Ambulatory Surgery Center Acquisitions: Meeting Regulatory - - PowerPoint PPT Presentation

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Ambulatory Surgery Center Acquisitions: Meeting Regulatory - - PowerPoint PPT Presentation

Dec 10, 2023 254 likes •626 views

Presenting a live 90-minute webinar with interactive Q&A Ambulatory Surgery Center Acquisitions: Meeting Regulatory Requirements, Conducting Due Diligence, Minimizing Risks WEDNESDAY, JUNE 7, 2017 1pm Eastern | 12pm Central | 11am

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Presenting a live 90-minute webinar with interactive Q&A

Ambulatory Surgery Center Acquisitions: Meeting Regulatory Requirements, Conducting Due Diligence, Minimizing Risks

Today’s faculty features:

1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific WEDNESDAY, JUNE 7, 2017

Curtis H. Bernstein, CPA/ABV, ASA, CVA, MBA, Principal, Pinnacle Healthcare Consulting, Denver Melissa Szabad, Partner, McGuireWoods, Chicago

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www.mcguirewoods.com

Ambulatory Surgery Center Acquisitions: Meeting Regulatory Requirements, Conducting Due Diligence, Minimizing Risk

Presented by: Melissa Szabad, McGuire Woods, LLP Partner Curtis Bernstein, Pinnacle Healthcare Consulting, LLC Principal

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6 | McGuireWoods

Ambulatory Surgery Center Acquisitions: Meeting Regulatory Requirements, Conducting Due Diligence, Minimizing Risk

  • I. The Transaction Process
  • A. Non-disclosure/confidentiality agreement

1. Negotiation of NDA 2. Exchange of information and documentation 3. Commencement of negotiations

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7 | McGuireWoods

Ambulatory Surgery Center Acquisitions: Meeting Regulatory Requirements, Conducting Due Diligence, Minimizing Risk

  • B. Letter of intent/term sheet
  • 1. Continued due diligence
  • 2. Negotiate material terms
  • 3. Non-binding LOI
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8 | McGuireWoods

Ambulatory Surgery Center Acquisitions: Meeting Regulatory Requirements, Conducting Due Diligence, Minimizing Risk

  • C. Definitive documents
  • 1. Negotiate definitive documents
  • D. Closing
  • 1. Execute and deliver transaction documents
  • 2. Satisfy all “conditions to close”
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9 | McGuireWoods

Ambulatory Surgery Center Acquisitions: Meeting Regulatory Requirements, Conducting Due Diligence, Minimizing Risk

  • II. Due Diligence

A.Compliance with anti-kickback, self-referral and fee splitting statutes and regulations:

  • 1. Sale of Interests
  • a. Fair Market Value
  • b. Offering of Units based on value or volume of

referrals

  • c. Reallocating Units based on value or volume of

referrals

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10 | McGuireWoods

Ambulatory Surgery Center Acquisitions: Meeting Regulatory Requirements, Conducting Due Diligence, Minimizing Risk

  • 2. Redemption Issues
  • a. Forced redemptions based on value or volume of

referrals

  • b. Litigation risk
  • c. Anti-Kickback risk
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11 | McGuireWoods

Ambulatory Surgery Center Acquisitions: Meeting Regulatory Requirements, Conducting Due Diligence, Minimizing Risk

  • 3. Safe Harbor Compliance
  • a. Compliance with 1/3 tests and other requirements
  • b. Uniform enforcement
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12 | McGuireWoods

Ambulatory Surgery Center Acquisitions: Meeting Regulatory Requirements, Conducting Due Diligence, Minimizing Risk

  • 4. Compensation Arrangements with Physicians
  • a. Anesthesia Arrangements
  • I. Federal Anti-Kickback: OIG Advisory Opinion No. 12-

06 (company and management fee models)

  • II. State Issues: anti-kickback, corporate practice of

medicine, fee splitting

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13 | McGuireWoods

Ambulatory Surgery Center Acquisitions: Meeting Regulatory Requirements, Conducting Due Diligence, Minimizing Risk

a. Anesthesia Arrangements

I. Employment of Anesthesiologists

Number of Providers 25th Percentile Median 75th Percentile 90th Percentile 2016 Compensation per FTE 6,682 $364,785 $425,380 $489,966 $579,383 Average ASA Units 2,859 8,430 11,439 15,646 19,762 2016 Collections per FTE 2,227 $339,511 $476,808 $639,638 $831,569 Average Compensation per ASA Unit 2,754 $27.00 $36.69 $53.08 $65.07 Average Professional Collections per ASA Un 999 $29.07 $40.96 $51.16 $59.97

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14 | McGuireWoods

Ambulatory Surgery Center Acquisitions: Meeting Regulatory Requirements, Conducting Due Diligence, Minimizing Risk

