1. Healthcare Reform
Winds of Change for ASC‟s
Texas Ambulatory Surgery Center Society
2010 Annual Meeting
Richard Bays MBA, RN, CPHQ, CLNC

2. A New Day for Health Care in America
• On September 23, 2010 new reforms under the Affordable Care
Act begin to bring to an end some of the worst abuses of the
insurance industry. These reforms will give Americans new rights
and benefits, including helping more children get health
coverage, ending lifetime and most annual limits on care, and
giving patients access to recommended preventive services
without cost-sharing.
• These reforms will apply to all new health plans, and to many
existing health plans as they are renewed. Many other new
benefits of the law have already taken effect, including rebate
checks for seniors in the Medicare donut hole and tax credits for
small businesses. And more rights, protections and benefits for
Americans are on the way now through 2014.

3. The Affordable Care Act: Immediate Benefits for Texas
Small business tax credits.
• 293,000 small businesses in Texas could be helped by a
new small business tax credit that makes it easier for
businesses to provide coverage to their workers and
makes premiums more affordable.1 Small businesses pay,
on average, 18 percent more than large businesses for the
same coverage, and health insurance premiums have gone
up three times faster than wages in the past 10 years. This
tax credit is just the first step towards bringing those costs
down and making coverage affordable for small
businesses.

4. The Affordable Care Act: Immediate Benefits for Texas
Closing the Medicare Part D donut hole.
• Last year, roughly 237,000 Medicare beneficiaries in Texas hit the donut
hole, or gap in Medicare Part D drug coverage, and received no extra help
to defray the cost of their prescription drugs.2 Medicare beneficiaries in
Texas who hit the gap this year will automatically be mailed a one-time
$250 rebate check. These checks will begin to be mailed to beneficiaries
in mid-June and will be mailed monthly throughout the year as new
beneficiaries hit the donut hole. The new law continues to provide
additional discounts for seniors on Medicare in the years ahead and
completely closes the donut hole by 2020.
Support for health coverage for early retirees.
• An estimated 207,000 people from Texas retired before they were eligible
for Medicare and have health coverage through their former employers.
Unfortunately, the number of firms that provide health coverage to their
retirees has decreased over time.3 Beginning June 1, 2010, a $5 billion
temporary early retiree reinsurance program will help stabilize early
retiree coverage and help ensure that firms continue to provide health
coverage to their early retirees. Companies, unions, and state and local
governments are eligible for these benefits.

5. The Affordable Care Act: Immediate Benefits for Texas
• New consumer protections in the insurance market
beginning on or after September 23, 2010.
– Insurance companies will no longer be able to place lifetime
limits on the coverage they provide, ensuring that the 11.8
million Texas residents with private insurance coverage never
have to worry about their coverage running out and facing
catastrophic out-of-pocket costs.
– Insurance companies will be banned from dropping people
from coverage when they get sick, protecting the 1.1 million
individuals who purchase insurance in the individual market
from dishonest insurance practices.
– Insurance companies will not be able to exclude children from
coverage because of a pre-existing condition, giving parents
across Texas peace of mind.

6. The Affordable Care Act: Immediate Benefits for Texas
• New consumer protections in the insurance market
beginning on or after September 23, 2010.
– Insurance plans‟ use of annual limits will be tightly regulated
to ensure access to needed care. This will protect the 10.6
million residents of Texas with health insurance from their
employer, along with anyone who signs up with a new
insurance plan in Texas.
– Health insurers offering new plans will have to develop an
appeals process to make it easy for enrollees to dispute the
denial of a medical claim.
– Patients‟ choice of doctors will be protected by allowing plan
members in new plans to pick any participating primary care
provider, prohibiting insurers from requiring prior
authorization before a woman sees an ob-gyn, and ensuring
access to emergency care.

