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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
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