ASCs must navigate a complex regulatory landscape to mitigate risks during ownership transactions, particularly for multispecialty ASCs.
Understanding and adhering to the False Claims Act, Anti-Kickback Statute, Stark Law, Exclusion Authorities and the Civil Monetary Penalties Law is essential, according to an article in the winter 2025 edition of Turning Square Corners, the newsletter of the Federal Bar Association's qui tam section.
"By adhering to these strategies, ASC owners and operators, including physicians, can protect themselves from legal risks while maintaining compliant and profitable business operations within the framework of federal healthcare regulations," the report said. "Failing to do so can result in government enforcement actions, monetary fines and potentially exclusion from participating in Medicare and Medicaid."
Here are five key points to know:
1. Under the AKS, offering or receiving remuneration for patient referrals reimbursed by healthcare programs is prohibited. However, specific safe harbors allow ASC ownership structures to avoid penalties if they meet certain conditions.
Additionally, failure to meet a safe harbor does not automatically make an arrangement illegal. The arrangement will be evaluated under the statute’s general prohibitions. Full compliance with all safe harbor conditions is required for guaranteed protection. Partial compliance may reduce risk, but offers no certainty.
2. Compliance with safe harbor standards is crucial for structuring ownership agreements and reducing legal risk. The seven standards include:
- Ownership terms must not be tied to referral volume or anticipated business from investors.
- At least one-third of each physician-investor's prior year income must derive from ASC-eligible procedures.
- Physician-investors must perform at least one-third of their procedures at the ASC.
- The ASC or its investors cannot provide or guarantee loans for investment purposes.
- Payments to investors must align proportionally with their capital investment.
- Ancillary services for federal program beneficiaries must be integral to ASC procedures and not separately billed.
- ASCs and physician-investors must treat federal healthcare program patients without discrimination.
3. Ownership transactions must occur at fair market value to avoid AKS concerns related to referral inducements. Independent, third-party valuations can help validate FMV and reduce regulatory risk. According to the article, there are three key considerations:
- Ownership units or prices must not depend on referral volume or value.
- Terms should be uniform and unrelated to the investor's ability to generate ASC business.
- Profit distributions must align with ownership interest, not individual productivity.
4. ASC transactions must avoid the following risks:
- Buying controlling interest above FMV: Acquiring controlling interest from physicians at inflated prices may be perceived as an inducement for referrals.
- Selling non-controlling interest below FMV: Selling non-controlling interests to referring physicians at undervalued prices can raise red flags. Uniform terms for all investors, regardless of referral potential, are essential.
- Buying out retiring physicians or selling to growing practices: Transparent, consistent processes defined in the operating agreement, with FMV-based pricing, are necessary for these transactions to avoid regulatory issues.
5. Profit distributions must adhere to ownership interests rather than productivity to comply with AKS rules. Ownership-based profit-sharing aligns with safe harbor provisions, ensuring compliance with federal regulations.