Will Recent Changes in CMS Rules Sink Us?

I love to lose myself in a good read. Ideally, it’s from the pile of fun books I stack next to my bed over the course of a snowy Colorado winter—one filled with memorable characters, lush settings, moving prose, and happy endings. It’s a much needed distraction, an escape from the weightier matters filling my work days.
 
While I wouldn’t classify the 85,000-plus pages of the Centers for Medicare & Medicaid Services (CMS) Rules and Regulations for 2021 an enjoyable read, I do highly recommend it—at least, the highlights of the 440-page section related to procedures now designated as payable at the outpatient and ambulatory surgical center (ASC) level.
 
I’ll save you some searching and scrolling; as of Jan. 1, CMS started cutting its list of inpatient-only services. It added 11 operations (including total hip arthroplasty) to the ASC-covered procedures list, with 267 more procedures to be tacked on that list this year.
 
Between this change in Medicare/Medicaid coverage and the long-term effects of a pandemic, this will likely cause significant shifts in both patient care and the medical device industry.
 
“Who knows how that will impact procedure volumes post-pandemic,” said Jude Paganelli, founder of Cor Medical Ventures Inc., in Del Mar, Calif. “Will more patients will be willing to have surgeries, will hospitals be able to do more surgery due to increased bed availability? The downstream impact remains to be seen.”
 
I can envision a post-pandemic world in which patients—particularly seniors—are more reluctant to enter a hospital and perhaps more likely to put off an elective procedure.
 
Steve Courtney is a spine surgeon and owner of Eminent Spine in Plano, Texas. He also predicts significant, long-term effects from the new rules and COVID-19.
 
“There is definitely a shift in healthcare,” he said. “[In] the pandemic, the last place you want to be is in a hospital. The hospital, that’s where all the sick people go.”
 
Courtney said given the excellent, streamlined services people can expect at most ASCs, patients can expect equal or better care outside of a hospital.
 
“[ASCs have] so many things dialed in now as far as post-operative pain control and follow-up, especially for total knee replacements. They have people coming to your home, they have rehab,” he said. “They’ve gotten very good with different types of pain treatment…The patient doesn’t notice a difference.”
 
This could potentially drive more traffic to ASCs and would lead to more efficient and cost-effective care, said John Shank, a Colorado Springs orthopedic surgeon who prefers to work in an ASC.
 
Shank and similar orthopedic practices face a new horizon of challenges. Medicare/Medicaid repayment rates—which most of his fees are based on—are decreasing 18-20 percent in Colorado over the next two years. Even as the potential demand could increase with these new rules and the catchup from last year’s delayed elective surgeries, he’s concerned it’s more than the current system can bear.
 
“I think it will be a disaster,” he said. “The government can’t control medicine effectively. It will be very difficult for a patient to choose and get good care. Providers will leave the state, I think that’s what you’ll see. That’s just Colorado right now, but it’s coming to a state near you soon.”
 
If other states follow suit with what is essentially a push toward a single payor, Shank said he’s concerned about yet another layer of burden for the provider.
 
“The overhead of a private practice has increased substantially over the past several years. Medicare has already cut our reimbursements on a nationwide level,” he said. “People are trying to keep up [to offset the decrease]. They’re gonna get burned out.”
 
To get around the bureaucracy and frustrations of managed care-imposed limitations on his practice, Courtney opened his own small hospital, Eminent Medical Center. He said he opted for a hospital over an ASC in part because reimbursement rates are 30-40 percent higher for hospitals than for surgicenters in Texas.
 
This new CMS rule will make it even harder for ASCs to be successful, he said. 
 
“It’s all about how you structure the reimbursement with the insurance companies. It is vital to survive. Implant costs have been going up. The Medicare population has gotten bigger,” Courtney said. “The surgicenters, they need to be attached to a hospital to get a hospital rate. If it’s a free-standing surgicenter, they’re gonna get shut out.”
 
The issue is much larger than hospital versus ASC, or even patient care overall, Shank said.
 
“From the medical product side—everything will be affected by this,” he said. “If we’re doing less procedures, patients are having less procedures done, the medical device industry will be directly affected. It will definitely affect the bottom line of the medical device industry.”
 
Paganelli is hopeful this shift from hospital to ASC will drive advances to offset the initial imbalance that comes with a big change. He wondered about better options to central sterile processing for smaller facilities, if orthopedic procedures can be done with a fully disposable set or instruments, and alternatives to pricey robots that might not be affordable in an outpatient setting.
 
“Robotics companies might have to not sell the robot but charge on a fee-per-use basis to put them in facilities that can’t afford to purchase them,” Paganelli said. “All kinds of new ideas and products inevitably come out of a shift in the location of surgery.”
 
I share Courtney’s and Shank’s concerns about the potential negative impacts of these new rules compounded by a year and an economy none of us could have foreseen. But I also share Paganelli’s hope. This is yet another plot twist in the story of the challenges our industry faces and overcomes.
 
I still prefer easy, mass-market fiction to verbose volumes of government-generated technical reading. But I keep turning the pages on this evolving story. I’m confident the bright minds and good people of our industry will come up with an innovative happy ending.
 

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Dawn Lissy is a biomedical engineer, entrepreneur, and innovator. Since 1998, the Empirical family of companies (Empirical Testing Corp., Empirical Consulting LLC, and Empirical Machine LLC) has operated under Lissy’s direction. Empirical offers the full range of regulatory and quality systems consulting, testing, small batch and prototype manufacturing, and validations services to bring a medical device to market. Empirical is very active within standards development organization ASTM International and has one of the widest scopes of test methods of any accredited independent lab in the United States. Because Lissy was a member of the U.S. Food and Drug Administration’s Entrepreneur-in-Residence program, she has first-hand, in-depth knowledge of the regulatory landscape. Lissy holds an inventor patent for the Stackable Cage System for corpectomy and vertebrectomy. Her M.S. in biomedical engineering is from The University of Akron, Ohio.