Joint-venture ASC OK'd by HHS after kickback concerns

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HHS' Office of Inspector General said it wouldn't impose sanctions on a joint-venture ASC investment by a health system, certain surgeons employed by the system and an ASC management company, according to an opinion posted April 29.

The venture was being investigated for its potential to break federal anti-kickback laws.

The proposed ASC will be 46 percent owned by the health system, 46 percent owned by five orthopedic surgeons and three neurosurgeons, and 8 percent owned by the ASC management company. According to the proposal, physician investors will individually get 4 to 8 percent ownership based on fair market value buy-in.

The opinion said that while the investors could be put in positions to influence referrals to the center, there was a low risk of abuse.

The OIG relied on "safeguards within the proposed arrangement" that would reduce the risk that investors "would receive profit distributions for referrals of patients to the new ASC."

The health system promised it wouldn't require or encourage physicians to refer patients to the ASC or its physician investors and that it wouldn't track ASC referrals made by affiliated physicians. 

The system also promised that physician investors would personally perform almost all ASC-qualified procedures that they refer to the ASC. 

ASC safe harbors require physician investors to derive at least one-third of their medical practice income from the performance of surgical procedures that will be reimbursed by Medicare at the proposed ASC each year.

While the investing orthopedic surgeons will receive one-third of medical practice income from ASC-qualified procedures, the neurosurgeons will still primarily derive income from hospital-based procedures, but would use the new ASC on a "regular basis." 

The OIG said the arrangement "presents a sufficiently low risk of fraud and abuse" and would only break anti-kickback laws if "requisite intent were present."

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