Justice Department cracks down on ASC, anesthesia provider arrangements

Recent government actions involving ASC-anesthesia provider arrangements point to a need to carefully vet these partnerships, according to a June 20 article in JDSupra from the law firm Waller Lansden Dortch & Davis. 

In April, anesthesia management services company Care Plus Management, its founders Paul Weir and John Morgan, MD, and 18 anesthesia entities Care Plus owned and operated agreed to pay $7.2 million to settle allegations of kickbacks and false claims. 

Between 2012 and 2016, Mr. Weir and Dr. Morgan were alleged to have convinced ASC physician owners to award exclusive service agreements in exchange for partial ownership in Care Plus anesthesia entities that would service the ASCs. A whistleblower alleged Care Plus Management unlawfully split a percentage of anesthesia service revenue with referring gastroenterologists, vascular surgeons and podiatrists, who were also owners of the ASCs. 

The government took issue with the ownership structure of the anesthesia company and its affiliations and the exclusive services they provided to referring physicians' ASCs. The arrangement created "sham joint ventures" — Care Plus Management and the physician-owners of each ASC would create a joint venture anesthesia company dedicated to each respective ASC.

According to the report, this case is similar to a settlement from November, when three anesthesia providers and several Georgia ASCs, along with their physician-owners and an administrator, agreed to pay more than $28 million to resolve allegations that they entered kickback agreements.

The suit alleges that Ambulatory Anesthesia of Atlanta and Northside Anesthesiology Consultants, both in Atlanta, paid a number of ASCs for medications, supplies, equipment and labor in exchange for patient referrals between 2005 and 2015. 

When structuring anesthesia contracts, the report's authors advise ASCs do the following:

  1. Monitor overlapping ownership between a service provider and the referral source.
  2. Arrange for coverage by the anesthesia provider and require each party to bill patients and payers separately. 
  3. Be wary of scenarios in which the provider performing and billing for services is outsourcing the financial risk.
  4. Note that contracting facilities are also at risk, so ASCs should monitor  the way the contracting provider is structured.

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