Fitch on how proposed CMS changes could affect post-acute healthcare

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Despite failed healthcare reform efforts this year, post-acute healthcare providers can expect to see some regulatory changes in the short term, according to Fitch Ratings

Here are four things to know.

1. CMS released its 2018 Medicare Outpatient Prospective Payment System proposed rule in July. As part of this rule, CMS proposed removing its total knee arthroplasty from the Medicare inpatient-only list and seeks comment on whether to also remove partial and total hip arthroplasty.

Fitch said ambulatory surgery centers would benefit from the change, "as adding knee and hip replacements gives them access to roughly $7 billion in annual Medicare spend."

"The proposal may also help to alleviate some of the recent volume pressures ASC operators have been experiencing as commercial-insured patients delay surgeries due to high deductible plans but will accelerate the existing admissions issues at general acute care hospitals," the agency added.

2. Earlier this year, CMS also issued an interim final rule delaying major bundled payment initiatives. The rule specifically delays the Comprehensive Care for Joint Replacement model expansion as well as implementation of cardiac bundles.

Fitch said this "will narrow the number of mandatory markets for the joint replacement bundle, allow for voluntary participation in the remaining markets and low volume/rural hospitals in all areas and will cancel the cardiac bundles that were scheduled to begin."

3. Fitch said it expects smaller bundles "are a short-term credit positive, on the margin," for general acute care hospitals as well as skilled nursing facilities and their real estate investment trust landlords.

4. But the agency added it still expects skilled nursing facility revenues and operating margins to face pressures from Medicare Advantage growth as well as from increased audits by the U.S. Department of Justice into billing practices and pay inflation.

Read the full report here.



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