The Aftermath of the 2022 AHA v. Azar SCOTUS Decision On July 13, 2023, the Centers for Medicare & Medicaid Services (CMS) released the proposed rule for the Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Centers (ASCs) for calendar year (CY) 2024. The agency proposes an increase in payments to all outpatient providers, introduces a new program, and announces their solution to repay 340B hospitals after their loss in the AHA v. Azar (2022) U.S. Supreme Court decision. On July 13, 2023, the Centers for Medicare & Medicaid Services (CMS) released the proposed rule for the Outpatient Prospective Payment…
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Reasons for the Recommendation and Responses On March 15, 2023, the Medicare Payment Advisory Commission (MedPAC) published its annual Report to Congress regarding the status of the Medicare program. Among other areas, the report detailed policy recommendations for the Medicare fee-for-service (FFS) payment systems, the Medicare Advantage (MA) program, and the Medicare prescription drug program (Medicare Part D). This article will review the recommendations made by MedPAC and responses from industry stakeholders. On March 15, 2023, the Medicare Payment Advisory Commission (MedPAC) published its annual Report to Congress regarding the status of the Medicare program.[1] Among other areas, the report…
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Post May 23, 2023, Developments Regarding Telehealth and Waivers Regardless of whether certain COVID-19 era waivers and flexibilities are made permanent, providers will be hard pressed to move away from what has become common practice over the past three years. A Premier Inc. survey of hospitals and non-acute providers found that 69% of respondents were still leveraging these waivers and flexibilities as of January 2023. While 80% of respondents have a plan in place to unwind their reliance on the waivers. Regardless of whether certain COVID-19 era waivers and flexibilities are made permanent, providers will be hard pressed to move…
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Indications for 2023 After a record year in 2021 transactional activity, where healthcare mergers and acquisitions (M&A) were up by 56 percent, the market continued to thrive in 2022. Preliminary results revealed that 2022 M&A deals hit a record high of 2,409 deals; 150 transactions over what was observed in 2021. Despite economic challenges (e.g., rising interest rates and borrowing costs, inflation, and labor costs), the healthcare transactional market has remained active. This article will review the U.S. healthcare industry’s M&A activity in 2022, and discuss what these trends may mean for 2023. After a record year in 2021 transactional…
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COVID-19 Pandemic Deemed Over and Waivers Ending On January 30, 2023, President Joseph Biden announced that the public health emergency (PHE) and national emergency declaration related to the COVID-19 pandemic will finally end on May 11, 2023, after being in place for over three years. This article will discuss the changes that will take place after both declarations cease, and the implications for stakeholders. On January 30, 2023, President Joseph Biden announced that the public health emergency (PHE) and national emergency declaration related to the COVID-19 pandemic will finally end on May 11, 2023, after being in place for over…
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Valuation Implications On September 13, 2022, Representatives Ami Berra (D-CA-7) and Larry Bucshon (R-IN-8) introduced the Supporting Medicare Providers Act of 2022 (H.R. 8800), which aims to infuse the Medicare Physician Fee Schedule (MPFS) with a 4.42% funding increase for 2023. With a bipartisan coalition of 12 co-sponsors, the bill would have the practical effect of negating the impending 4.42% cut to the MPFS conversion factor. This article discusses the bill. On September 13, 2022, Representatives Ami Berra (D-CA-7) and Larry Bucshon (R-IN-8) introduced the Supporting Medicare Providers Act of 2022 (H.R. 8800), which aims to infuse the Medicare Physician…
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Beyond Prescription Drug Costs On August 16, 2022, President Joseph Biden signed the Inflation Reduction Act of 2022 (IRA) into law. The broad bill, which covers healthcare, taxes, and climate change, had been passed around Congress in assorted versions with varying support for months, but under the specter of a record 40-year-high inflation rate, congressional Democrats ultimately came together to pass the IRA; no Republicans voted for the bill. Although the IRA is anticipated to result in $485 billion in total spending, the law actually stands to lower the U.S. deficit by approximately $300 billion across the next 10 years.…
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Valuation Implications Over the past couple of months, the Centers for Medicare & Medicaid Services (CMS) released the proposed rules for several of its payment schedules, indicating the state of healthcare reimbursement for the next year. This article briefly summarizes these proposed payment rules and discusses their significance to healthcare valuation professionals. The U.S. government is the largest payor of medical costs, through Medicare and Medicaid, and consequently has a strong influence on physician reimbursement. The prevalence of these public payors in the healthcare marketplace often results in their acting as a price setter, and being used as a benchmark…
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A Shake-up in the Evolution of the Healthcare Industry? As covered in a May 2021, NACVA QuickRead article, special purpose acquisition companies (SPACs) began tremendous growth in 2020 and looked to be a new mainstream avenue of investing. Two years later, the growth of SPACs across all industries, including healthcare, has plateaued and appears to be dropping in some industries. This article will examine how SPACs grew to their 2021 height in popularity and their future in a post-COVID-19 world. As covered in a May 2021, NACVA QuickRead article, special purpose acquisition companies (SPACs) began tremendous growth in 2020 and…
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Indications for 2022 After an understandable slowdown in 2020, due to the onset of the COVID-19 pandemic, merger and acquisition (M&A) activity in the healthcare industry accelerated in 2021, and the industry is expected to continue the high number of deals and high deal volume in 2022. This article will review the U.S. healthcare industry’s M&A activity in 2021 and discuss what these trends may mean for 2022. After an understandable slowdown in 2020, due to the onset of the COVID-19 pandemic,[1] merger and acquisition (M&A) activity in the healthcare industry accelerated in 2021, and the industry is expected to…