7. The Affordable Care Act: Immediate Benefits for Texas
Extending coverage to young adults.
• Beginning on or after September 23, 2010, plans and issuers that offer
coverage to children on their parents‟ policy must allow children to
remain on their parents‟ policy until they turn 26, unless the adult child
has another offer of job-based coverage in some cases. This provision
will bring relief to roughly 161,000 individuals in Texas who could now
have quality affordable coverage through their parents.4 Some employers
and the vast majority of insurers have agreed to cover adult children
immediately.
Affordable insurance for uninsured with pre-existing
conditions.
• $493 million federal dollars are available to Texas starting July 1 to
provide coverage for uninsured residents with pre-existing medical
conditions through a new transitional high-risk pool program, funded
entirely by the Federal government. The program is a bridge to 2014 when
Americans will have access to affordable coverage options in the new
health insurance exchanges and insurance companies will be prohibited
from denying coverage to Americans with pre-existing conditions. If
states choose not to run the program, the Federal government will
administer the program for those residents.

8. The Affordable Care Act: Immediate Benefits for Texas
Strengthening community health centers.
• Beginning October 1, 2010, increased funding for Community Health
Centers will help nearly double the number of patients seen by the
centers over the next five years. The funding could not only help the 318
Community Health Centers in Texas but also support the construction of
new centers.
More doctors where people need them.
• Beginning October 1, 2010, the Act will provide funding for the National
Health Service Corps ($1.5 billion over five years) for scholarships and
loan repayments for doctors, nurses and other health care providers who
work in areas with a shortage of health professionals. This will help the
12% of Texas‟s population who live in an underserved area.
New Medicaid options for states.
• For the first time, Texas has the option of Federal Medicaid funding for
coverage for all low-income populations, irrespective of age, disability, or
family status.

9. The Budget and Texas
Make Health Care More Affordable, Accessible, and Secure
• The President is committed to ensuring that every American has
access to affordable health care.
• Key Budget Highlights:
– $18.7 billion for Texas to provide health coverage to low-income
children and families.
– Bolster prevention activities by expanding community health
activities, strengthening the public health workforce, and improving
detection and monitoring of chronic disease.

10. The Budget and Texas
Make Health Care More Affordable, Accessible, and Secure
• Key Budget Highlights:
– $2.5 billion nationwide for health centers to provide affordable high-
quality primary and preventative care to underserved populations.
– New Medicare and Medicaid initiatives to provide higher quality care
at lower costs.
– $79 million to strengthen regional and local partnerships among rural
health care providers, increase the number of health care providers in
rural areas, and improve the performance and financial stability of
rural hospitals.
– $169 million to place doctors, nurse practitioners, and dentists in
medically underserved areas to improve access to needed health care
services.

11. Health Care Reform: Legislation Affects Ambulatory Surgery Centers
What about my ASC and CMS?

12. Health Care Reform: Legislation Affects Ambulatory Surgery Centers
Currently…
• Under current law, the Centers for Medicare and Medicaid
Services (CMS) is required to update Medicare ASC facility fee
payments annually for inflation. The agency historically has used
the consumer price index for urban areas (CPI-U) for this
purpose.
Next Year…
• Beginning in 2011, the Patient Protection and Affordable Care Act
(PPACA) requires CMS to reduce the inflation update by a
“productivity adjustment,” which is also defined under the new
law as the 10-year rolling average of productivity gains in the
general economy. Most significantly, the new law provides that
application of the productivity adjustment may result in a
negative update, which could reduce payments from one year to
the next.

13. Health Care Reform: Legislation Affects Ambulatory Surgery Centers
Example…
• In 2010, CMS inflated ASC payments by 1.2 % based on CPI-U for
the relevant period. The productivity adjustment for 2010 was 1.3
%. If the PPACA policy had been in effect for 2010, Medicare
payments to ASCs would have been reduced by 0.1 %, before other
adjustments are applied.
New Grading System for 2012??
• The acquired conditions policy is one of several new Medicare
initiatives intended to reward quality and penalize poor
care. Under the acquired conditions policy, Medicare payments
are reduced when patients incur a secondary diagnosis that was
not present upon admission (e.g., a foreign object was retained
after surgery or the patient has a surgical site
infection). Medicare‟s acquired conditions policy currently applies
only to hospitals but could apply to ASCs, depending on the
results of CMS‟s study. This report is due to the U.S. Congress by
January 2012.

