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 Government Affairs Newsletter, January 2012

Face, Hand Transplants Could Face Government Regulations - Boston Herald
The government wants to start regulating face and hand transplants just as kidneys, hearts and other organs are now, with waiting lists, a nationwide system to match and distribute body parts and donor testing to prevent deadly infections. It's a big step toward expanding access to these radical operations, especially for wounded troops returning home. Read more
High Court Could Delay Health Care Law Decision - Palm Beach Post
When the U.S. Supreme Court decided to take up health care reform, most observers probably assumed it would either strike down or uphold part or all of the landmark law requiring virtually every American to buy health insurance. In fact, in its first day of oral arguments in the case, set for March 26, the court will weigh the question of whether now is the time to make any decision at all. Read more
Florida Sovereign Immunity Bill Would Protect ER Doctors - Daily Record
Doctors working in emergency rooms would be protected by sovereign immunity from large medical malpractice judgments under a measure filed in the Senate. The measure, filed by Sen. John Thrasher (R-St. Augustine), notes that emergency room doctors must treat those who show up in the ER, and because they can't turn away patients their malpractice insurance is expensive. Read more
Pioneer Accounting Care Initiative Could Save $1.1 Billion - Information Week
The new Pioneer Accountable Care Organization initiative set to launch in January in 32 healthcare organizations across the country could save up to $1.1 billion over five years, said the Centers for Medicare & Medicaid Services. The initiative, which will be managed by the CMS Innovation Center, marks a significant step in the U.S. Department of Health and Human Services' efforts to encourage primary care doctors, specialists, hospitals and other caregivers to offer coordinated care for Medicare beneficiaries. Read more
ASC Washington Update
Ambulatory surgical centers (ASCs) continue to provide hand surgeons and other physicians with an opportunity to supplement their income through shared facility fees paid to the center for the performance of procedures, while also ensuring quality care for their patients. Although the economy is otherwise shaky, the ASC industry nationally remains healthy due to the cost savings to insurance companies compared to a hospital outpatient department (HOPD). The sale of assets to a corporate investor can also generate a healthy return on investment.

Recent health care reform and government regulations, have impacted the ASC industry.  In addition to quality reporting measures the government now requires new physician ownership disclosure. Government involvement and oversight are increasing each year..   Understanding how the changing health care regulatory landscape is impacting the ASC industry is critical to ensuring an ASC’s continued viability and success.

ASC Payment Update and New Quality Reporting Measures
On November 1, 2011, the Centers for Medicare and Medicaid Services (CMS) issued a final rule with a comment period that will update payment policies and payment rates for services furnished to Medicare beneficiaries in HOPDs and ASCs beginning Jan. 1, 2012.  The final rule increases payment rates to ASCs by 1.6 percent during the 2012 calendar year.  This reflects the ASC payment system’s annual 2012 consumer price index update of 2.7 percent minus a 1.1 percent productivity adjustment required by the Affordable Care Act.
In a move followed closely by the ASC industry, the final rule also establishes a new quality reporting program for ASCs.  The ASC quality reporting program will initially consist of five quality measures. These measures are comprised of four outcome measures and one surgical infection control measure.  CMS has also added two structural measures to be reported beginning in 2013. CMS has included one measure based on a safe surgery checklist use and another measure based on facility volume data for selected ASC surgical procedures. 
While ASCs will be expected to comply with the quality reporting measures as early as October 1, 2012, a failure to report will only affect payment determinations to ASCs beginning in 2014. Most of the measures should not be problematic for ASCs to report, but the surgical infection control measure may be difficult to track and report without consistent criteria and cooperation from the operating surgeons.
The new ASC quality reporting program was established in response to a Congressional directive under the Patient Protection and Affordable Care Act which required CMS to develop a plan  to implement a value-based purchasing (VBP) program or true pay-for-performance system for ASCs.  While CMS developed a VBP plan for ASCs and reported the plan to Congress early in 2011, CMS does not currently have the statutory authority to implement a VBP program for ASCs.  The ASC quality reporting rules, however, establish a framework for collecting quality metrics and suggests that a transition toward a Medicare valued-based purchasing program for ASCs or a true pay-for-performance system may be on the horizon. 

The ASC industry generally seems prepared to embrace quality reporting measures. The initial years, however, will be an early test of whether a substantial majority of the 5,000+ Medicare-certified ASCs are able and willing to report quality data.  The reporting requirements will also provide CMS with access to important information in determining whether the ASC industry is ready for a pay-for-performance program.
Changes to the ASC Patient Rights Conditions for Coverage
In 2011, CMS also issued a new final rule updating certain obligations imposed upon ASCs with respect to patient rights.  CMS had originally proposed that a patient could not undergo an ASC procedure on the same day that they received their patient notice of rights. Since the original rule applied only to ASCs and not to hospital outpatient departments, CMS acknowledged that the proposed rule could limit patient access to non-emergent services at ASCs, limit patient choice, and create patient scheduling and travel inconveniences. As a result, CMS ultimately took a more practical approach.  The final rule effectively eliminates waiting periods for same-day surgeries and allows ASCs to provide the same type of same day surgeries that patients could alternatively receive at hospital outpatient departments as long as the patient receives his or her notice of patient rights prior to the start of the surgical procedure.
The final rule also requires an ASC to provide each patient with a written list of the names of all physicians that have a financial relationship with the ASC prior to the procedure. A similar disclosure requirement is also part of the anti-kickback statute ASC investment safe harbors.  The new rule, however, appears to expand this requirement and require ASCs to provide patients with a written disclosure identifying all physicians who have a financial interest or ownership interest in the ASC.  
ASCs continue to provide hand surgeons and other physicians with an opportunity to supplement their income while providing quality care for their patients. The health care industry, however, continues to evolve and new legislation and regulations impacting ASCs are simply a part of doing business.  A solid understanding of how these rules and regulations impact ASCs is invaluable to an ASC’s continued success.
Contributed by Joshua Kaye ( and Jerry Sokol ( partners at McDermott Will & Emery LLP and co-chair the Firm’s Ambulatory Surgical Center Practice Group, and Anne Miller MD