  • b. Medical Director and other Personal Service

Agreements

I. Safe harbor compliance II. Time sheets

  • III. Fair market value
  • IV. Legitimate services actually rendered

V. Stacking

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15 | McGuireWoods

Ambulatory Surgery Center Acquisitions: Meeting Regulatory Requirements, Conducting Due Diligence, Minimizing Risk

b. Medical Director and other Personal Service Agreements

  • III. Fair Market Value

i. Services rendered versus rendering physician ii. Administrative compensation versus clinical compensation

  • IV. Legitimate services actually rendered

i. Time sheet review process

V. Stacking

i. Benchmark data includes all compensation at both the aggregate and per wRVU levels ii. Producing at 90th level productivity does not mean compensation for clinical services is set at 90th percentile compensation per wRVU

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16 | McGuireWoods

Ambulatory Surgery Center Acquisitions: Meeting Regulatory Requirements, Conducting Due Diligence, Minimizing Risk

II. Due Diligence (continued)

  • c. Equipment and Real Estate Leases

I. Safe harbor compliance II. Fair market value

  • III. Lithotripsy arrangements-per click, global billing,

different arrangements for Medicare/Medicaid and commercial

  • IV. Femtosecond lasers—global billing, IOLs
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17 | McGuireWoods

Ambulatory Surgery Center Acquisitions: Meeting Regulatory Requirements, Conducting Due Diligence, Minimizing Risk

c. Equipment and Real Estate Leases II. Fair Market Value

i. Full time exclusive lease versus block lease ii. Accounting for all services provided and risks taken iii. Credit risk and term of lease

  • III. Lithotripsy Arrangements

i. Per click versus half day ii. Mobile versus on-site iii. Bilateral and multiple procedure issues (lithotripsy and lasertripsy)

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18 | McGuireWoods

Ambulatory Surgery Center Acquisitions: Meeting Regulatory Requirements, Conducting Due Diligence, Minimizing Risk

  • d. Management Agreements

I. Safe harbor compliance II. Fair market value

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19 | McGuireWoods

Ambulatory Surgery Center Acquisitions: Meeting Regulatory Requirements, Conducting Due Diligence, Minimizing Risk

d. Management Agreements II. Fair Market Value

i. Services provided ii. Rate of return to management company iii. Time versus task

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20 | McGuireWoods

Ambulatory Surgery Center Acquisitions: Meeting Regulatory Requirements, Conducting Due Diligence, Minimizing Risk

  • B. Billing and Coding Audit and Review
  • 1. Medicare/Medicaid audits or reviews
  • 2. Private payer recoupments, out-of-network issues
  • 3. Private pay/non-covered procedures (ABNs,

physician global billing)

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21 | McGuireWoods

Ambulatory Surgery Center Acquisitions: Meeting Regulatory Requirements, Conducting Due Diligence, Minimizing Risk

  • C. Anti-Trust
  • 1. Review of payor contracts
  • 2. Payor contracting negotiations post-closing
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22 | McGuireWoods

Ambulatory Surgery Center Acquisitions: Meeting Regulatory Requirements, Conducting Due Diligence, Minimizing Risk

  • D. Compliance with conditions of participation
  • 1. Look for other uses in the facility (physician office

space, shared common areas)

  • 2. Disclosure of physician ownership
  • 3. 23-hour stay, recovery care
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23 | McGuireWoods

Ambulatory Surgery Center Acquisitions: Meeting Regulatory Requirements, Conducting Due Diligence, Minimizing Risk

  • E. Licensure, CON and Accreditation
  • 1. Do the number of operating and procedure rooms

match what is on the license or CON?

  • 2. Have prior changes in ownership been reported?
  • 3. Is license and accreditation current?
  • 4. Any survey issues or plans of correction?
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24 | McGuireWoods

Ambulatory Surgery Center Acquisitions: Meeting Regulatory Requirements, Conducting Due Diligence, Minimizing Risk

  • F. Litigation and Liens
  • 1. Run searches early
  • 2. Need time to have liens removed
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25 | McGuireWoods

Ambulatory Surgery Center Acquisitions: Meeting Regulatory Requirements, Conducting Due Diligence, Minimizing Risk

  • G. Medical Staff Issues
  • 1. Healthcare Quality Improvement Act
  • 2. Denials, revocations, suspensions, other

disciplinary actions

  • 3. Were bylaws followed?
  • 4. Proper reporting
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26 | McGuireWoods

Ambulatory Surgery Center Acquisitions: Meeting Regulatory Requirements, Conducting Due Diligence, Minimizing Risk

  • III. Deal Structure
  • A. Stock vs. Asset Transaction

1. CON, License and Permit Issues 2. Billing/Commercial Payor Issues 3. Tax Issues

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27 | McGuireWoods

  • III. Deal Structure
  • A. Stock vs. Asset Transaction

1. No change in value based on deal structure unless certain assets excluded from transaction a. Certain assets may not be transferrable 2. Value of equity = Value of assets – Debt 3. Multiple of earnings based on equity transactions a. Real estate not included in quoted multiples but is included in reported multiples