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RAND Corporation 2022 Study Published in JAMA A study conducted by the RAND Corporation and published in the January 2022 issue of the Journal of the American Medical Association (JAMA) seeking to determine whether health systems primarily incentivize volume or value in their physician compensation models found that almost all physicians are still compensated through a volume-based model that rewards productivity over the value of care provided. This article summarizes the results of the study. A study conducted by the RAND Corporation and published in the January 2022 issue of the Journal of the American Medical Association (JAMA) seeking to…
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Center for Medicare & Medicaid Publishes Proposed and Final Rules on Medical Reimbursement Rates The U.S. government is the largest payor of medical costs, through Medicare and Medicaid, and consequently has a strong influence on physician reimbursement. The prevalence of these public payors in the healthcare marketplace often results in their acting as a price setter and being used as a benchmark for private reimbursement rates. Consequently, changes to Medicare and Medicaid payment rates are notable as they may indicate a shift in the greater healthcare reimbursement landscape. Over the summer, the Centers for Medicare & Medicaid Services (CMS) released…
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This article discusses the recent settlement of National Spine and Pain Center signed with the U.S. Department of Justice and provides the basis to discuss the importance of obtaining an opinion regarding the FMV physician compensation. On August 6, 2021, the U.S. Department of Justice announced that it had reached a settlement with National Spine and Pain Center, LLC (NSPC), a Maryland physician management services organization (MSO). As part of the settlement agreement, NSPC signed a non-prosecution agreement and agreed to pay $5.1 million to resolve criminal Medicare Anti-Kickback Statute violations.[1] An affiliate of NSPC, Physical Medicine Associates, Ltd. (PMA)…
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Analysis of Deal Stats Pre- and Post-COVID-19 This article will review PE activity generally, and in the healthcare industry, during the COVID-19 pandemic, and discuss what is expected for the remainder of 2021, as the economy evolves in response to a post-pandemic America. The involvement of private equity (PE) in the healthcare industry in the first quarter of 2021 disappointed investors after the number of deals closed was only half the number of deals in the same quarter of 2020.[1] Just over a year ago, when the COVID-19 pandemic was hitting the U.S. full force, the volume of transactions increased…
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Healthcare Valuation 2021 Update The COVID-19 pandemic has impacted nearly all businesses and is poised to continue to do so through at least the end of 2021. In healthcare, there has been additional issues due to the industry’s unique position at the crossroads of the front line of care and policy response. As of January 19, 2021, important updates have gone into effect concerning the two most significant laws in healthcare transactions and valuations: the Stark Law and the Anti-Kickback Statute (AKS). In this webinar, the guest speakers, Don Barbo and Brad Parker, examined the pandemic-driven financial statement and valuation…
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An Alternative to the IPO The popularity of special purpose acquisition companies (SPACs) has been soaring in recent years. There are 35 times as many SPACs operating in 2020 as in 2010, and these companies seem poised for greater exponential growth in the future. While many experts are predicting a continued, rapid increase in SPACs, this article will also examine the factors that could possibly slow SPAC growth and diminish their future prospects. The popularity of special purpose acquisition companies (SPACs) has been soaring in recent years. There are 35 times as many SPACs operating in 2020 as in 2010,…
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Valuation Implications On November 20, 2020, the Centers for Medicare & Medicaid Services (CMS) issued a final rule to modernize and clarify the Stark Law. The Stark Law governs those physicians (or their immediate family members) who have a financial relationship with an entity, and prohibits those individuals from making Medicare referrals to those entities for the provision of designated health services (DHS). Notably, the law contains a large number of exceptions, which describe ownership interests, compensation arrangements, and forms of remuneration to which the Stark Law does not apply. This article will focus on the definitional changes to commercial…
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Technology (Part V of V) As noted in the first installment of this five-part series, an ambulatory surgery center (ASC) is a distinct entity that primarily provides outpatient surgical procedures to patients who do not require an overnight stay after the procedure. ASCs typically provide relatively uncomplicated surgical procedures in a non-hospital, outpatient setting, and most ASC cases are non-emergency, noninfected, and elective. The last installment of this series on the valuation of ASCs will review some of the technology advancements that are driving ASC industry growth and evolution. [su_pullquote align=”right”]Resources: Valuation of Ambulatory Surgery Centers—Introduction (Part I of V)…
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Regulatory (Part IV of V) As noted in the first installment of this five-part series, an ambulatory surgery center (ASC) is a distinct entity that primarily provides outpatient surgical procedures to patients who do not require an overnight stay after the procedure. ASCs typically provide relatively uncomplicated surgical procedures in a non-hospital, outpatient setting, and most ASC cases are non-emergency, noninfected, and elective. This fourth installment will discuss the regulatory environment in which ASCs operate. [su_pullquote align=”right”]Resources: Valuation of Ambulatory Surgery Centers—Introduction (Part I of V) Valuation of Ambulatory Surgery Centers—Competition (Part II of V) Valuation of Ambulatory Surgery Centers—Reimbursement…
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Reimbursement (Part III of V) As noted in the first installment of this five-part series, an ambulatory surgery center (ASC) is a distinct entity that primarily provides outpatient surgical procedures to patients who do not require an overnight stay after the procedure. The facilities typically provide relatively uncomplicated surgical procedures in a non-hospital, outpatient setting, and most ASC cases are non-emergency, noninfected, and elective. This third installment on the valuation of ASCs will discuss the reimbursement environment of ASCs. [su_pullquote align=”right”]Resources: Valuation of Ambulatory Surgery Centers—Introduction (Part I of V) Valuation of Ambulatory Surgery Centers—Competition (Part II of V) [/su_pullquote]…