PPM ASC Symposium 2023 | Washington Outlook: Evolving Federal Policy Impacting Reimbursement, Operations and Deal Strategies - McDermott Will & Emery

PPM ASC Symposium 2023 | Washington Outlook: Evolving Federal Policy Impacting Reimbursement, Operations and Deal Strategies


In this session, panelists discussed the political shifts in Washington that are impacting healthcare reimbursement, operations, and deal strategies, including Centers for Medicare & Medicaid Services (CMS) policies on reimbursement, recent activity regarding non-competes and consolidation, and the end of the COVID-19 public health emergency (PHE).

Session panelists included:

  • Brian Fortune, President, Farragut Square Group
  • Deborah Godes, Vice President, McDermott+Consulting
  • Katharine O’Connor, Partner, McDermott Will & Emery
  • William Prentice, Chief Executive Officer, Ambulatory Surgery Center Association
  • Eric Zimmerman, Principal, McDermott+Consulting, and Partner, McDermott Will & Emery (Moderator)

In Depth

Top takeaways included:

  • Eight years after the passage of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), CMS continues to make adjustments to calibrate physician reimbursement. As they do so, budget neutrality requirements continue to hamper progress. Providers may have to look to the US Congress to get involved and implement an inflation adjustment factor to the fee schedule.
  • Ambulatory Surgery Centers (ASCs) may face challenges in obtaining favorable reimbursement as they enter the fifth year of a pilot program in which they have been receiving the same inflation adjustments as hospitals. At the end of the pilot program, it is unclear whether ASC reimbursement will continue to receive the hospital market basket adjustments or go back to Consumer Price Index (CPI) adjustments, which have historically been less favorable than hospital inflation adjustments.
  • Site neutrality continues to be a hot topic as CMS and Congress looks for ways to minimize incentives to refer patients to one setting over another (e.g., hospitals versus ASCs versus physician offices). From a deal standpoint, if part of the attractiveness of a target physician practice is that it is getting paid 30% to 40% higher than a hospital outpatient setting, buyers should be careful, as CMS is always looking for ways to close that gap, typically manifesting in the form of lower physician clinic rates.
  • While the Biden administration began with significant rhetoric addressing healthcare mergers and consolidations, challenges to consolidation have not actually increased in the form of merger challenges. Legislation addressing consolidation has also slowed down in the latter half of the administration.
  • Even though the Federal Trade Commission’s (FTC) proposed ban on non-compete clauses is not yet in effect and may be modified before it is issued as a final rule, the FTC has already begun to crack down on non-competes in the healthcare industry. If a provider is submitting documents to the FTC for a merger or an investigation, the FTC will most likely be reviewing the provider’s non-competition provisions during that process.
  • During the past three years, the PHE has led providers to make significant adjustments in their operations to take advantage of hundreds of statutory and regulatory flexibilities. As the PHE comes to an end on May 11, 2023, providers will need to make adjustments to go back to pre-2020 operations, which could be challenging in some instances. The administration has stated that they intend to use the PHE flexibilities to learn lessons and solicit feedback on which flexibilities should remain in place, but it is unlikely that CMS will make any new announcements between now and May 11. Outside of the federal policy arena, some states may continue their flexibilities, and some commercial plans that took inspiration from CMS may also continue their flexibilities after May 11.