Ambulatory Surgery Centers are in the Spotlight in the OIG Advisory Opinion No. 21-02

May 3, 2021

Written by Bartt B. Warner, CVA

Noteworthy for investors of ambulatory surgery centers (“ASCs”), the Office of Inspector General (“OIG”) released a favorable (low risk) Advisory Opinion (No. 21-02)1 on April 29th, 2021. The Advisory Opinion reviewed a proposed arrangement (“Arrangement”) in which a health system (“Health System”), manager (“Manager”) and five orthopedic surgeons and three neurosurgeons employed by the Health System (“Physician Investors”) would like to invest in a new ASC (“New ASC”). The offer or payment of investment returns from an ASC to an investor constitutes remuneration under the Federal anti-kickback statute. As a result, the Advisory Opinion analyzed if the Arrangement, if assumed, would constitute justification for the imposition of sanctions under the Federal anti-kickback statute.

According to the Advisory Opinion, “the Proposed Arrangement, if undertaken, would generate prohibited remuneration under the Federal anti-kickback statute if the requisite intent were present, the OIG would not impose administrative sanctions on Requestors in connection with the proposed Arrangement under sections 1128A(a)(7) or 1128(b)(7) of the Act, as those sections relate to the commission of acts described in the Federal anti-kickback statute.”


  1. Health System would own 46 percent of the New ASC.
  2. Physician Investors would own 46 percent collectively, ranging from 4 percent to 8 percent per Physician Investor.
  3. The Manager would own 8 percent and develop and manage ASCs throughout the country while providing various management services, consulting, and administrative services to the New ASC.
  4. Physicians would not have any ownership interest in the Manager.
  5. The New ASC would allow new investors to invest directly (i.e., no investor would invest through a pass-through entity). In addition, ownership interest in the New ASC would not be contingent on prior or expected volume or value of referrals made by the potential new investor(s).
  6. Distributions and capital contributions would be made proportionately to an investor’s ownership interest the New ASC.
  7. The New ASC would be in a newly constructed medical facility owned by a real estate joint venture (“Real Estate Company”) comprised of the Health System, the Physician Investors, and the Manager.
  8. The New ASC would enter into various space, equipment leases and services arrangements with the Health System and the Real Estate Company.

Referral Risk

Under the Proposed Arrangement, both the Health System and its affiliated physicians, including Physician Investors, would be in a position to generate or influence referrals to various beneficiaries of Federal health care programs to the New ASC. In order to limit the ability of the aforementioned physicians to make or influence referrals, the Health System would disallow any action that required and/or encouraged any physician or medical staff members refer patients to the New ASC or to the Physician Investors. In addition, the Health System would refrain from tracking any referrals made to the new ASC by its affiliated physicians. Further, the compensation received by the affiliated physicians from the Health System would be consistent with Fair Market Value and would not be related in any way, to the volume or value of referrals that the Health System’s affiliated physicians make to the New ASC or its Physician Investors. Lastly, the Manager also attested that it would not make or influence referrals in any way to the Physician Investors or to the New ASC.

Physician Investor Procedures, Income and Program Parameters

According to the Advisory Opinion, the Health System certified the following:

  1. Each year, a minimum of one-third of the procedures payable by Medicare and performed by a physician in an ASC (“ASC Qualified Procedure”) would be performed at the New ASC.
  2. For the previous fiscal year or previous 12-month period, every orthopedic surgeon Physician Investor would receive at least one-third of his or her medical practice income from ASC-Qualified Procedures.
  3. For the previous fiscal year or previous 12-month period, not every neurosurgeon Physician Investor would derive one-third of their medical practice income from ASC-Qualified Procedures.
  4. Manager would oversee monitoring each Physician Investor’s compliance with the various procedure and medical practice income requirements.
  5. The majority of the medical practice income for the neurosurgeon Physician Investors is derived from inpatient hospital procedures and would continue even after the investment in the New ASC. However, the neurosurgeon Physician Investors would regularly utilize the New ASC (e.g., to personally perform neuroplasty procedures).
  6. For ASC-Qualified Procedures, the Physician Investors rarely would refer patients to each other.
  7. The estimated number of ASC-Qualified Procedures performed in the New ASC and referred by Physician Investors would be less than 1 percent of the aggregate number of ASC-Qualified Procedures performed at the New ASC annually.
  8. Any space or equipment leased by the new ASC from the Health System and/or the Real Estate Company would comply with the Federal anti-kickback statute safe harbors.
  9. Any services performed by the Health System and/or Real Estate Company for the benefit of the New ASC would comply with the Federal anti-kickback statute safe harbors.
  10. Patients referred to the New ASC by any investor will receive written notification of such investor’s ownership in the New ASC.

Safeguards to Mitigate Risk

The Advisory Opinion acknowledged several ways that the Arrangement mitigated risk and keys questions that should be asked in similar situations which are listed below:

  1. Is the ASC management company directly or indirectly influencing referrals of items or services reimbursable by a Federal health care programs to the ASC?
  2. Is there physician ownership in the ASC management company?
  3. Is the health system influencing and/or tracking referrals from its affiliated physicians to the ASC?
  4. Would the physicians that are investors in the ASC derive at least one-third of his or her medical practice income from all sources for the previous fiscal year or previous 12-month period from the performance of ASC-Qualified Procedures?
    • If the answer is no, would the physicians utilize the ASC on a regular basis as part of their medical practice and would the physicians rarely refer ASC-Qualified Procedures to other physician investors in the ASC?
  5. Does the arrangement contain safeguards to mitigate the risk that the health system would make or influence referrals to the ASC?
  6. Is the compensation for the health system’s affiliated physicians set at Fair Market Value and not related in any way to the volume or value of referrals?
  7. Is the offer of ownership in the ASC based on prior or future referrals?
  8. Are the profit distributions and capital contributions proportionate to an investor’s ownership in the ASC?
  9. Do the space, equipment rental and services arrangements for the ASC comply with the Federal anti-kickback statute safe harbors?
  10. Does the ASC and its physician investors provide written notice to patients referred by the ASC investors to the ASC of the referral source’s ownership interest in the ASC?
  11. Are ASC patients receiving medical benefits/assistance under any Federal health care program treated in a nondiscriminatory manner?
  12. Does the arrangement include safeguards that prevent ancillary services performed at the ASC to Federal health care program beneficiaries that are not related directly and integrally to primary procedures performed at the New ASC and billed separately to any Federal health care program?
  13. Is any cost associated with the ASC (unless required by a Federal health care program) not included on any cost report or any claim for payment from a Federal health care program?


Although the Advisory Opinion is favorable, the OIG took the unique stance of relying heavily on the Health Systems’ certifications as previously discussed. In addition to the certifications, the OIG offered a multitude of factors that should be carefully considered for similar arrangements. The safeguards outlined in the opinion demonstrate regulatory guidance remains an important part of investing in health care. All interested parties should consider their referral relationships, as well as guidance provided by this opinion and applicable laws before finalizing a similar arrangement.


1 OIG Advisory Opinion 21-02 available at:

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