THE PHYSICIANS DO NOT MAKE MEANINGFUL CONTRIBUTIONS TO THE MSO
THE PSMSO RECEIVES COMPENSA- TION FROM AFFILIATED COMPANIES THAT IS BASED ON A PER REFERRAL , PER PRESCRIPTION , OR PERCENTAGE OF REVENUE BASIS .
THE MSO COMPENSATION IS NOT DETERMINED IN ACCORDANCE WITH FAIR MARKET VALUE .
THE DISTRIBUTIONS TO PHYSICIANS MAY IMPLICATE THE ANTI-KICKBACK STATUTE .
LEGAL
Physician-Syndicated “ MSO Models ”
Oberheiden | Elliott | Byrd | Sauter
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REASONS FOR FAILURE
Those PSMSOs reviewed cloud their operating agreements in an air of legality and arti cial emphasis of regulatory compliance . A closer look of those reviewed reveals that references to safe harbors ( such as a 40 % -60 % structure ) are designed to merely create peace of mind among PSMSO members . Investing physicians should make sure that offered documents do not contain the following flaws .
THE PHYSICIANS DO NOT MAKE MEANINGFUL CONTRIBUTIONS TO THE MSO
As the name entails , “ service ” is an inherent component of an “ MSO .” However , it can hardly be said that any of the physician owners is seriously engaged in services other than referring business to the corresponding and affiliated pharmacy or toxicology laboratory . Physicians interviewed under oath will likely admit that they have not provided a single tangible service to the MSO , have not once been involved in meaningful corporate affairs , and have instead taken a passive investor position and delegated all distribution justifying services to other professionals .
THE PSMSO RECEIVES COMPENSA- TION FROM AFFILIATED COMPANIES THAT IS BASED ON A PER REFERRAL , PER PRESCRIPTION , OR PERCENTAGE OF REVENUE BASIS .
( e . g . Pharmacies , DNA or Blood Testing Facilities , or Toxicology Laboratories )
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Due to the risk of anti-kickback violations , the Office of Inspector General and the Department of Justice have repeatedly articulated great concerns about percentage-based compensation in Physician Joint Ventures and issued several Fraud Alerts on the subject .
THE MSO COMPENSATION IS NOT DETERMINED IN ACCORDANCE WITH FAIR MARKET VALUE .
Although PSMSO operating agreements state that they reflect fair market value , they often don ’ t . In the samples reviewed , the PSMSOs charge astronomical service fees that lack any legal foundation . To be justifiable , fees should be calculated objectively and assessed by reputable third party CPAs .
THE DISTRIBUTIONS TO PHYSICIANS MAY IMPLICATE THE ANTI-KICKBACK STATUTE .
If the PSMSO service fee does not meet fair market value and cannot be considered commercially reasonable , the question of kickbacks becomes a concern . That fear is compounded by the fact that investing physicians pay a nominal investment amount but receive strikingly disproportionate returns on their investments- a classic red flag in Department of Justice kickback assessments . Pseudoreferences to safe harbors and bogus 40 %/ 60 % structures do not reduce the regulatory risk once the fair market value analysis fails .
31 TODAY ’ S PRACTICE : CHANGING THE BUSINESS OF MEDICINE