Ambulatory Surgery Center Acquisitions: Meeting Regulatory Requirements, Conducting Due Diligence, Minimizing Risk

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28 | McGuireWoods

Ambulatory Surgery Center Acquisitions: Meeting Regulatory Requirements, Conducting Due Diligence, Minimizing Risk

  • B. Acquisition by a Hospital and Conversion to

HOPD

  • 1. Reimbursement (Section 603 of the Bipartisan

Budget Act of 2015)--Effective January 1, 2017,

  • ff-campus provider based departments (PBD) first

billing Medicare after Nov. 2, 2015 are no longer eligible to be paid under the outpatient prospective payment system (OPPS)

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29 | McGuireWoods

Ambulatory Surgery Center Acquisitions: Meeting Regulatory Requirements, Conducting Due Diligence, Minimizing Risk

  • 2. Provider Based Regulations (42 C.F.R. § 413.65)--

The following PBDs are excepted from the new payment rules (i.e., they still are still paid under the OPPS): (a) on-campus PBDs; (b) dedicated emergency departments; (c) remote locations of a hospital (i.e., those located within 250 yards of the hospital’s main buildings); or (c) off-campus PBDs that were billing and operating as outpatient departments prior to Nov. 2, 2015.

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30 | McGuireWoods

Ambulatory Surgery Center Acquisitions: Meeting Regulatory Requirements, Conducting Due Diligence, Minimizing Risk

  • 3. Stark Act and Anti-Kickback Statute

Considerations

  • a. Isolated transactions or fair market value exceptions to

Stark Act

  • b. No applicable safe harbor under Anti-Kickback
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31 | McGuireWoods

Ambulatory Surgery Center Acquisitions: Meeting Regulatory Requirements, Conducting Due Diligence, Minimizing Risk

  • 4. Co-Management Agreements

a. Fees: Annual Fixed Fee; Incentive Fee b. Anti-Kickback (Advisory Opinion No. 12-22); Personal Services and Management Contracts Safe Harbor c. Stark Law; Personal Services Arrangements and Fair Market Value Exceptions d. False Claims Act e. Civil Monetary Penalties

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32 | McGuireWoods

  • 4. Co-Management Agreements

a. Time versus Value b. Test of reasonableness c. Stacking

  • 5. Gainsharing and Bundled Payment

a. Duplication of services b. Time versus value c. Test of reasonableness

Ambulatory Surgery Center Acquisitions: Meeting Regulatory Requirements, Conducting Due Diligence, Minimizing Risk

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Ambulatory Surgery Center Acquisitions: Meeting Regulatory Requirements, Conducting Due Diligence, Minimizing Risk

GI Medical Patient Encounte r: DRG 440

Cost Quality

Cost Target Achieved Cost Target Missed No Shared Savings Quality Goals Achieved Quality Goals Missed Base Compensatio n: Hospital and Physicians No Shared Savings Shared Savings

  • Review basis

for miss

  • Geometric Mean
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34 | McGuireWoods

Group Surgeon TJR, Cement, Bio Utilization Total Direct Savings Rebate Savings Potential Surgeon Savings Vol Hip Vol Knee Vol REV Kneeman 520 $ 8 $ 528 $ 264 $ 10 Cementman (2,292) $

  • $

(2,292) $ 2,700 $ 204 $ 6 1 Hipman 17,500 $

  • $

17,500 $ 8,750 $ 5 5 2 Crosby 64,561 $ 80 $ 64,641 $ 32,320 $ 7 21 2 Young 22,707 $ 34 $ 22,741 $ 11,371 $ 10 7 6 Nash 315 $ 88 $ 403 $ 201 $ 3 3 1 Shoulderman 1,200 $ (50) $ 1,150 $ 575 $ 1 6 Group 1 Total 104,511 $ 160 $ 104,671 $ 2,700 $ 53,685 $ 31 47 18

Exhibit 2 - Case Break out Surgeon Estimated Pool - YTD - Month 2017 ASC

Savings Volume GROUP 1

Ambulatory Surgery Center Acquisitions: Meeting Regulatory Requirements, Conducting Due Diligence, Minimizing Risk

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35 | McGuireWoods

Ambulatory Surgery Center Acquisitions: Meeting Regulatory Requirements, Conducting Due Diligence, Minimizing Risk

  • 5. CON, Licensure
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36 | McGuireWoods

Ambulatory Surgery Center Acquisitions: Meeting Regulatory Requirements, Conducting Due Diligence, Minimizing Risk

  • C. Partial Acquisition by Management Company

and/or Hospital

  • 1. Valuation Pricing Issues
  • 2. Ownership Percentage
  • 3. Other Arrangements
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37 | McGuireWoods

Questions or Comments?

Melissa Szabad mszabad@mcguirewoods.com www.mcguirewoods.com Curtis H. Bernstein cbernstein@askphc.com www.askphc.com