Company Model Sample Clauses

Company Model. A model commonly referred to as the “Company Model” is described in a June 16, 2010, letter from the American Society of Anesthesiologists to the Office of Inspector General of the United States Department of Health and Human Services (the “ASA Letter”). Under this model, a separate group or company is formed, which is owned by some or all of the same individuals who own the ASC (the “Anesthesiology Company”). The Anesthesiology Company contracts to provide anesthesiology services to the ASC, and the Anesthesiology Company hires the anesthesiologists as employees or independent contractors. Income received by the Anesthesiology Company in excess of the compensation paid to the anesthesiologists is distributed to the GI physician owners of the Anesthesiology Company. It should be noted at the outset that, in order to satisfy the corporate practice of medicine requirements under New York law, all of the owners of the Anesthesiology Company must be physicians.11 Assuming this requirement is satisfied, New York, as noted above, permits the sharing of fees between a practice and its employees or independent contractors. Under the safe harbor regulations, payments by the Anesthesiology Company to the anesthesiologists, whether as employees or independent contractors, can be structured to fall within the bona fide employee safe harbor12 or the personal services safe harbor described above. However, the payments from the Anesthesiology Company to its owners would not satisfy any applicable safe harbor. Since the owners of the Anesthesiology Company do not provide services to it, payments to the owners constitute a return on investment in the Anesthesiology Company. Therefore, the payments to the owners would have to qualify either under the safe harbor for investment interests13 or for investments in group practices.14 The investment safe harbor requires, among other things, that no more than 40 percent of the equity interests in the entity be held by investors who are in a position to make referrals. Under the Company Model, all of the investment interests in the Anesthesiology Company are held by physicians who are in a position to make referrals to the Anesthesiology Company. The group practice safe harbor includes a requirement that “the equity interests in the practice or group must be held by licensed health care professionals who practice in the practice or group.” However, as described in the ASA Letter, this requirement would not be satisfied because the ...