If you’re a physician-owner seeking to profit fromanesthesia reimbursement, here’s an overview ofthree joint-venture models that let you do just

that. Each is unlike the traditional ASC-anesthesiaarrangement, where the ASC bills for facility feeswhile anesthesia providers bill for services rendered.

Anesthesia services company. This modelinvolves forming a new company to supply

anesthesia services, either owned by the samephysicians who own the ASC, in the same percent-ages, or by selected investors, provided the selec-tion isn’t rewarding the ASC’shighest utilizers. Since the devel-opment, recruitment, manage-ment, and coding and billingassociated with an anesthesiaconcession requires some busi-ness acumen, an anesthesia serv-ices company may also partlyown the new company.

The new company, now theASC’s exclusive anesthesiaprovider, may charge a manage-ment fee for its administrativeassistance. It will employ or con-tract with anesthesia providers,enroll in Medicare to bill for serv-ices and obtain all payor con-tracts. It will allocate the profitsamong its owners in accordancewith the ownership breakdown.

In a variation of this model, the new companystarts out wholly owned by the established anesthe-sia company with the condition that, after a limitedperiod of time, the ASC’s investors have the optionto purchase all or part of the new company at a pre-determined fair market value. The new companyand the established company will then enter into along-term management arrangement.

From a payment perspective, this model reducesthe possibility that payors will deny claims or reim-burse at a lesser level. From a regulatory perspec-

tive, however, the model shares certain elements ofa “suspect contractual joint venture” under the fed-eral Anti-kickback Statute. Recent guidance fromthe Office of Inspector General suggests thatarrangements in which an existing supplier gives areferral source the opportunity to profit may bedeemed sham arrangements and the profit opportu-nities deemed kickbacks. By setting up the arrange-ment to safe harbor the various financial arrange-ments, you can reduce, if not eliminate, the likeli-hood that this arrangement will be seen as suspect.

Group practice anesthesia. This model,

in which the physicians’ practiceemploys the anesthesia providersand bills for their services, isideal for ASCs whose physician-investors are associated with asingle group practice. A tremen-dous benefit is that you don’thave to allocate the anesthesiaprofits to investors on a pro ratabasis. You can distribute themwith more flexibility, in a mannermore closely reflecting eachphysician’s relative productivity,since they’re allocated throughthe group practice.

Another benefit of this modelis the ease and speed with whichyou can implement it, since the

group practice already has a Medicare number andpayor contracts. Review those contracts to verifythat the group practice will be reimbursed for theanesthesia services at the same rate that an anes-thesia practice would. If it won’t, the practice maywant to form a new entity to employ and bill foranesthesia services, which will operate as a wholly-owned subsidiary of the practice.

This model shouldn’t present significant regulato-ry issues, as anesthesia services are operated as anatural extension of the practice.

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LEGAL UPDATEJerry J. Sokol, JD, and Joshua M. Kaye, JD

Can ASCs Share in Anesthesia Revenue?A look at three ways that you can partner with your anesthesia providers.

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IN THE LOOP Partnering with your anesthesiaproviders can boost your facility’s bottom line.

In-house provider. With this model, anASC effectively shifts anesthesia services in-

house by hiring providers as employees or retainingthem as independent contractors. The anesthesiaprovider assigns the ASC the right to bill for andcollect anesthesia fees.

There are two key advantages here. First, the ASCand its investors can administer and profit fromanesthesia services the same way they have from thecenter’s operations, lessening the likelihood forinvestor grievances that the anesthesia concession isbeing administered differently than the center’s otherworkings. Second, the model might better positionthe ASC to offer its payors package pricing; that is,approach the payors with a package of two services

(the facility and the anesthesia provider fees) thatthey’d otherwise have to pay separately.

This arrangement does come with cautions. Itcould implicate the Anti-kickback Statute if theanesthesia provider accepts a payment below fairmarket value in exchange for an exclusive source ofanesthesia referrals. Some payors have expressedreluctance to process claims from ASCs that coverboth facility and anesthesia services. It could alsoimplicate states’ fee-splitting laws or, if the ASCinvolves non-physician ownership, their corporatepractice of medicine laws. OSM

Mr. Sokol (jsokol@mwe.com) and Mr. Kaye (jkaye@mwe.com)are partners in the health law department of McDermott Will &Emery’s Miami office and co-chairs of the firm’s HealthTransactions Practice Group.

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