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Tip of the week, part 2: Steer clear of these compliance pitfalls

Managed Care Weekly Advisor, August 1, 2007

As your surgery center continues to grow and you look for ways to bring in more reimbursement, don't overlook the critical compliance problems that could come into play. With proper research and careful planning, you can avoid the following pitfalls, which are often because of common misconceptions or negligence in developing certain financial arrangements:

  1. Your ASC reallocates ownership to more closely reflect physician utilization: This causes material regulatory risk under the anti-kickback statute, because profits generated from an ASC must be distributed to physicians pro rata (in proportion) based on their ownership. Only physicians who utilize a surgery center as an active extension of their practice can be owners. Therefore, surgery centers should incorporate a mechanism to redeem or buy out the ownership interests of physicians who no longer utilize the center as an active extension of their practice.

  2. Your ASC doesn't adequately examine financial relationships between the center and physician owners or other referring physicians: For example, if a physician uses the center to a greater extent than others and expresses some resentment over ownership allocation, the surgery center might consider another financial relationship, such as a medical directorship, with that physician to quell his or her dissatisfaction. Overpaying for these services could also create compliance issues. Obtain a fair market value analysis for what a medical director would get paid in your market. Likewise, make sure that compensation for family members who work at the center is equal to fair market value. For example, a physician's wife who works at the surgery center as an administrator should not receive inflated compensation.