OIG Shifts Course on Anesthesia Providers and the Anti-Kickback Statute

In a recent advisory opinion, the Department of Health and Human Services (HHS) Office of the Inspector General (OIG) opined that employment of an anesthesia provider may be low risk under the Federal Anti-Kickback Statute (AKS) under certain circumstances. This opinion, Advisory Opinion 21-15, may represent a softening of OIG’s position on anesthesia providers.

OIG’s position on anesthesia providers is largely found in a 2012 advisory opinion, Advisory Opinion 12-06, concerning two proposals by an anesthesia provider (Requestor) for structuring its relationship with several ambulatory surgery centers (ASCs). Under the first proposal, the Requestor would remain the ASCs’ sole provider of anesthesia services but would also pay the ASCs a per-patient fee, exclusive of federal healthcare beneficiaries, in exchange for management services (e.g., pre-operative nursing assessments, procuring office space, and transferring billing documentation). OIG rejected this proposal, finding that the carve-out for federal healthcare beneficiaries would not save the per-patient management fee from constituting improper remuneration under AKS. Specifically, by collecting both a management fee from the Requestor and a facility fee from payors, OIG concluded that the ASCs would be receiving double payments for the same services and therefore would be unduly influenced to keep the Requestor as their exclusive provider of anesthesia services to all patients.

Under the second proposal, the ASCs’ physician-owners would form wholly owned subsidiaries for the purpose of providing anesthesia services to ASC patients. The subsidiaries would bill for and furnish all anesthesia-related services (e.g., recruiting personnel and assisting in structuring employment or independent contractor relationships with anesthesia personnel, ordering supplies, quality assurance, and providing logistics). The subsidiaries would pay the Requestor a negotiated rate for its services and retain any profits, presumably for distribution to the non-anesthesiologist physician-owners. OIG rejected this proposal as well, concluding that no AKS safe harbor would protect the distribution of profits from the subsidiaries to their physician-owners because such profits would be a function of the Requestor’s anesthesia services revenue resulting from the physician-owners’ referrals. In particular, OIG found the ASC safe harbor inapplicable because it protects only returns on investments in Medicare-certified ASCs, or entities operated exclusively for the purpose of providing “surgical” services, and anesthesia services are nonsurgical in nature. Additionally, while noting that payments by the subsidiaries to the Requestor, employees, or independent contractors could be protected under the personal services, employee, and/or management contract safe harbors, OIG nevertheless indicated that none of these safe harbors would protect the distributions of profits from the subsidiaries to their physician-owners, since a likely purpose of such distributions would be to generate referrals for anesthesia services.

In the recent advisory opinion, however, OIG addressed the employment of a CRNA to provide anesthesia services to a pain management practice, where the practice would likely profit off its referrals to the CRNA as a result of the CRNA’s assignment of its billing rights. OIG noted that it continues to maintain that the employment safe harbor does not protect the distribution of profits to referring shareholders related to the employment. However, OIG stated that bona fide employment in which a professional reassigns billing rights in exchange for compensation is “a commonplace practice in the healthcare industry, explicitly authorized by the laws and regulations governing the Medicare program” and that the transaction at issue was a “straightforward employment agreement.” Thus, OIG concluded that the proposed arrangement presents a sufficiently low risk of fraud and abuse under AKS and approved the relationship. Because the rationale of this opinion turns on employment, it may apply differently to physician anesthesiologists, who are often subject to state corporate practice of medicine laws as well.

For over 35 years, Wachler & Associates has represented healthcare providers and suppliers nationwide in a variety of health law matters. If you or your healthcare entity has any questions pertaining to structuring your practice, the Anti-Kickback Statute, or healthcare compliance, please contact an experienced healthcare attorney at 248-544-0888 or wapc@wachler.com.