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Legal Update
Pushing the Envelope at an ASC
Lorin Patterson
Publish Date: October 10, 2007

Lorin Patterson, Esq. Say a physician-owner wants to perform an upper GI endoscopy or type of knee arthroscopy that's not on the Medicare-approved ASC procedures list. Or perhaps he wants to do patient evaluations on your premises to save time traveling between his office and your facility. Should you let him? You can, as long as you minimize the risks.

Lorin Patterson, Esq.\ The challenge
One of the safe harbors to the federal Anti-kickback Statute emphasizes that ASCs should be operated as extensions of physician-investors' practices. Given that, it makes sense that docs would want to perform non-ASC-approved surgeries and evaluate patients in their surgery centers. But doing so might risk an ASC's standing with Medicare and state licensing authorities, but (and here's the good news) you can usually manage the risks.

The two main barriers to expanding physician use of a Medicare-certified ASC is contained in Medicare's Conditions of Participation for ASCs. First, the ASC must conduct business exclusively for the purpose of performing surgery that does not require hospitalization. Second, particular emphasis is focused on the exclusive use of an ASC's ORs and recovery areas.

Non-Medicare-approved procedures
Because the conditions of participation require that ASCs be used exclusively for surgery, physicians are complying with this caveat even when they perform surgical procedures not on the ASC-approved list. The Centers for Medicare and Medical Services concedes such procedures are frequently performed in ASCs.

It doesn't end with CMS's acceptance of the practice, though. Reimbursement rates are often different depending on where a procedure is performed, so the physician must consult with counsel regarding the appropriate means of seeking reimbursement for each procedure. Both physician and ASC should consult with private payers on reimbursements for such procedures, as their methods frequently differ from Medicare's practices.

ASCs should also address the issue of what the physician pays for using the facilities for non-approved procedures. If the ASC doesn't receive fair market compensation from the physician, it might appear as though the ASC is violating the Anti-kickback Statute exposure on the basis that it is offering such services as a loss leader to inducing the physician to also bring his Medicare or Medicaid cases to the center. ASCs should develop and implement protocols for being compensated by physicians in such cases. At minimum, have these documents on hand:

  • a written policy that says the physician will reimburse the ASC for staff costs, supplies and OR time used on procedures the facility can't seek reimbursement for;
  • a written statement from the physician that says he'll seek the appropriate form of reimbursement; and
  • a written policy that says the physician agrees to charge costs comparable to what the ASC actually incurs.

Lorin Patterson, Esq\. Non-surgical purposes
A more troublesome issue could arise if a physician wants to use an ASC for non-surgical purposes such as office visits with Medicare or Medicaid patients. Fortunately, CMS has issued guidance on two approaches you can take as long as a physician maintains a degree of separation between the ASC and office practice (for example, ASC and office recordkeeping must be separate).

An ASC and a physician office may use the same space, staff and equipment but at different times. For example, the parties could operate on alternate days or during prescribed block times on the same day. Document all details of the arrangement with written agreements clearly specifying

  • what periods of time each entity will be able to use the center;
  • how much and when the physician will actually pay rent for the period he uses the facility; and
  • if staff and equipment will be shared, what the physician will pay for these services as well.

Another approach involves the physician offices operating during the ASC's hours of operation in specifically designated and separate space within the ASC. Under this arrangement, only the physician - and not the ASC - would have the right to use the designated space. In addition, the physician couldn't use the ASC staff, equipment or common areas during this period. Here, you should document the following:

  • the space the physician will have exclusive access to (I suggest you attach a copy of the ASC floor plan with the area clearly marked)
  • how you plan to physically separate the ASC's ORs and recovery areas from the physician's office space (using a small office or a large storage room is ideal) and
  • the rental agreement for the space the physician will use.

Remember, this informed guidance from CMS won't absolutely protect all arrangements; it was informal and issued to only one party. Be sure to review each situation carefully with counsel and to notify all appropriate regulatory agencies of the arrangement.

Toe the line
The federal government wants considerable clinical involvement between physicians and the ASCs they invest in. But you must respect the limits of this involvement. If you prepare for increased clinical integration with explicit policies, you'll likely ensure these limits won't be pushed.