wife of Hospital’s Chief Exec Kicks Two Nurses
Arrested after Treatment for Two Counts of Battery

Sadly, Violence against Doctors and Nurses Rising
New North Carolina Law Aims to Provide Additional Protections

Employer Insurance Costs Expected to Rise in 2024
Employers and Employees Continue to Experience Cost Pain


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