OIG Issues Favorable ASC Advisory Opinion

The U.S. Department of Health and Human Services Office of Inspector General (OIG) has issued a favorable advisory opinion involving a proposed ambulatory surgery center (ASC).

The proposed arrangement is an ASC joint venture between surgeons, a health system, and a management company. The three would invest in the new ASC. Under the proposed arrangement, the surgeons would collectively own 46% of the new ASC, the health system would own 46%, and the management company would own 8%.

The OIG analyzed the proposed arrangement and concluded that the “offer or payment of investment returns from an ASC to an investor constitutes remuneration under the Federal anti-kickback statute.” However, the opinion then went into a detailed analysis of the safeguards in the proposed arrangement. Specifically, those safeguards that would reduce the risks associated with referrals and “other safeguards designed to reduce fraud and abuse risks.”

The OIG concluded that the proposed arrangement is “sufficiently low risk under the Federal anti-kickback statute, and we would not impose administrative sanctions on the Health System or the Manager in connection with the Proposed Arrangement.”

Manatt Health Partner Brian Bewley and Associate Kaitlyn Dunn co-authored an article for Law360 titled “HHS Advisory Highlights Need For Anti-Kickback Law Update.” In the article, they highlighted the normalcy of the issues presented by the proposed ASC as well as what this means for physicians in similar situations.

Bewley and Dunn stated, “First, given the intent behind and historical commentary surrounding the ASC safe harbor, parties to an ASC joint venture often carefully scrutinize, monitor and implement measures to ensure one or both of the mathematical one-third tests are satisfied, as appropriate.”

Bewley and Dunn continued, “However, this opinion supports that one or more physicians’ failure to satisfy the one-third tests—particularly, the one-third practice income test—likely will not be perceived as problematic where such physicians are otherwise using the ASC on a regular basis and only occasionally cross-refer to other specialists who may be invested in or practice at the ASC.”