ASC Experts: An Interview with Mike Cicero on Navigating NYSDOH Compliance

By: Campbell Helm

As part of our ASC Experts series, I interviewed Mike Cicero of Cicero Consulting Associates. In this interview, we discussed the history of his firm, the regulatory environment for ambulatory surgery centers (ASCs) in New York, and the opportunities and challenges that lie ahead for providers navigating New York State Department of Health (NYSDOH) requirements.

Q: Can you share the history of Cicero Consulting and your role in the ASC space?

Cicero: Cicero Consulting was founded in 1980 by my father, who previously served as Deputy Commissioner of Health for New York State and as the first Medicaid Director of New York State. Originally, the firm focused on strategic planning, regulatory consulting, and Certificate of Need mainly for nursing homes and long-term care facilities. Over the years, we expanded to include hospitals and hospital systems, ambulatory surgery centers, and other healthcare providers and agencies. Today, 45 years later, we provide a wide range of services: our 3 fundamental areas are CON applications and post-CON approval NYSDOH Regional Office work, Grant applications, and strategic regulatory consulting and planning for all healthcare facilities and agencies that are regulated by the NYSDOH, the New York State Office of Mental Health (OMH) and the New York State Office of Addiction Services and Supports (OASAS). For ASCs, we provide strategic planning and consulting and CON application services, including establishment, construction and expansion, surgical specialty addition, relocation, limited/indefinite life operating certification, and ownership change applications, as well as post-approval Regional Office work and closure plans.

Q: How has the DOH’s view of Ambulatory Surgery Centers changed over time? How do you expect it to change in the future?

Cicero: The first freestanding ASC in New York State was established in the late 1980s. NYSDOH has always been concerned with ensuring that ASCs do not cause financial harm to local hospitals, and that concern remains a focal point today. Since around 2006, NYSDOH and the Public Health and Health Planning Council (PHHPC) have imposed a 5-year limited life operating certificate on all newly established freestanding ASCs, which do not have a hospital as a direct owner. The purpose of this policy is to monitor ASCs in their early years to make sure that they adhere to the commitments made in their establishment CON application. At the end of the limited life, the ASC must file a CON application seeking indefinite or permanent operating certification; that application functions like a report card on how the ASC performed during its limited life and whether the ASC satisfied its commitments, especially regarding Medicaid and Charity Care. Over the years, new laws and regulations governing ASCs have been implemented, most of which focus on health equity and ensuring that ASCs provide an appropriate level of care to the underserved members of the community. The future is difficult to predict, but as more regulations are added and as more ASCs are developed, compliance becomes

increasingly challenging and costly and demonstrating public need becomes more difficult.

Q: Do you expect the Department of Health’s regulations to change as the number of ASCs increases?

Cicero: Each ASC CON application is always evaluated on its own merits, and applicants must demonstrate public need, financial feasibility, architectural compliance, and character and competence. For certain other healthcare providers, such as licensed home care services agencies (LHCSAs), New York State recently implemented regulations to restrict the establishment of new LHCSAs and the expansion of existing LHCSAs in counties where NYSDOH has determined there is no need for additional LHCSAs. The presumption of no need is rebuttable under the regulation, but it is a difficult burden to overcome. It’s possible that a similar regulatory framework could apply to ASCs in the future, if NYSDOH determines that the market in any region becomes too saturated.

Q: What trends are you seeing in ASC–hospital collaboration?

Cicero: Increasingly, we see hospitals or hospital-affiliated entities partnering with groups like Sapient and individual physicians to develop joint venture ASCs, which turns competition into collaboration. These collaborations allow providers to pool resources and apply together, and this approach is much more common today than it was 15 years ago. Joint venture ASCs can be single-specialty, dual single-specialty, and multi-specialty, and enable hospitals or hospital systems to provide tangible support for their physicians which, in turn, fosters physician loyalty to the hospitals with which they are affiliated.

Q: The Sapient team worked with you a lot a decade or so ago when there was a big transition from OBS to ASC for Gastroenterology. Are you seeing any other specialties experience a similar conversion?

Cicero: It’s always been a pleasure to work with the Sapient team over the years, and I look forward to continuing that collaboration. The OBS conversion to Article 28 facilities has been significant – gastroenterology has been a major area of growth. We’ve also seen ophthalmology, orthopedics, plastic surgery, and especially pain management become much more prominent in recent years. More recently, vascular surgery has emerged as a very popular specialty that providers are exploring, bringing it into the Article 28 ASC regulatory environment. Currently, the Health Planning Committee of PHHPC is discussing whether ASCs should be permitted to provide Diagnostic Catheterization and Percutaneous Cardiac Intervention services, which have always been restricted to hospitals in NYS.

Q: What are the most common misconceptions you see groups make when pursuing an ASC?

