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Editor's Page
So Much to Say, So Little Space. Where to Begin?
Dan O'Connor
Publish Date: October 10, 2007

This is the 60th letter I've written you, which makes me 5 in editor's years. It's also the hardest, not because I've again waited until the edge of deadline to write, but because June and July were crazy months and I only have this small space to recap several seismic events. In order of occurrence, here's all the news that fits the print.

  • Tuesday, June 19. An OIG advisory opinion questions whether a fairly common ASC transaction runs afoul of the Anti-kickback Statute. A group of orthopedic surgeons wanted to sell 40 percent of its ASC to a local hospital. The purchase price was set at fair market value, but would exceed the amount of capital the orthopods invested in the ASC, thereby resulting in a gain for the orthopedists on the sale. The hospital-physician ASC safe harbor requires that ASC profit distribution be "directly proportional" to the amount of capital invested. The OIG didn't go so far as to characterize the transaction as illegal, but in concluding that the transaction "poses a heightened risk of fraud and abuse," the OIG demonstrated a clear unwillingness to bless transactions that fail to fall squarely within an applicable safe harbor.
  • Thursday, July 12. Medicare all but abolished "under arrangements" joint ventures in which a hospital pays an ASC a per-procedure fee for the facility component of ambulatory surgery and then bills payors under its own provider and tax identification number. "There appears to be no legitimate reason" for certain hospital-physician joint ventures "other than to allow referring physicians an opportunity to make money on referrals for separately payable services" that "were previously furnished directly by the hospitals, and in most cases, could continue to be furnished directly by the hospitals," says CMS in closing the loophole that made under arrangements possible and calling this trick play what it is: a way to bilk the system.
  • Monday, July 16. Medicare announces the new ASC payment system, which was surprisingly anticlimactic. For months, we'd known that ASCs would be paid a failing (in the 60s) percentage of what hospitals receive for the same procedures. Nobody was doing cartwheels when they learned that Medicare would reimburse ASCs 65 percent of what hospitals receive, not the 62 percent originally proposed last August.
  • Wednesday, July 25. Federal legislation is introduced that could eliminate physicians' abilities to refer patients to hospitals in which they hold an ownership interest. Also, today's 150 or so physician-owned hospitals would be prevented from any growth or expansion and would face severe curtailment in ownership, funding and operating abilities.

There you have it, four shots to the chin of physician ownership. Are you getting the message?

DID YOU SEE THIS?