Profiting from Anesthesia

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As you know, the government has been aggressively pursuing enforcement actions against health care providers, including providers in the ASC industry. In 2012,  the Office of the Inspector General (OIG) issued an unfavorable advisory opinion regarding two types of ASC anesthesia arrangements.  

The two problem arrangements in the OIG opinion involved: 1) an anesthesia provider serving as an ASC's exclusive anesthesia provider and paying the ASC for certain management services of the anesthesia practice; and 2) physician owners in an ASC forming a new anesthesia company that then contracted with their ASC as the exclusive provider of anesthesia services. The OIG responded by stating that both of the arrangements would likely have anti-kickback risks. As a result, many of these types of ASC anesthesia arrangements are being replaced with arrangements that carried less regulatory risk. Some of the alternative ASC anesthesia models are summarized in this article. Obviously, the models must be analyzed in light of specific facts and circumstances and carry varying degrees of risk that have to be considered. Further, state laws may have an impact on the viability of the ASC anesthesia model. 

Traditional Model

The Traditional Model is an arrangement where the anesthesia practice enters into an exclusive contract with the ASC to provide anesthesia. Here, the anesthesia practice would bill and collect for all anesthesia services and retain all revenue from collection. The surgeon owners of the ASC do not profit from anesthesia. 

Provider Employment Model

In the Provider Employment Model, a group practice which is owned by surgeons that also have a common ownership interest in the ASC: 1) enters into an exclusive contract with the ASC to provide anesthesia; 2) directly employs an anesthesiologist to provide anesthesia at the ASC; 3) group practice bills and collects for anesthesia; and 4) after paying the employment compensation for the anesthesiologist, retains the profits. This arrangement should be structured to meet the group practice investment safe harbor in order to mitigate the risk of a violation of the anti-kickback law. 

Provider Leasing Model 

The Provider Leasing Model is very similar to the Provider Employment Model above. In the Provider Leasing Model, an anesthesia practice leases anesthesia providers to the group practice. The group practice bills and collects for the anesthesia services, and the group practice pays the anesthesia practice a flat fee for the anesthesia providers. Again, the risk with this model should be mitigated by structuring it to ensure compliance with the group practice investment safe harbor. 

ASC Provider Employment Model

In the ASC Provider Employment Model, the anesthesia provider is directly employed by the ASC or its wholly-owned subsidiary. The ASC would bill and collect for anesthesia services, pay the anesthesia provider's employment compensation, then retain profits associated with the anesthesia services. This model is not a safe harbored arrangement; however, there are arguments that it meets the safe harbor at least for direct employment. 

As you can see, it is still possible to profit from anesthesia in an ASC; however, the arrangement should be structured in a way that either fits within an ASC safe harbor or is thoroughly vetted by healthcare regulatory counsel, especially as it related to state laws and regulations. 

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