Healthcare Reimbursement, Technology & Regulatory Issues 2009 Edward G. Detwiler, ASA Accredited...
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![Page 1: Healthcare Reimbursement, Technology & Regulatory Issues 2009 Edward G. Detwiler, ASA Accredited Senior Appraiser American Society of Appraisers.](https://reader035.fdocuments.in/reader035/viewer/2022062516/56649de65503460f94adf270/html5/thumbnails/1.jpg)
Healthcare Reimbursement, Technology & Regulatory
Issues 2009
Edward G. Detwiler, ASA
Accredited Senior Appraiser
American Society of Appraisers
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Medicare Reimbursement Policies
Deficit Reduction Act (DRA) of 2005
• DRA, was signed into law by President Bush in February 2006 and took effect January 1, 2007.
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DRA 2005In November 2005, CMS published final regulations, which would implement the same multi-procedure methodology rate reduction proposed for hospital outpatient services. CMS proposed phasing this rate reduction in over two years, 25% in 2006, and another 25% in 2007.
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Impact on Equipment Values
• Many imaging facilities operate near break-even, with some modalities, such as MRI, PET/CT and CT making a profit, while others such as Ultrasound, Mammography and Radiology are marginal or experience losses.
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Impact on Equipment Values
Cuts in reimbursements have caused some to go under as profits become negative.
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Impact on Equipment Values
Remember OBRA 1993?• Anti-Kickback and Self-Referral legislation
referred to as “Stark-II” put a large number of imaging and therapy centers at risk or out of business.
• From one of my presentations in 1993…
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The Hillary Factor - 1993
The number of MRI procedures dropped by 30% and the price per procedure dropped by up to 50% overnight!
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The Hillary Factor - 1993
Prices for new equipment plummeted, sometimes by 50% or more. Values for existing equipment decreased proportionally, as there was a glut of equipment that was sitting and out of use due to violations of Stark-II.
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Definitions of Value Concepts
The most over-used term is
“Fair Market Value”
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Orderly Liquidation Value
This value is frequently referred to as the "wholesale value."
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Residual Value
This value should fall somewhere between Fair Market Value In Place and In Use and Orderly Liquidation Value
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Residual Values
• Factors affecting residual values include:
• New equipment selling prices– If prices for new replacement equipment
decrease, the maximum Fair Market Value will decrease
– Likewise, the maximum Orderly Liquidation Value will decrease
– Residual Value will follow
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Residual Values
• Used equipment selling prices– If used equipment selling prices decrease,
both Fair Market Value and Orderly Liquidation Value will decrease
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Technology
• Forecasting Values based on Technology, known in appraisal terms as “Technological Obsolescence”
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Technology
• Forecasting Residual Values
PET/CT vs. PET
PET Values decreased unexpectedly with the introduction of PET/CT
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Technology
• Forecasting Residual Values
PACS, EMR, HlPPAAutomated Chemistry
Robotic Surgery
DNA - Clean Room Labs
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Regulatory Environment
• Forecasting Values based on changes in Regulatory Environment
• Known in appraisal terms as “Economic Obsolescence”
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Regulatory Environment
FASB and IASB
• Agree that Operating Lease will disappear
• Lessee will see all leases as Capital Leases…no more “Off Balance-Sheet” financing
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Regulatory Environment
• Lessee had Rent Expense, will now have combination of Depreciation and Interest
• Economic Structure of Leases will continue as present
• FASB 13 will go away
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Regulatory Environment
• Grandfather Clause???
• Possibility that existing Operating Leases will continue until expiration/termination
• No Final Ruling
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The Future
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