Inspector general rejects joint venture between surgeons, medical device supplier

The HHS Office of Inspector General has issued an advisory opinion rejecting a proposed joint venture between a group of surgeons and an entity that supplies those same surgeons with intraoperative neuromonitoring services, claiming the partnership would violate federal anti-kickback laws. 

IONM services are used to monitor a patient's neurological function during surgeries in hospitals or ASCs. Professional services are provided by a neurologist who constantly monitors the tests's results. 

An IONM supplier who contracts with ASCs and hospitals requested the advisory opinion, informing the OIG of plans to assist physicians at facilities where IONM is used to form and operate an entity, Newco, that would perform IONM services. The entity would be owned by the same physicians. 

The OIG determined physicians would be at a risk of fraud because they could stand to profit by referring IONM services to their patients. 

"The proposed arrangement would implicate the federal anti-kickback statute. It would involve several forms of remuneration … and returns on investment interests in Newco to the surgeon owners. These streams of remuneration could induce the Surgeon Owners to make referrals of IONM services for which payment could be made by a federal health care program. For the reasons set forth below, we conclude that the risk of fraud and abuse presented by the proposed arrangement is not sufficiently low under the federal anti-kickback statute for OIG to issue a favorable advisory opinion," the OIG wrote in its decision, published Aug. 18. 

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