Recently, a confidential Qui Tam federal motion by the Florida Society of Anesthesia (FSA) has been made public. In this suit, the FSA alleges unlawful “company model” schemes by several practice groups, mainly gastroenterologists, and filed a federal false claims act complaint.
Anesthesiology has seen a rise of proceduralists utilizing the company model. In this model, anesthesia providers are hired, turn over billing rights, and then are compensated below market rates. Alternately, CRNAs can replace physician anesthesiologists. Some believe this loss of business and income has larger implications. In an era of health reform, this may alter the value of Anesthesia Care in fee splitting/value based models of care. The company model is currently illegal under some state laws, such as Maryland, but not necessarily federal law. Other arrangements exist, however, that are legal. This article reviews the basics and the implications.
Let’s start by looking at the three principal ways that we provide service to Surgeon-owned centers:
Fee-For-Service Model (traditional model)
An Anesthesia group will work directly with the ASC (ambulatory care center), providing its service and assuming responsibility for billing and collecting. Since there is no financial connection between the anesthesia group and the ASC, this model carries little legal risk of violating the AKS (Anti-Kickback Statute).
Another option is the employment model, in which the ASC will employ the anesthesia providers directly and provide their salary. In this case, the anesthesia providers perform anesthesia services at the ASC and give the ASC the right to collect professional fees for their services. In contrast to the traditional model, this allows the ASC to gain revenue from anesthesia services.
There are downsides to the employment model. First, the ASC is responsible for the provider’s salary, even if revenues are less than expected. Second, some third-party payers may hesitate to process claims from an ASC that covers facility and anesthesia services simultaneously. The ASC that bills for anesthesia often has payments bundled, denied or delayed.
Finally, this arrangement could violate some state corporate practice of medicine and fee-splitting regulations. It also can be argued that it increases utilization of services.
The third of the three arrangements is the company model, wherein the ASC creates its own company for anesthesia services which directly employs or contracts with anesthesia providers. The newly-formed company charges for the anesthesia services, whereas the ASC charges for facility fees (keeping them separate and avoiding bundling). Of course, this arrangement is advantageous to the ASC, and is frequently used. However, it has recently faced increased scrutiny by the OIG and is may be illegal under state Self-Referral laws.
There are two major advantages to the company model. First, because the anesthesia service fees and the facility fees are billed by two separate entities under this arrangement, there are fewer chances of payment denial. Additionally, the newly formed company does not need to consist of the exact medical specialists who own the ASC or in the same percentages, allowing more control of the makeup of shareholders.
The OIG has warned that the anesthesia group has given the ASC investors the chance to profit off of anesthesia services, which can potentially be perceived as a kickback. Increased utilization is a red flag. But there are ways to minimize the likelihood of the agreement being perceived as a suspect contractual joint venture under federal law.
Self-Referral and Health Reform
As part of payment reform, we are evaluating new ways to be paid based on the “value” of the care we provide. Initially, this took the form of either incentives or penalties for meeting “quality” requirements or avoiding complications and readmissions. These steps allow the traditional fee for service model to continue.
Going forward, government and third party payers want to transition to a system with bundled payments per episode of care or global capitated budgets for a population of patients. The details are complicated; for providers, the key point is that we must be able to value our services and argue their value. As we transition to a system that rewards referring physicians over captive physicians (like Anesthesiologists, Radiologists and Emergency physicians) even more than now, the importance of negotiation is critical.
Additionally, we are simultaneously transitioning surgical volume from acute care settings like hospitals to outpatient ASC’s that may be hospital owned or physician owned. These physician owned entities are already forced to practice in a highly efficient manner due to lower reimbursement. As the pressure has constrained margins, we must be watchful for business practices that create profit centers from higher utilization of tests and services.
Note- This article was not written by a lawyer and does not constitute legal advice. Please consult a legal professional for a legal opinion.