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Anesthesiologist and joint business models.

Posted by Doris Dike | Jan 21, 2022 | 0 Comments

Sometimes providers create joint business arrangements with anesthesiologists and certified registered nurse anesthetists (CRNAs) to enhance their fees. However, a healthcare lawyer should carefully examine the business model before it is formed to ensure it does not violate federal laws.

ANTI-KICKBACK LAWS

Under the federal Anti-Kickback Statute (AKS), providers can become criminally liable if they knowingly and willfully offer, pay, solicit, or receive any remuneration from referring patients to providers of items or services reimbursable by a federal healthcare program. The AKS defines “remuneration” broadly to include anything of value. 

An AKS violation can also lead to liability under the False Claims Act and the Civil Monetary Penalties Law, as well as exclusion from federal healthcare programs. The AKS prohibits “purposeful” payments to another to get monies from the federal healthcare program. Violations of the statute constitute a felony punishable by a maximum fine of $25,000, imprisonment of up to five years, or both.

The AKS offers safe harbor provisions that protect providers from being reprimanded for otherwise questionable actions. These provisions include, but are not limited to:

·        Referrals made as part of an employment or professional services arrangement

·        Payments made for the lease of equipment or office space

·        Certain payments made for the purpose of health practitioner recruitment

·        Investments made in part of a medical company

·        Same-practice group provisions, etc. 

JOINT VENTURES

According to the U.S. Department of Health and Human Services Office of Inspector General (OIG), “[a] joint venture may take a variety of forms: it may be a contractual arrangement between two or more parties to cooperate in providing services, or it may involve the creation of a new legal entity by the parties, such as a limited partnership or closely held corporation, to provide such services.” There is nothing in the law that prohibits a joint venture; however, some collaborations may draw suspicion from OIG. To help business owners determine if their business arrangements are questionable, OIG created a Special Fraud Alert. OIG has identified several factors, some of which include:

  • Investors are chosen because they are in a position to make referrals.

  • Physicians are expected to make a large number of referrals and may be offered a greater investment opportunity in the joint venture than those anticipated to make fewer referrals.

  • Physician investors are actively encouraged to make referrals to the joint venture and may be encouraged to divest their ownership interest if they fail to sustain an “acceptable” level of referrals.

  • A healthcare provider in one line of business (the “Owner” or referring physicians in a “company model”) expands into a related healthcare business by contracting with an existing provider of an item or service (the “Supplier” or anesthesiologists in a “company model”) to provide the new item or service to the Owner's existing patients, including federal healthcare program patients.

BUSINESS MODELS

Generally speaking, business owners and providers fall into one of three business model categories when offering anesthesiology services.

Fee-for-service model. Under this traditional model, an anesthesiology group bills for services that it provided to a patient. The anesthesiology group will contract with ambulatory surgery centers (ASCs), hospitals, or other entities. In this relationship, the facility charges a facility fee, and the surgeons and anesthesiologists charge their own independent professional fees.

Health regulatory agencies, generally speaking, do not take issue with this model. There are no remuneration or rewards being paid to providers in effort to get patients, and this model will not compromise patient care. Therefore, providers should be able to safely implement this business model.

Employment model. In an employment model, an entity will hire an anesthesiologist by directly employing the physician or hiring the provider as an independent contractor. The anesthesiologist allows an entity, often an ASC, to bill and collect his or her service fees. The ASC then has flexibility in how it wishes to pay the employed physician. This is not deemed a kickback because the employed physician is not paid based on a referral model, and the AKS safe harbor laws provide a carve-out for this type of structure. 

Company model. Hospitals and surgical centers are pressured to reduce costs and maintain profits while providing a high standard of care. Changes regarding reimbursement of healthcare services have caused entities to evaluate or change their business relationships with anesthesia groups from the ordinary fee-for-service agreement to a “company model.” Under a company model, a referring physician, who typically also owns the facility where surgical procedures are performed, forms a separate anesthesia company to share in anesthesia revenue. Non-anesthesiologists do this to accomplish indirectly what they cannot do directly: receive compensation, in the form of a portion of the anesthesiologists' clinical revenues, in return for referrals of patients.The truth is that, in these structures, the doctors have the ability to form business relationships with other providers to capture the most money for themselves. Company model arrangements can be considered problematic because they could compromise patient care and safety by corrupting the professional judgment of the physicians or the business owners. Business owners may choose to enter into business arrangements with the most inexperienced and cheapest providers, or even choose not to use a physician anesthesiologist at all. Obviously, these types of arrangements are great for non-anesthesiologists, but sometimes pain doctors and anesthesiologists enter into these relationships to incentize providers to send patients their way.

Under the AKS, these types of arrangements are often considered kickbacks or a remuneration because a non-anesthesiologist is receiving monetary value by entering into an agreement with the anesthesiologist.

This joint venture will come under scrutiny because providers will be chosen to “invest” or partake in the business arrangement since they are in a position to make referrals, and they will be actively encouraged to continue to make referrals to enrich business owners. Additionally, the AKS' safe harbor provisions offer little protection to company model business structures because:

·        Investment safe harbor provisions require that no more than 40% of the equity interest be held by investors who are in a position to make referrals.

·        The group practice safe harbor provision must be held by the equity interest of an owner who practices in the specialty.

·        This is not an employment model.

Conclusion

The convoluted legal analysis and potential penal liability surrounding certain anesthesiology joint ventures should cause many providers and business owners to be cautious. Not all business ventures are worth partaking in. Physicians can certainly engage in fee-for-service and employment-like models; however, the company model ventures are fraught with kickback danger for all parties involved. Parties currently engaged in or considering the company model should carefully review OIG guidance and consider the steps necessary to ensure compliance with the AKS.

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