Cicero: There’s a common misconception that the most important thing to do is file a CON application as quickly as possible to get in the “queue.” That strategy usually causes more harm than good. NYSDOH expects to receive a complete, compliant application that meets all requirements. When an application is rushed to submission, it is incomplete or falls short of the applicable regulatory requirements, that’s when applicants encounter delays and difficulties. A little more time making an application as perfect as it

can be pre-submission can save months of review time, frustration, and increased costs post-submission.

Along the same lines, some applicants do not take the character and competence component of CON applications seriously enough. NYSDOH scrutinizes character and competence submissions very carefully; incomplete disclosures, or the failure to disclose certain issues, can be devastating to a CON application. Often, applicants are in such a rush to file the application that they provide incomplete or inaccurate disclosures, believing that they can always just supplement later. However, once NYSDOH discovers an inaccurate or incomplete disclosure, or a complete failure to disclose, it is difficult to persuade NYSDOH that the individual has the requisite character and competence to operate an ASC in NYS. Written summaries of character and competence disclosures are included in NYSDOH Staff Reports, which are public documents reviewed and discussed at PHHPC meetings; when an individual fails to disclose information, that is usually noted in the Staff Report; this underscores the importance of character and competence to the CON process.

Finally, as discussed, there’s considerable scrutiny around Medicaid and Charity Care utilization in ASCs. This stems from a perception that ASCs may not always serve their fair share of these patients. We have seen some ASC applicants overestimate in their CON applications the level of care they will provide to the underserved members of the community, and then underestimate the importance placed on this issue by NYSDOH and PHHPC once the ASC is operational. At the end of the 5-year limited life, when ASCs are back in front of NYSDOH, this approach can come back to haunt ASCs when they were not able to meet those overestimated commitments or they did not take those commitments seriously enough and must explain why. The initial Medicaid certification process for newly established ASCs can be very time-consuming and can cause Medicaid utilization and reimbursement delays, which makes hitting targets for care to the underserved even more challenging.

Q: Have there been any recent objections to ASCs from hospitals? Are they common?

Cicero: In the early 2000s, hospitals often objected to ASC projects. Today, hospital objections are less common, although they still happen, including within the last 2 years, particularly when smaller community hospitals believe that the proposed ASC is located too close to the hospital and/or will divert cases from the hospital and cause financial harm. To reduce risk, Cicero Consulting always advises ASC developers to engage local hospitals early (it is a requirement in NYS for every ASC to have a transfer and affiliation agreement with a local hospital) and, where possible, to explore joint ventures to minimize the risk of objections.

Q: Ten years ago, hospitals saw ASCs as competition, but now hospitals see ASCs as more of an opportunity. Would you agree with that statement?

Cicero: Yes, hospitals are active in this space. As discussed, many hospitals and hospital systems, especially in the downstate area, have entered joint ventures with ASCs. Of course, there are still cases where a hospital may push back and object – for example, if an ASC is being proposed right on the hospital’s doorstep or around the corner. In those situations, hospitals are more likely to fight the project.

Q: What would be your recommendation to avoid a hospital objection?

Cicero: The key is getting out in front of it and understanding the source of the cases the ASC will perform. In NYS, one of the first things NYSDOH does upon receiving a CON application to establish a new ASC is send a letter to the closest local hospitals soliciting their input regarding the proposed project. So, it’s critical to discuss your project with at least one local hospital early in the process. Partnering with a hospital doesn’t always work out, but maintaining a collegial relationship will be beneficial. In many cases, the physicians who are proposed owners of the ASC already have connections with hospitals and established relationships with their medical staff. That often creates a natural synergy and can help ease concerns before they escalate. Also, as discussed, involving a hospital in the ASC ownership through a joint venture, when feasible, can not only eliminate the risk of objection from the specific hospital partner but can also discourage objections from other area hospitals.

Q: Can you share an example of a challenging experience when it came to an ASC project, and what helped you get across that finish line?

Cicero: One of the biggest challenges comes from New York’s 5-year limited life for new ASCs. After those first 5 years, ASCs must reapply for permanent operating certification and demonstrate compliance – including Medicaid and Charity Care utilization and other commitments. If the ASC falls short of its original projections, which happens frequently for a variety of reasons, it becomes difficult to secure a permanent operating certificate. During and after COVID, for example, one ASC tried every conceivable way to meet Medicaid and Charity Care commitments but still fell short, making permanent operating certification impossible. In that case, we worked very closely with the ASC to demonstrate and document to NYSDOH the good-faith, serious and consistent efforts undertaken by the ASC during its limited life to reach such patients and to partner with other community providers to seek referral relationships; doing so was critical to helping the ASC obtain an extension of its limited life rather than losing its operating certificate altogether.

Q: What advice would you give consultants or ASC leaders navigating DOH today?

Cicero: Understand the laws and regulations thoroughly, stay current on changes to the applicable laws, regulations, and policies, and attend NYSDOH and PHHPC public meetings to stay engaged with the process. Early planning and respect for compliance are essential.

Cicero’s perspective underscores the importance of treating compliance as a foundation, not an afterthought. For ASC leaders and consultants, his message is clear: respect the process, plan early, and always do it right the first time.