Expanding Your ASC's Offerings

DIt is not uncommon for physicians to have downtime in their ASCs that they wish to optimize. For example, an ASC may not have a sufficient numbers of cases to fill a full-time operating schedule, or it may simply have more space than needed to meet state survey requirements and patient needs. In order to increase the utilization of the ASC, most owners try to increase the number of physicians performing surgery at the ASC. On the other hand, others have considered leasing unused space to a physician who offers nonsurgical services. While this may seem like a good business decision, there are some significant risks to consider before taking this step.

THE ASC/MEDICARE RELATIONSHIP
In order to participate in the Medicare program and receive Medicare payment, an ASC must be certified, and, in order to be certified, it must meet Medicare's definition of an ASC. According to Medicare, an ASC is a distinct entity that operates exclusively for the purpose of providing surgical services to patients not requiring hospitalization (ie, an inpatient stay in a hospital). Consequently, the use of Medicare-certified space for nonsurgical services jeopardizes the ASC's status with Medicare. If the facility no longer meets Medicare's definition of an ASC, it cannot be certified, which means you no longer receive Medicare payments.

So as not to jeopardize your ASC's ability to be certified by Medicare, you have two options. The first is not to lease the space for nonsurgical services. Nonsurgical services does not include meeting a patient preoperatively, but rather the use of the space for an evaluation and management service or medical procedure.

Your second option is to carve out that space from that which is considered part of the ASC-certified space. In order to receive Medicare certification, surveyors evaluate the property and its facilities in order to ensure that it meets certain state-based requirements. The requirements can be rather specific; some states have requirements regarding an ASC's square footage and the type of ventilation. Thus, changing the configuration of your facility may require a new survey by the state. If you fail to get resurveyed, your participation in Medicare could be at risk.

GOING FOR IT
If you want to pursue leasing space currently considered part of your ASC for nonsurgical services, it is critical that you contact your state survey agency in advance to determine if it has any special procedures that must be followed when changing your surveyed space. You also should contact your local Medicare contractor to ensure that your certification will not be at risk.

Once you are prepared to lease the space, make sure you have a written leasing arrangement with the physician(s) who will be using the space. Allowing a physician to use the space for free could be considered a kickback under both federal and your local state law.

If you are considering opening an ASC, you may want to think ahead about designating office space separate from the certified ASC space. This preplanning would allow you to build the ASC with leasing in mind. Then, make sure the survey considers only that area that will be used for surgical services. In this way, you could offer the office space to the physicians for nonsurgical use.

Allison Weber Shuren, MSN, JD, is a health care attorney at Arent Fox Kintner Plotkin & Kahn, PLLC, in Washington, D.C. Material adapted from Ms. Shuren's presentation entitled, “Regulatory Issues in Ophthalmology,” given at the Current Concepts in Ophthalmology Meeting held in San Juan, Puerto Rico, in January 2003. Ms. Shuren may be reached at (202) 775-5712; shuren.allison@arentfox.com.