REGULATORY COMPLIANCE IN THE ASC

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REGULATORY COMPLIANCE IN THE ASC

• October 6, 2007
• Michael A Romansky, JD
• mromansky_at_OOSS.org
• [phone]

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LEGAL AND REGULATORY CONSIDERATIONS IN
DEVELOPING AN ASC

• Todays Agenda
• Regulatory challenges
• Medicare certification
• State CON/licensure
• Formation and organizational issues
• Expanding the referral base
• Other fraud/abuse issues

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Developing an ASC Regulatory Prerequisites to
Facility Payments

• Licensure state statute and/or regs
• Certificate of need state statute and/or regs
• Medicare certification Medicare Conditions of
  Coverage (CfC)
• Accreditation private entity applying its
  standards (generally or than Medicare)

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Developing an ASC Regulatory Prerequisites to
Facility Payments

• Medicare Certification requires compliance with
  Medicare Conditions of Coverage (CfC)
• Standards and conditions re governing body and
  management, supervision, facility structure,
  medical staff, etc., have not been modified since
  1982.

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Developing an ASC Regulatory Prerequisites to
Facility Payments

• CMS has proposed first revision in 25 years to
  ASC conditions of coverage (CfC)
• New responsibilities and restrictions
• No planned overnight stays
• More responsibilities for governing body and
  management
• Quality assessment and performance improvement
  standards

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Developing an ASC Regulatory Prerequisites to
Facility Payments

• New responsibilities and restrictions (cont.)
• Patient rights
• Infection control
• Patient admission, assessment, discharge
• Status
• Comments due October 30
• Final rule late 2008

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Developing an ASC Regulatory Prerequisites to
Facility Payments

• Facility must be used exclusively for purposes
  of providing ambulatory surgical services
• ASC physically separate from clinic
• Surgical space (OR, pre- and post-op) never used
  for non-surgical purposes
• ASC maintains separate medical records and staff
  for ASC operations

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Developing an ASC Regulatory Prerequisites to
Facility Payments

• Facility must be in compliance with state
  licensure laws.
• Licensure laws may require CON
• Doesnt require a license if facility is
  permitted to operate without one, e.g., physician
  office exemption
• Lesson Must do thorough regulatory analysis of
  federal and state laws to obtain Medicare
  certification

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Developing an ASC Regulatory Prerequisites to
Facility Payments

• State health department or private accreditation
  body must survey facility

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FORMATION AND ORGANIZATIONAL ISSUES

• Separate entity?
• LLC or other independent entity
• Multiple investors may necessitate disclosure of
  risks

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Medicare Fraud/Abuse Issues

• ASC investment safe harbor
• Compensation arrangements
• Relationships with vendors
• Stark II regulations
• Voluntary compliance program

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Four ASC Investment Safe Harbors

• Surgeon-owned ASC
• Single-specialty ASC
• Multi-specialty ASC
• Hospital/physician ASC

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Common Elements to All Safe Harbors

• ASC is Medicare-certified
• No loans/financing to referring investors
• Equal terms to all investors w/o regard to
  referrals
• Payments to investors must be proportional to
  capital contribution NOT TIED TO REFERRALS
• Federal program beneficiaries not treated
  discriminatorily
• Patients notified of physicians ownership

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Additional Elements for Single-Specialty ASCs

• All investors
• Must be physicians
• In a position to refer patients
• Perform services themselves
• One-third income test
• Each physician must derive at least 1/3 of his
  medical practice income from procedures performed
  in HOPD or ASC

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Additional Elements for Multi-Specialty ASC

• Each surgeon must meet
• Common elements of safe harbor
• One-third income test
• One-third procedures test Must perform,
  individually, at least 1/3 of his procedures for
  the prior year at the particular ASC

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Can We Dock Safely in the ASC Safe Harbor

• Few ASCs pass muster
• 1/3 tests
• Non-surgeon investors
• Compliance with safe harbors is goal, not mandate
• Use safe harbor elements as guidelines in
  promoting, organizing, and implementing ASC
  ventures

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Can We Dock Safely in the ASC Safe Harbor?

• Promote use of ASC by surgeon owners
• It is reasonable to check utilization of facility
  by owner-surgeons
• Implications for refractive centers
• ASC ventures with optometrist owners

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Non-Users, Out-of-Towners, Retirees, the Deceased
and Other Non-Contributor Deabeats

• Changes in safe harbors are a reminder to draft
  carefully and periodically amend organizational
  documents
• Buy-sell provisions
• Build into original operating agreements
• Use them judiciously
• Apply them uniformly

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Additional Safe Harbors Relevant to ASCs

• Personal services
• Space rentals
• BASIC CONCEPTS
• a.Written agreements, at least one year
• b.Fair market value compensation
• c.No tie-in to referral of Medicare patients

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Other Areas of Regulatory Exposure for ASCs

• Medicare conditions of coverage
• HIPAA
• Employment/EEOC
• Antitrust
• Credentialing
• OSHA/EPA
• DEA
• CLIA
• Medical device injury reporting
• COBRA