Employee Bonuses of Net Profits - ASC Facility Fee?

Question:

Hi Jennifer,

Can I pay my surgeons a % of facility fee profits to incentivize them to bring cases to our ASC? 

Thank you.

Dr. J

Answer:

That's a specific question!  And one I will answer here, but with very narrow application.   An opinion dating back to 2023 from the Office of Inspector General addresses bonuses from ASC facility fees head on, but in a narrow capacity.   

In OIG Advisory Opinion No. 23-07, the OIG approved a compensation model where physicians received a percentage of  net profits from ASC facility fees tied to procedures they personally performed, BUT, the short opinion is RIFE with triggers - there are footnotes absolving the author of delving into corporate structure issues, caveats added to ownership rights of participants, and clear lines drawn on "employment status".   So, while there is room on the scale to tilt towards "yes," I cautioning we need a real assessment of your facts to ensure we are not a weighted "no". 

To give a bit more on the applicable opinion (23-07), the key is the isolated employment status. Under the Anti-Kickback Statute, there is a statutory safe harbor that specifically allows employers to pay employees for services if they have a bona fide employment relationship. Under the safe harbor, “remuneration” does not include payment to employees for services reimbursable by federal health care programs. Here, the OIG concluded that this this arrangement was protected because the physicians were bona fide employees of the ASC, so the bonus compensation was covered under the safe harbor.  

The OIG also made clear that small changes to this structure could lead to a very different outcome due to a higher fraud and abuse risk. If the physicians owned the ASCs or were independent contractors instead of employees, there would be more concerns under the Anti-Kickback Statute. And, if the payments were structured in a way that tied more directly to referral volume rather than personally performed services, the arrangement would not be approved.

The takeaway is that incentive-based bonuses are not off-limits, but must be structured the right way. When done within a bona fide employment relationship and tied to a physician’s own work, they can be compliant. Otherwise, they can look exactly like the type of financial incentive the Anti-Kickback Statute is designed to prohibit.