Ambulatory Surgical Centers and the Regulatory Environment

Miami is an international crossroads city and the global healthcare industry is present here. Multinational health care and related companies must practice in accordance with U.S. law, even if this law conflicts with the business’s home country.

Today’s healthcare companies operate in a highly regulated environment. If they are building a global presence, they must manage potential risks associated with third parties, agents, and foreign affiliates. The companies extended relationships must also abide by U.S. law. Ambulatory surgery centers (ASCs) and their management companies must consider both regulatory and transactional requirements. Jerry Sokol of McDermott Will & Emery is an experienced legal counsel to large health systems and/or corporate buyers in the healthcare sector.

Ambulatory Surgery Centers

Legal issues concerning ASCs continue to evolve. For instance, increased enforcement of anti-kickback and associated statutes, rising impatience from mainstream physicians concerning doctors’ activities at ASCs, and increasing efforts of doctors and administrators to identify new and creative ways to profit from ASCs continue to present legal challenges.

Some advocates say that ASCs and joint ventures with hospitals can contract for lower managed care rates and make more money in existing co-management relationships. Others focus on how to reduce the financial struggle between ASCs and insurers about out-of-network reimbursements.

Anti-Kickback Issues

The federal government continues to increase funds to healthcare and medical fraud enforcement. These investigations primarily focus on physician-hospital associations and billing and/or collection matters. Investigators continue to probe financial relationships between physicians and medical centers/hospitals.

Today, the ASC industry in the U.S. must manage more fraud and abuse investigations than ever before. Start-up ASCs, sale of equity interests to doctors, and buying or selling ASC equity positions to health systems or large corporates require careful legal guidance. Jerry Sokol Miami assists ASCs and ASC managers with both regulatory and transactional needs.

OON Reimbursement

ASCs continue to struggle with payor relationships and out-of-network (OON) reimbursement issues. In previous years, ASCs didn’t take the necessary steps to inform patients about in-network alternatives. Unfortunately, state and federal regulators placed the blame on ASCs and not their payors. The net result is that many ASCs must charge patients higher than average out-of-pocket costs when payor refuse to pay claims.

Some ASCs have proactively managed the regulatory environment. For instance, some ASCs build better relationships with their residential state department of insurance and/or large payors. These ASCs advocate for patients’ rights. Payors’ no-pay policies to OON providers preclude patients from using full PPO network benefits.

Non-Compliance Issues

Self-monitoring physician teams are much less likely to turn a blind eye to non-safe harbor compliance matters. Many ASCs offer the non-compliant doctor or provider full value for his or her shares or financial interest to protect compliant physicians.

In other cases, the team may provide legal notice to a non-compliant practitioner, demanding that he or she come into safe harbor compliance.

The law says that safe harbor requirements must consistently apply to all practitioner members if the ASC plans to enforce these concepts. It is essential for ASC teams to comply fully and fairly with safe harbor compliance issues. Litigation surrounding safe harbor non-compliance issues continues to increase.

Although the future concerning health care reform is unclear, it’s important for ASC managers and equity owners to proactively manage certain long-term trends in the law.

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