In a presentation at the 18th Annual Ambulatory Surgery Centers Conference in Chicago, Partner Scott Becker, JD, CPA, and Lainey Gilmer, JD, with McGuireWoods LLP, discussed key legal issues, industry trends and compliance plans for ambulatory surgery centers.
Mr. Becker began the discussion with trends he's observed in the healthcare and ASC industry. He said an entrepreneurial generation of physicians may be on the decline — a trend sparked by younger physicians' preference for work-life balance along with the nationwide move towards hospital employment. Also, healthcare reform's opposition to physician-owned hospitals may reduce a large entrepreneurial force in the industry.
Recent studies have shown the average ASC has approximately 15 physicians, according to Mr. Becker. "Ten years ago, extensive business coming from non-affiliated physicians was a sign of health. Now that's a concern," he said. "If those physicians go to work for another hospital system, it can drive an ASC deep into the red." He also said there is increased competition for a limited amount of physicians, since approximately 80 percent of physicians are already in some type of financial relationship with hospitals.
Hospitals used to be fairly selective about which specialists they were hiring five years ago, but that mindset has changed, according to Mr. Becker. "Over the last couple of years, what you see is a move from selective hiring to more aggressive acquisitions of physicians," he said.
Moving into the legal portion of the presentation, Mr. Becker said two core questions for physician co-management agreements are:
1) What will it actually do? "It can't be formed just because you don't want to lose your physicians to another hospital system," said Mr. Becker.
2) What services will be defined by the agreement? Mr. Becker recommends hiring a service line manager who works with the co-management company to ensure agreements are facilitated.
Mr. Becker explained that a large portion of investigations are conducted on billing and collections. "For ever $2 million the government spends on investigations, it gets $17.3 million back," said Mr. Becker. "In terms of solving healthcare problems, there are many politically unpopular ideas to save costs. But one of the decisions that is not unpopular is putting more money into fraud-fighting efforts," said Mr. Becker.
Similarly, the government is also spending more time investigating hospital-physician relationships. Kickback classes no longer involve only bad actors as much as they used to, according to Mr. Becker. Still, he noted that the ASC environment has not been as prime of a target for government investigations as much as other healthcare settings.
Ms. Gilmer noted a few key concepts for successful compliance plans, including a culture of compliance, education and audit monitoring. She said that safe harbors are still the preferred method to remain compliant. When a hospital meets certain "safe harbors," it can avoid penalties if they show they did not intend to violate the anti-kickback statute. If hospitals aren't meeting safe harbor requirements, the deal is not necessarily illegal, but faces more risks.
Financial relationships cannot, in any way, be a method to reward providers for volume or referrals. "It doesn't matter if there's a long reason of why an agreement might be legitimate," said Ms. Gilmer. "If there is one reason it's illegitimate, that's all that matters." She also noted that each physician relationship should have its own file with a step-by-step outline of compliance efforts to ensure the relationship has met regulations.
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Mr. Becker began the discussion with trends he's observed in the healthcare and ASC industry. He said an entrepreneurial generation of physicians may be on the decline — a trend sparked by younger physicians' preference for work-life balance along with the nationwide move towards hospital employment. Also, healthcare reform's opposition to physician-owned hospitals may reduce a large entrepreneurial force in the industry.
Recent studies have shown the average ASC has approximately 15 physicians, according to Mr. Becker. "Ten years ago, extensive business coming from non-affiliated physicians was a sign of health. Now that's a concern," he said. "If those physicians go to work for another hospital system, it can drive an ASC deep into the red." He also said there is increased competition for a limited amount of physicians, since approximately 80 percent of physicians are already in some type of financial relationship with hospitals.
Hospitals used to be fairly selective about which specialists they were hiring five years ago, but that mindset has changed, according to Mr. Becker. "Over the last couple of years, what you see is a move from selective hiring to more aggressive acquisitions of physicians," he said.
Moving into the legal portion of the presentation, Mr. Becker said two core questions for physician co-management agreements are:
1) What will it actually do? "It can't be formed just because you don't want to lose your physicians to another hospital system," said Mr. Becker.
2) What services will be defined by the agreement? Mr. Becker recommends hiring a service line manager who works with the co-management company to ensure agreements are facilitated.
Mr. Becker explained that a large portion of investigations are conducted on billing and collections. "For ever $2 million the government spends on investigations, it gets $17.3 million back," said Mr. Becker. "In terms of solving healthcare problems, there are many politically unpopular ideas to save costs. But one of the decisions that is not unpopular is putting more money into fraud-fighting efforts," said Mr. Becker.
Similarly, the government is also spending more time investigating hospital-physician relationships. Kickback classes no longer involve only bad actors as much as they used to, according to Mr. Becker. Still, he noted that the ASC environment has not been as prime of a target for government investigations as much as other healthcare settings.
Ms. Gilmer noted a few key concepts for successful compliance plans, including a culture of compliance, education and audit monitoring. She said that safe harbors are still the preferred method to remain compliant. When a hospital meets certain "safe harbors," it can avoid penalties if they show they did not intend to violate the anti-kickback statute. If hospitals aren't meeting safe harbor requirements, the deal is not necessarily illegal, but faces more risks.
Financial relationships cannot, in any way, be a method to reward providers for volume or referrals. "It doesn't matter if there's a long reason of why an agreement might be legitimate," said Ms. Gilmer. "If there is one reason it's illegitimate, that's all that matters." She also noted that each physician relationship should have its own file with a step-by-step outline of compliance efforts to ensure the relationship has met regulations.
Related Articles on Legal Issues for ASCs:
Opinion: What is Your ASC Worth: Fair Market Value vs. Market Value9 Observations on the ASC Market
Anti-Kickback and Stark Act Compliance: Common Issues for Surgery Centers