LEGAL UPDATE
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O U T P AT I E N T S U R G E R Y M A G A Z I N E O N L I N E | M A R C H 2 0 1 4
Safe or slippery?
Let's consider another situation. Brownfields Surgery Center has been
contracting with Sleepytime Anesthesia for 5 years. But the
Brownfields physician-owners have decided they want to capture a
piece of the anesthesia fees that arise from their referrals, and don't
renew Sleepytime's exclusive contract. Instead, they enter into one
with Brownfields Anesthesia, a wholly-owned subsidiary of the ASC.
So now when a patient undergoes a procedure at Brownfields Surgery
Center, the surgeons bill for their professional services, the ASC bills for
the facility fee (the profit from which finds its way back to the physician-
owners as distributions) and Brownfields Anesthesia bills for services
rendered (the profit from which also finds its way into physician-owners'
pockets, also as distributions from the ASC).
Of those 3 cash flows, the third — from Brownfields Anesthesia by
way of Brownfields Surgery Center — is both problematic and a com-
plicating factor. Here's why.
First, there's no regulatory exception or "safe harbor" from the Anti-
Kickback Statute that covers anesthesia profits returning to physi-
cians as a result of their referrals. This doesn't necessarily constitute a
violation of the statute. But the danger for the surgeons in our exam-
ple is that their anesthesia profits will vary with the volume and value
of their referrals, which is a significant red flag.
Second, including anesthesia profits in the distributions that physi-
cian-owners receive through the surgery center essentially demolishes
the safe harbor upon which they rely for their investment in the cen-
ter itself. The statute's ASC safe harbor protects returns on invest-
ments only in connection with Medicare-certified ASCs, which it
defines as operating exclusively for the purpose of providing surgical
services. In this view, anesthesia services are not considered surgical
services.
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