Pain-management clinics can be a valuable source of revenue for ambulatory surgery centers, but they can also spell legal trouble if you're not careful to avoid the pitfalls of the federal Anti-Kickback statute. Whether you already have a pain management clinic or are considering adding one to your facility, here's how to avoid the pain management danger zones.

The situation
The Anti-Kickback statute prescribes criminal liability to parties on both sides of an impermissible "kickback" transaction - payment in any form to a physician to induce a referral of services that is reimbursed under any state or federal healthcare program.

In the typical pain management clinic, the ASC leases office space to an anesthesiologist. The anesthesiologist uses the space to evaluate patients who are candidates for pain blocks. Often, the anesthesiologist will schedule patient-evaluation visits on the same day he is providing anesthesiology at the surgery center. (While the anesthesiologist is evaluating pain-block patients, a CRNA administers the anesthesia under the supervision of the anesthesiologist.)

Medicare and most payors compensate the anesthesiologist for the evaluation visit. If the anesthesiologist determines that a pain block is medically necessary, he refers the patient to the ASC to have the procedure performed. If the patient is a Medicare patient, the pain-block procedure generally should be performed on a different day than the day the patient is evaluated by the anesthesiologist to ensure that the anesthesiologist will be compensated for both the evaluation and the procedure.

Since the anesthesiologist clearly refers patients to the ASC, the contractual arrangement between the ASC and the anesthesiologist should comply with one of the safe harbors created by the Anti-Kickback statute. The contract must:

• be in writing and signed by the parties
• be for a term of at least one year
• describe the precise space leased to the anesthesiologist, including the exact times he is entitled to occupy the space
• and specify what other services, if any, the anesthesiologist will provide to the ASC.

In addition, the anesthesiologist must pay the ASC fair market value for the space he leases and the services he consumes at a rate set in advance, "in the aggregate" (a rate encompassing space and services). Fair market value is the price (more of a range than an exact figure) that a buyer would pay to a seller during a transaction in which neither is under compulsion to sell or buy.

In most instances, the ASC provides the anesthesiologist with the use of its reception area, in addition to the designated leased space, transcription, receptionist services and nursing. Unfortunately, many agreements between an ASC and anesthesiologist don't recognize that services are provided to the anesthesiologist on top of the leased space. Under such circumstances, the Office of Inspector General could assert that the value of the uncompensated services provided by the ASC is a kickback paid to the anesthesiologist to induce a referral to the ASC.

The solutions
It is crucial that an ASC evaluate the services it provides to the anesthesiologist and charge the anesthesiologist accordingly. The safe harbor requirement that the rate must be set in advance, in the aggregate, has generally been interpreted to mean that the charge must be a flat rate. Since, however, the value of the services provided to the anesthesiologist depends on the volume of patients the anesthesiologist sees, a flat-rate fee may not be a fair market value fee. There are two good ways to address this issue:

• Draw up a one-year contract with a monthly charge at a fixed dollar amount based on the value of the space used and the value of services provided to the anesthesiologist during the preceding year (in the first year of the contract, you must estimate the value of the service you'll provide to the anesthesiologist).
• Draw up a multi-year contract with a charge equal to the lesser of a flat-rate "ceiling," which should be based on the value of the maximum amount of services the ASC believes it will provide or an amount based on the number of pain-block patients the anesthesiologist sees at the ASC, plus the monthly rent. The anesthesiologist might be charged a monthly rent of $2,000 and a variable charge of $10 per patient visit, but cap the variable charge at $150,000 per year. Although it is not clear that this payment methodology will fit completely within the safe harbor, the variable rate based on the services provided helps ensure that the payment is fair market value, which is the government's key consideration in reviewing arrangements between providers and referral sources. You can argue that the existence of a flat-rate ceiling complies with the safe harbor's requirement that the rate be "set in advance in the aggregate."

Reducing your risk
While there are healthcare regulatory pitfalls in creating pain management clinics, properly structured pain management clinics involve a low level of regulatory risk and can be lucrative to the anesthesiologist and the ASC.