In a recent advisory opinion, the Office of Inspector General (“OIG”) of the U.S. Department of Health and Human Services (“HHS”) concluded that an investment by a health system, a management company, and surgeons in an ambulatory surgery center (“ASC”) did not create a substantial risk of fraud and abuse under the federal Anti-Kickback Statute (“AKS”) despite not meeting each of the criteria for protection in the AKS safe harbor for ASCs.

In Advisory Opinion No. 21-02, the OIG stated it would not impose sanctions on the proposed arrangement, which contemplated an ASC jointly owned by a health system (owning 46 percent), a management company (owning 8 percent), and five orthopedic surgeons and three neurosurgeons employed by the health system (with ownership ranging from 4 percent to 8 percent). The management company would provide certain management services to the ASC but also certified it would not i) directly or indirectly make or influence referrals to the ASC or its physician owners, and ii) none of the physician owners of the ASC had, or would in the future have, ownership in the management company. The requestors acknowledged the neurosurgeons would not satisfy the ASC safe harbor requirement that one-third of his or her medical practice income for the previous fiscal year or previous 12-month period from the performance of ASC-Qualified Procedures, but did state the neurosurgeons would use the ASC as a ‘regular’ part of their respective practices.

The AKS prohibits paying, soliciting or receiving remuneration to induce or reward referrals for items or services reimbursed under federal health care programs. Remuneration under the AKS includes returns on investment and there is heightened concern when investors are in a position to make or influence referrals to the entity that he or she has invested in. HHS has promulgated safe harbor regulations that, if met, protect persons from sanctions under the AKS. However, safe harbor protection is afforded only to those arrangements that precisely satisfy all of the conditions set forth in the safe harbor.

With respect to the proposed arrangement described in Advisory Opinion 21-02, although the physician investors and health system would be in a position to influence referrals to the ASC, the OIG found the risk of fraud and abuse was mitigated by the following facts:

• The arrangement included safeguards to reduce the health system’s ability to make or influence referrals to the ASC by the physician owners. In particular, the physicians employed or contracted by the health system would be paid fair market value and would not receive compensation related, directly or indirectly, to the volume or value of referrals made to the ASC or the physician owners. The health system agreed it would not engage in any actions that would require or encourage referrals, nor would it track referrals to the ASC or the physician owners.
• All investors would invest directly (not via a pass-through entity) in the ASC. Neither the ASC nor any investor would loan funds to, or guarantee a loan for, any investor to obtain ownership in the ASC. In addition, capital contributions and profit distributions would be made in proportion to an investor’s ownership in the ASC.
• Ownership in the ASC was not offered (and would not be offered in the future) to any investor based on the volume or value of referrals made by or expected to be made by an investor or potential investor. In addition, investors would notify patients that are referred to the ASC about the investor’s investment interest in the ASC.
• Other arrangements between the parties, such as leasing of space and equipment from the health system to the ASC and the provision of administrative services to the ASC, would comply with the applicable AKS safe harbors.
• The ASC and its investors agreed to treat all patients, including federal health care program beneficiaries, in a nondiscriminatory manner. In addition, the investors certified that all procedures performed at the ASC would be properly billed and the health system would not include any costs associated with the ASC on its cost report or claims for payment from federal health care programs, unless required to do so.

Based on the information provided, the OIG concluded the proposed arrangement presented a sufficiently low risk, particularly considering the safeguards in place to prevent fraud and abuse.

While the advisory opinion is only ‘binding’ on the requested parties, Advisory Opinion 21-02 provides additional guidance for health systems, surgeons and management companies who are involved in or would like to develop a new ASC.