14. Healthcare Reform for ASC’s
The Future??

15. Post Election Mobilization to Fight Health Law
“G.O.P. Plans to Use Purse Strings to Fight Health Law“
– The New York Times November, 2010
– GOP to attack health care law 'piece by piece'
Republicans acknowledge that they do not have the
votes to repeal President Obama's health care overhaul,
but they plan to use spending bills to block some of its
provisions.

16. Post Election Mobilization to Fight Health Law
The House Republican whip, Representative Eric Cantor of
Virginia, described the strategy this way:
“If all of Obamacare cannot be immediately repealed, then it is my
intention to begin repealing it piece by piece, blocking funding for
its implementation and blocking the issuance of the regulations
necessary to implement it. In short, it is my intention to use every
tool at our disposal to achieve full repeal of Obamacare.”
• The Senate Republican leader, Mitch McConnell of Kentucky, said
he, too, wanted to shut off money for the new law.

17. Post Election Mobilization to Fight Health Law
• Gov. Rick Perry calls for federal health care law's repeal
The Dallas Morning News, November 10, 2010
• He called for dismantling the national health care law, saying
states could come up with better and probably cheaper plans.
• "Repeal it in its entirety," he said. "Have them start anew from
the premise the states can better handle these questions."
• Perry has maintained that regulations prevent the states from
innovating. He even suggested on CNN during his book tour that
Texas could conceivably opt out of Medicaid and find its own
solution.

18. Discontentment with Health Reform
Congressman Kevin Brady‟s
Health Plan Chart
• In addition to capturing the
massive expansion of
government and the
overwhelming complexity of new
regulations and taxes, there is
also:
• $569 billion in higher taxes;
• $529 billion in cuts to Medicare;
• Increasing the ranks of Medicaid
by 16 million;
• 17 major insurance mandates;
and
• the creation of two new
bureaucracies with powers to
impose future rationing: the
Patient-Centered Outcomes
Research Institute and the
Independent Payments Advisory
Board.

19. Discontentment with Health Reform
This portrays only about one-third of the complexity of the final bill.

20. Healthcare Reform for ASC’s
What Can My ASC Do
While The Health Care
Reform Issues Are
Worked Through?

21. Healthcare Reform for ASC’s
1) Looking for operational reimbursement
margins, case volume/mix
Where can you find savings?
Supply Chain Processes – Shipping Charges
Medical Supplies, Cross Over Instrumentation
Pharmaceuticals
Operational Costs – Contractual Arrangements
Staffing Patterns
Cross Train Staff
Block Time (Utilizing Resources Relative to Volume)
Specialty Mix – Syndication

22. Healthcare Reform for ASC’s
2) Where Am I ? Who‟s Here?
Demographics - Focus on target groups
Who‟s coming to the doctor ?
Local population types
Suburban, Sports, Industrial, Cosmetic
For what ?

23. Healthcare Reform for ASC’s
3) Let‟s get proactive !!
Preventative Treatment / Screening
Colonoscopy, Cataract-Eye, Cancers
Health Plan Coverage
Promote yourself in community
These procedures are strongly
associated with age and represent
essential services to Medicare
beneficiaries.

