In March, OIG published a new frequently asked questions (FAQ) page, General Questions Regarding Certain Fraud and Abuse Authorities. The FAQ page, located here, includes new guidance for ambulatory surgery center (ASC) investments by physicians who fail to qualify for the single-specialty ASC safe harbor under the Federal Anti-Kickback Statute (AKS). This safe harbor, located at 42 CFR § 1001.952(r), requires, among other things, that at least one-third of each physician investor's medical practice income from all sources for the previous fiscal year or previous 12-month period be derived from the surgeon's performance of procedures included on the list of Medicare-covered procedures for ASCs. The new guidance addresses whether a single-specialty ASC may offer an investment interest to a physician who cannot meet this requirement—known as the “one-third test” or the “practice income test”—but otherwise meets all of the other elements of the safe harbor.

For ASCs endeavoring to meet the safe harbor, the one-third test is a common point of failure due to the variable nature of physicians’ practices. If a physician’s investment in an ASC qualifies under the single-specialty ASC safe harbor, then remuneration paid by the ASC to the physician will be shielded from liability under the AKS. If the physician’s investment does not meet all of the requirements of the safe harbor, then the investment will not be protected. Failure to qualify for the safe harbor does not mean the arrangement is necessarily illegal. As a general matter, an investment that does not qualify for the safe harbor will only violate the AKS if there is an intent to induce referrals.

The FAQ notes that OIG adopted the one-third test “because physicians who meet this standard are more likely to use the ASC as an extension of their physician office space, which reduces the risk that the physician’s investment interest would induce or reward such physician to make referrals to other surgeons for ASC procedures that the physician does not personally perform.” The FAQ goes on to state that OIG evaluates arrangements that fail to qualify “based on the totality of the facts and circumstances” and “considers a number of facts and circumstances when evaluating the relative risk of fraud and abuse presented by ASC investments by physicians who do not meet the Practice Income Test (but who satisfy all of the other pertinent safe harbor conditions).” The FAQ notes that the factors considered include:

(i) whether the physician-investors will refer patients to the ASC for procedures that they will not personally perform;

(ii) whether the physician-investors will make use of the ASC for their own procedures; and

(iii) what circumstances cause the physician-investors to fail the practice income test (e.g., they perform a high volume of inpatient procedures).

Although the question presented in the FAQ addresses only the section of the ASC safe harbor relating to single-specialty ASCs, the response mentions that the one-third test is also present in the multi-specialty section of the ASC safe harbor. The guidance therefore may be helpful for multi-specialty ASC operators navigating the same risk.

To read the full FAQ document, please click here.