PHHPC Considers Report on Charity Care in ASCs

May 26, 2015

While there has long been a regulatory requirement that ambulatory surgery centers (“ASCs”) provide a certain level of charity care pursuant to 10 NYCRR § 709.5(d), the Public Health and Health Planning Council (“PHHPC”) and an Ad Hoc Advisory Committee on Freestanding ASCs and Charity Care (the “Advisory Committee”) have been reviewing how to measure if ASCs are meeting their charity care requirements, and how to enhance the impact of ASC’s charity care programs. The Advisory Committee recently released a draft of their report, available here, which discusses the issue and sets forth its proposal. PHHPC held a meeting on May 21, 2015 to allow the public to discuss and comment on the report prior to the report’s finalization and approval.

The charity care requirements have come under scrutiny recently as the increased frequency of five year limited-life operating certificates has given PHHPC more opportunity to review whether an ASC has met its charity care goals. While the regulations do not set a required amount of charity care, the general rule PHHPC has used in approving ASC certificate of need applications is that 2% of the ASC’s cases must be charity care cases, and 5% must be Medicaid patients. While ASCs must demonstrate a plan to meet this requirement in the application phase, a “significant number” do not reach their goals by the time their five year limited-life review comes up. Without any precedent for how to best address this issue, the Advisory Committee has been formulating approaches for how to measure and enforce charity care requirements while realizing that flexibility is required, as individual ASCs face unique challenges in providing charity care based on a variety of factors in a dynamic and changing healthcare environment.

The Advisory Committee acknowledged that it is difficult to set a percentage of required charity care and Medicaid care for particular ASCs due to variables including the ASC’s patient population’s payor mix, the reluctance of Medicaid managed care plans to enter into agreements with freestanding ASCs (particularly during the certificate of need application phase), and the physical locations of some ASCs. Recognizing these challenges and the ambiguity in the regulations, the Advisory Committee recommended that PHHPC consider charity and Medicaid care on a case-by-case basis. It recommended that PHHPC consider care to the underserved both prospectively upon application and retrospectively upon the five year limited-license review, in both cases taking into consideration the surgical services offered, the payor mix of insured in the area, and the level of uninsured in the area.

The Advisory Committee proposed that in their evaluation, PHHPC request the following upon an ASC’s application for a certificate of need:

  1. Projected charity and Medicaid cases taking into account the above-mentioned factors.
  2. Contracts or letters of intent from two Medicaid managed care plans.
  3. Documentation of preliminary contact with FQHCs, provider associations, advocacy groups for the underserved, DSRIP Performing Provider Systems, local health departments or other organizations to establish arrangements to bring ASC services to underserved clients.
  4. Staffing and a plan to conduct outreach to underserved groups, develop referral arrangements with FQHCs, and navigate underserved patients through appointments, surgery, and follow-ups.

Should an ASC fail to meet its expected targets upon its five year limited-life review, the Advisory Group did not advocate necessarily denying permanent-life certification. Rather, it recognized that the changing realities of healthcare may render the ASC’s initial projections inappropriate. Therefore, the Advisory Committee advocated that PHHPC employ a review procedure that takes into account the preferences of FQHCs and other providers in the ASC’s area for referrals to non-free standing ASCs, higher than expected growth in insurance coverage in the area, outreach efforts of the ASC to publicize its services, consolidation of surgical services into PPS’s in which the ASC could not gain entry, and compensatory activities by the ASC (such as providing services to a relatively high number of Medicaid managed care patients and a lower number of uninsured, or a willingness to incur higher levels of bad debt under high-deductible plans offered under the Affordable Care Act).

At the meeting held by PHHPC on May 21, 2015 to discuss the Advisory Committee’s report, there were general comments by PHHPC and members of the public. For example, the Chairman of PHHPC discussed whether it would be feasible to generate a list of charity and Medicaid care provided by ASCs, so that ASCs could know where they stand one year prior to their five year review. He also expressed a desire to have a minimum percentage set to ensure compliance. A member of the public expressed his desire that PHHPC and others in a position to do so encourage Medicaid managed care plans to enter into agreements with ASCs, as there are logistical difficulties in doing so in the application phase, and Medicaid managed care plans are generally reluctant to do so even when the ASC receives its operating certificate.

At the conclusion of the meeting, PHHPC requested that the Advisory Committee incorporate the comments from the meeting into the report if appropriate, and present a finalized version of the draft report. PHHPC will convene another meeting to review the finalized report and vote on its approval on June 11, 2015.

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