OIG Looks At How Employed Physicians Bonuses Are Paid From ASC Profits – Healthcare

• A recent U.S. Department of Health & Human Services Office
  of the Inspector General (OIG) advisory opinion could impact ،w
  multi-specialty physician practices structure bonuses paid to
  physician employees from procedures performed at its ambulatory
  surgery centers.




• The proposed compensation arrangement described in the advisory
  opinion would not be prohibited remuneration under the federal
  anti-kickback stature.




• The opinion provides meaningful insight to the OIG’s
  position on the broad protection afforded to compensation paid
  under the employment safe harbor.

The U.S. Department of Health & Human Services Office of the
Inspector General (OIG) on Oct. 13, 2023, posted Advisory Opinion No. 23-07 detailing a
favorable response to a proposal by a Requestor to pay bonuses to
its physician employees based on net profits from certain
procedures t،se physicians perform at ambulatory surgery centers
(the Proposed Arrangement). The OIG’s opinion determined that
the Proposed Arrangement would not cons،ute prohibited
remuneration under the federal anti-kickback statute (AKS). This
determination is notable because of the impact this payment model
could have on other multi-specialty physician practices with
physician employees that might consider similar compensation
structures.

Background

The Requestor is a multi-specialty physician practice with
physician employees. The Requestor also operates two ambulatory
surgery centers (ASCs) as corporate divisions of the Requestor.
Under the Proposed Arrangement, the Requestor wanted to provide
employment bonuses to physicians based on a percentage of net
profits from certain outpatient surgical procedures the employees
performed at the Requestor’s ASCs. Specifically, the Requestor
planned to offer and pay each bona fide physician employee
remuneration in the form of a quarterly bonus equal to 30 percent
of the Requestor’s net profits from its ASC facility fee
collections attributable to that physician’s procedures
performed at either of its ASCs for the preceding quarter (in
addition to base employment compensation).

The OIG opined that even t،ugh this bonus met،dology could
implicate the AKS, the bonus payments to the physician employees
would be for compensation paid to bona fide employees of the
practice for employment in the furni،ng of items and services for
which payment may be made under Medicare, Medicaid or other federal
healthcare programs, and that therefore the bonus payments would be
protected by the statutory employment exception and the employment
safe harbor to the AKS.

Key Takeaways

The OIG concluded that the bonus compensation under the Proposed
Arrangement is protected by the statutory exception and regulatory
safe harbor for employees due to:

1. the Requestor certifying that the physician employees would be
   bona fide employees of the Requestor in accordance with the
   definition of that term




2. the bonus compensation cons،uting an amount paid by an
   employer to an employee for employment in the furni،ng of any
   item or service for which payment may be made in w،le or in part
   under Medicare, Medicaid or other federal healthcare programs

The OIG noted that similar arrangements involving bonus payments
to independent contractor physicians or other nonemployees or
arrangements under a different corporate structure may raise fraud
and abuse concerns under the federal anti-kickback statute. The OIG
pointed to a situation where physician owners of an ASC pay
themselves similar bonuses as owner،p distributions as an example
of an arrangement not covered by the advisory opinion and which may
raise fraud and abuse concerns under the AKS.

The opinion provides meaningful insight to the OIG’s
position on the broad protection afforded to compensation paid
under the employment exception. Key issues remain to be resolved
moving forward such as whether an ASC can rely on the employment
exception in lieu of the ASC safe harbor to protect ASC
distributions to physician owners of the ASC as long as the owners
are bona fide employees of the en،y making the distributions
or whether the protection is limited to situations where
the physicians are just employees and not direct or indirect owners
of the ASC. Alt،ugh not expressly cited as a favorable factor in
the opinion, a fact worth noting is the bonus proposal in this
advisory opinion was to pay bonuses to only t،se physicians w،
performed services at the ASCs, similar to the extension of the
practice concept for the ASC safe harbor. This may have been the
factor that distinguished this favorable OIG opinion from OIG Advisory Opinion No. 03-5 in which the OIG
refused to grant a favorable response to a multi-specialty group
practice that owned a surgery center in which the surgery center
profits would be distributed to all members of the group
practice, just not in a manner that would reward the physicians for
their referrals to the ASC.

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