24. Healthcare Reform for ASC’s
"The doctor say he's comin', but you
gotta pay him cash."
Joe Walsh/Don Henley
„Life in the Fast Lane‟ from the „Hotel California‟ Album
December 8, 1976

25. Healthcare Reform for ASC’s
4) Niche Services / Cash Pay
What Specialties are Marketable to
Your Center?

26. Healthcare Reform for ASC’s
High Demand Specialties
Bariatric
Botox
Cosmetic – All Types
Eye – Lasik
Varicose Veins

27. Healthcare Reform for ASC’s
• Niche Services
• Employer drug screenings
• On-site diagnostic x-rays
• Target - Seasonal Groups
– Spring Break
• Orlando – Resort Areas

28. Healthcare Reform for ASC’s
• NY Mammograms /
Tiered Services
• Dual Storefronts
• Dual Pricing
• Dual Service Levels
• Same Diagnostic Area

29. Why ASC’s Continue to be on the Rise
1) Growth in surgeries performed in ASCs parallels
the historic shift away from hospital inpatient
surgeries toward outpatient settings.
2) A number of factors account for the growth in
ASCs including population health guidelines for
disease screening (e.g., colorectal cancer
screening), shift in site of services away from the
hospital outpatient setting to ASCs, payer
incentives to pay for care in the most cost-
effective setting, demographic changes, and
consumer and physician preferences.

30. Why ASC’s Continue to be on the Rise
3) Much of the growth in outpatient surgeries was
made possible by technological improvements
that have allowed for faster patient recovery
times. These advances include improved
surgical techniques, anesthesia, and
pharmaceuticals to better manage post-operative
pain.
4) Patients prefer ASCs because they offer lower
copayments, more convenient locations, shorter
waiting times, and easier scheduling for patients.

31. ASC’s – Solutions for HealthCare
Extra! Extra! Fraud & Abuse in Healthcare
9 patients made nearly 2,700 ER visits in Texas !
Hospital trips of 5 women, 4 men over 6 years cost taxpayers
$3 million.
• One of the nine spent more than a third of last year in the ER: 145
days. That same patient totaled 554 ER visits from 2003 through
2008.
• Eight of the nine patients have drug abuse problems
• Seven were diagnosed with mental health issues
• Three were homeless
• Five are women whose average age is 40
• Four are men whose average age is 50
• The average emergency room visit costs $1,000. Hospitals and
taxpayers paid the bill through government programs such as
Medicaid
• A task force is seeking ways to divert non-emergencies away
from emergency rooms.

32. Healthcare Reform for ASC’s
Sometimes We Change Our
Strategies and Methods
Adaptation to the Market,
Our Clients and the
Financial Climate is
Necessary

33. Most Interesting Questions This Year
• From the accounting department:
– Why are the numbers on this balance sheet red
and in (brackets)?
• From the front desk clerk:
– Someone from the state called looking for
some paperwork, I told them we probably don‟t
have it. We‟re really bad at keeping track of
things around here.
• From a MD in front of a JCAHO surveyor:
– Why are we everything so different today?

34. References
• 1 http://www.irs.gov/pub/newsroom/count_per_state_for_special_post_card_notice.pdf
• 2 Office of the Actuary. Centers for Medicare and Medicaid Services. Number
represents only non-LIS seniors.
• 3 Kaiser Family Foundation. 2009 Employer Health Benefits Survey.
• 4 U.S. Census Bureau, Current Population Survey. Annual Social and Economic
Supplements, March 2009; and 45 CFR Parts 144, 146, and 147.
http://www.hhs.gov/ociio/regulations/pra_omnibus_final.pdf
• President's Budget and Your State
http://www.whitehouse.gov/omb/budget_factsheet_tx/
• Office of the Governor, Rick Perry
http://www.governor.state.tx.us/highlight/health_care_texas
• An Analysis of Recent Growth of Ambulatory Surgical Centers, KNG Health
Consulting, LLC 2009
• Newsweek http://www.newsweek.com/2010/11/08/a-q-a-with-texas-gov-rick-perry.html
• Congressman Kevin Brady
http://www.house.gov/apps/list/press/tx08_brady/pr_100728_hc_chart.html
• Aloma Urgent Care http://www.alomaurgentcare.com/Services.htm
• Austin ER's got 2,678 visits from 9 people over 6 years
http://www.statesman.com/news/content/news/stories/local/04/01/0401er.html

35. For more information :
Richard Bays RN, MBA, CPHQ, CLNC
RBaysConsulting@gmail.com
Phone (832) 316-2701