OIG Releases Advisory Opinion No. 07-13

On October 19, 2007, the Department of Health and Human Services' Office of Inspector General (OIG) released OIG Advisory Opinion No. 07-13 (Advisory Opinion). 

In the Advisory Opinion, a group of ophthalmologists and optometrists, and a wholly-owned subsidiary of a nonprofit hospital system (hospital) owed 100 percent of a group practice.  The ophthalmologists and hospital also had ownership interests in a surgical center, which operated Medicare certified single specialty ophthalmology ambulatory surgical centers (ASCs). Under the proposed arrangement, the hospital intended to sell some of its ownership interest in the surgical center to the optometrists.  Therefore, the group practice and surgical center inquired whether the addition of the optometrists as owners of the single specialty ophthalmology ASCs would violate the Federal anti-kickback statute and constitute grounds for related sanctions, including civil monetary penalties and program exclusions.   

Based on the facts presented, the OIG concluded that the proposed arrangement could potentially generate prohibited remuneration under the Federal anti-kickback statute and that the OIG could potentially impose related sanctions.  In reaching that conclusion, the OIG found that the proposed arrangement did not satisfy the safe harbor for investment interests in hospital/physician-owned ASCs.  The OIG pointed out that the safe harbor requires, among other things, that ownership be limited to physicians who perform ASC procedures on a regular basis (as demonstrated by meeting a one-third practice income test) and other investors who are not in a position to generate referrals to the ASC or its investors.  However, the OIG found that the optometrists would perform no ASC procedures, but would generate referrals to other investors (e.g., ophthalmologists) and, indirectly, to the surgical center ASCs. 

Because no safe harbor would protect the addition of the optometrists as owners of the surgical center, the OIG next examined whether the proposed arrangement would pose a minimal risk under the Federal anti-kickback statute.  In doing so, the OIG found that there were no safeguards to minimize the risk that the optometrists' investment in the surgical center would be for the purpose of inducing or rewarding referrals.  The OIG also found that the ophthalmologists and optometrists were in distinctly different positions. In particular, the OIG determined that the ophthalmologists personally performed surgical procedures at the surgical center ASCs as an extension of their office practices, but that the surgical center ASCs were not a comparable extension of the optometrists' office practices. Further, the OIG concluded that the likelihood that the optometrists would use their investment in the surgical center as a vehicle for receiving remuneration for referrals to the ophthalmologists increased significantly. Therefore, the OIG concluded that the proposed arrangement did not pose a minimal risk.