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OIG allows employer to retain profits from employed CRNA in ASC

November 24, 2021

Earlier this month, the HHS Office of Inspector General (OIG) published an advisory opinion that permitted a pain management practice to retain the profits it received from billing for the anesthesia services that an employed CRNA provided at an ASC partially owned by the practice’s physician-owner.

As described in Advisory Opinion 21-15, a pain management practice wholly owned by one physician employed a CRNA to provide anesthesia services at the practice’s office and an ASC co-owned by the practice’s physician-owner and another physician. Pursuant to this agreement, the CRNA reassigned his billing rights to the practice while the practice assumed responsibility for the CRNA’s performance of anesthesia services, billed for the CRNA’s services, paid the CRNA a salary, and performed other duties typically expected of employers.

In reviewing the employment agreement, the OIG identified two streams of remuneration: (1) the salary payments from the practice to the CRNA and (2) the profit the practice could earn by billing for the CRNA’s anesthesia services under the reassignment of billing rights. According to the OIG, both streams implicated the Anti-Kickback Statute - the salary payments because the CRNA ordered and arranged for items and services that might be reimbursable under Medicare or Medicaid, and the potential profit because the practice arranged for the purchase of the CRNA’s services or referred patients to the CRNA for services that might similarly be reimbursed by Medicare or Medicaid.

Notwithstanding the conclusion that both reimbursement streams implicated the Anti-Kickback Statute, the OIG declined to impose sanctions for either one. The OIG concluded that the first stream was protected by the safe harbor for employment agreements, and the second stream, while not protected by a safe harbor, presented a sufficiently low risk of fraud and abuse because it was a “straightforward” arrangement under which the practice assumed duties that were typical of an employer. In reaching its conclusion about the second reimbursement stream, the OIG noted that reassignment arrangements are common in the health care industry and explicitly authorized by Medicare statutes and regulations.

Although Advisory Opinion 21-15 indicates that the OIG is unlikely to impose sanctions on parties who enter reassignment arrangements as part of straightforward, bona fide employment agreements, it may not provide much clarity since many health care providers likely already believed that such arrangements were permitted. The OIG is correct that reassignment agreements like the one described in Advisory Opinion 21-15 are quite common, so reaching any other conclusion would have been extremely disruptive to the industry. 

Moreover, in reaching this conclusion, the OIG has also indicated that reassignment arrangements implicate the Anti-Kickback Statute because they give the party accepting assignment the opportunity to earn profit from services. This statement could impact parties whose relationships are less straightforward. Interestingly, Advisory Opinion 21-15 did not discuss whether the anesthesia services were paid at Fair Market Value (“FMV”).  Nevertheless, compensation paid to anesthesia providers should always be consistent with fair market value rates (supported by reliable surveys, valuations or market data).  Otherwise, it seems likely that the OIG would take the position that the difference between the fair market value rate for the CRNA’s services and the actual compensation amount paid to the CRNA constitutes a payment to the referring physician(s) in exchange for referrals of anesthesia services.

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