Mar 20 2017

Blowing Up Your ASC Because Of Confusion Of Purpose

Physicians (and others) considering forming a Medicare certified ASC have to be very careful about not confusing the ASC entity’s purpose.

If they do, they may not only blow the federal Anti-Kickback Statute (“AKS”) safe harbor on which they likely rely, they may destroy all of their Medicare claims by turning them into false claims.

Here are two of the ways that ASC organizers and operators cause the fatal explosion of their business.

Running Physician Services Through The ASC Entity

Most organizers of an ASC attempt to fit the business structure into the AKS’s ASC safe harbor. The object is to protect the payment of distributions to the ASC’s physician owners from prosecution as kickbacks.

Although there are several categories of standards (e.g., single-speciality ASCs, multi-specialty ASCs) under the safe harbor, all depend on the fact that the investment entity actually is an ASC.

As defined for Medicare purposes, an ASC must be, among other things, “a distinct entity that operates exclusively for the purpose of providing surgical services.”

In turn, surgical services for Medicare purposes do not include physician services.

The problem is that there’s a trend among some ASC owners to use their ASC entity to employ physicians. A prime example would be the direct employment of anesthesiologists – this is one of the variants of the so-called “Company Model” of anesthesia services through which surgeon-owners of an ASC attempt to capture a portion of anesthesia fees. Note also, that some ASC owners attempt to directly employ other physicians, even surgeons, in similar fashion.

Rendering physician services of any kind through the ASC entity causes it to no longer qualify as an ASC for Medicare purposes. No ASC means no ASC safe harbor. Even worse, no ASC means that any ASC claims to Medicare weren’t actually ASC claims. They were worthless claims. Even worse, they were false claims.

Running Non-ASC Services Through An ASC Entity

In almost exactly the same manner, an ASC can blow its Medicare definition by expanding into a service line consisting of non-ASC services. For example, by performing diagnostic procedures other than those directly related to performance of a covered surgical procedure.

Once again, the facility is no longer an ASC either for safe harbor or for Medicare billing purposes.


Comment or contact me if you’d like to discuss this post.

Mark F. Weiss


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