On October 19, 2007, the Department of Health and Human Services Office of Inspector General (OIG) posted Advisory Opinion No. 07-13 concerning ownership in ophthalmology Ambulatory Surgical Centers (ASCs). The Advisory Opinion can be found at http://www.oig.hhs.gov/fraud/docs/advisoryopinions/2007/AdvOpn07-13.pdf

A group practice and a surgical center requested an opinion from the OIG regarding whether a Proposed Arrangement would violate the anti-kickback statute. The Proposed Arrangement called for the addition of optometrists as owners of three single-specialty ophthalmology ASCs.

The group practice was owned by 8 ophthalmologists, 9 optometrists, and a wholly-owned subsidiary of a nonprofit hospital system. The surgical center which operated the three single-specialty ophthalmology ASCs was owned by only the ophthalmologists and the hospital.

The optometrists referred patients to the ophthalmologists for the treatment of suspected or actual eye disease or injury. While some of the optometrists assisted with preoperative and postoperative work, only the ophthalmologists performed surgery in the surgical center ASCs.

The Proposed Arrangement called for the hospital to sell some of its ownership interest in the surgical center to the optometrists over a period of 3 years. Surgical center joint ventures that include investors who can generate surgical business are “subject to fraud and abuse,” the OIG stated.  The OIG performed a straightforward anti-kickback statute analysis and gave an unfavorable advisory opinion to the group practice and surgical center, concluding that the Proposed Arrangement could potentially generate remuneration prohibited under the anti-kickback statute.

The OIG analyzed the Proposed Arrangement under the investment interests “safe harbor” exception to the anti-kickback statute and found that it did not meet the exception. A critical component to the investment interests safe harbor exception is that ownership in the ASC be limited to physicians who perform ASC procedures on a regular basis. Because the optometrist owners would not regularly perform ASC procedures, but they would generate referrals to other investors (i.e. the ophthalmologists), OIG found that the Proposed Arrangement failed to meet the investment interests safe harbor exception.

The OIG next determined whether the Proposed Arrangement might pose only a minimal risk under the anti-kickback statute. The OIG concluded that because there were no discernible safeguards to reduce the risk of fraud and abuse, it could not find that there was only a minimal risk of fraud of abuse. The surgical business would not be an extension of the optometrists’ office practice, since the optometrists would not be performing surgery in the ASCs. Thus, the risk was higher that the optometrists would invest in the surgical center simply to receive remuneration for referrals to the ophthalmologists.