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Finalized CMS Medicare Rule Signals New Era of Orthopedics
A recently finalized CMS These changes to ASC
rule signals that the knee replacement and out-
health care industry should patient hip replacements
brace for another wave of could have an adverse
orthopedic-related consol- impact on hospitals as they
idations — especially open doors to new competi-
those driven by private tors including ASC manage-
equity and health systems ment companies and larger
seeking to enter joint ven- orthopedic practices. Such
tures with larger orthope- organizations could develop
dic practices. their own ASCs and capture
In its 2020 Medicare this newly available patient
payment rule, CMS final- population and value. For
ized several orthopedic- BY CHAD BESTE larger orthopedic practices
related changes, including in particular, this may
for: increase their ability to add value and
• Ambulatory surgery center (ASC) savings under the BPCI Program — pro-
facilities – Adding knee replacement and viding even more impetus for change
repair procedures as approved services and opportunities for investors in the
• Hospital outpatient facilities – space.
Adding hip replacements and a number This is triggering several responses
of spinal surgical procedures as approved across the health continuum:
services, shifting them away from their 1. Greater investment from private tive joint replacement patients provides 3. Increased emphasis on—and com-
historical inpatient-only setting equity into orthopedics investors a growing opportunity for prof- petition for—top orthopedic talent
At the same time, CMS has also updat- BDO’S QUICK TAKE: Capitalizing on itability, as orthopedic services provided BDO’S QUICK TAKE: In a value-
ed its Bundled Payments for Care a highly fragmented market, PE firms in the outpatient setting have shown based world, it’s easier to identify the
Improvement (BPCI) Advanced Model to have already been acquiring many larger lower readmission rates and fewer com- best surgeons based on patient volumes,
include an outpatient component of physician practices with scale. As plications. This is an attractive transition complications and quality of outcomes.
knee replacements. Modern Healthcare reported on Sept. 3, for PE firms to ride. This information will become more read-
The move from inpatient to outpatient 2019, orthopedists — as well as other 2. A new wave of branding and spe- ily available as industry efforts to boost
and ASCs began several years ago, but specialists like gastroenterologists and cialization efforts transparency into the billing practices
these collective changes from CMS repre- urologists — are among the newest tar- BDO’S QUICK TAKE: The industry is and quality ratings of healthcare organi-
sent a focused push to expedite that gets in the PE rush into physician prac- moving to a value-based world, so organ- zations moves forward. As greater
trend, which threatens a highly lucrative tices. “These firms are attracted to spe- izations need to determine where they emphasis is placed on outpatient facili-
revenue stream for hospitals. cialties that promise rich revenue from play in this world and promote that. ties over the traditional hospital setting,
For example, the following changes ambulatory surgery centers, lab, imaging Some health systems and hospitals may organizations will need to ensure they
are expected to negatively impact hospi- and other ancillary services,” the publi- lose out on these lucrative volumes as have the infrastructure and leadership in
tals’ revenue streams by the respective cation wrote. patients go elsewhere for better value. place to attract — and retain — leading
reimbursement amounts listed: This shift towards ASCs among lucra- Others may instead get ahead of the surgeons.
trend and create leading orthopedic cen- Learn more about how your organiza-
ters of excellence to support higher reim- tion can manage risk amid new reim-
bursement and profit margins. bursement models and ultimately, trans-
Another option for health systems may form to better compete in today’s health-
be to create joint venture models with care landscape.
leading ASC management companies or
orthopedic practices to promote volume Chad Beste is Healthcare Advisory
protection and growth. For those who Partner at BDO.
pursue this model, it will require both
sides to conduct careful pre-venture due Contact:
diligence around how to structure the Alfredo Cepero, Managing Partner
agreement, what liabilities that structure 305-420-8006/ acepero@bdo.com
opens them up to, and a careful review of
clinical coding policies and procedures Angelo Pirozzi, Partner
to ensure proper reimbursement and 646-520-2870 / apirozzi@bdo.com
mitigate risk of clawbacks.
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10 December 2019 southfloridahospitalnews.com South Florida Hospital News