MARCO HISTORICO SITUACIONAL

Many states in a manner similar to the Federal Fraud and Abuse Statutes simply prohibit kickbacks. Examples of this type of statute include:

 Washington. Wash. Rev. Code Ann § 19.68.010 (1998). Rebating prohibited; disclosure; list of alternative facilities.

It shall be unlawful for any person, firm, corporation or association, whether organized as a cooperative, or for profit or nonprofit, to pay, or offer to pay or allow, directly or indirectly, to any person licensed by the state of Washington to engage in the practice of medicine and surgery, drugless treatment in any form, dentistry, or pharmacy and it shall be unlawful for such person to request, receive or allow, directly or indirectly, a rebate, refund, commission, unearned discount or profit by means of a credit or other valuable consideration in connection with the referral of patients to any person, firm, corporation or association, or in connection with the furnishings of medical, surgical or dental care, diagnosis, treatment or service, on the sale, rental, furnishing or supplying of clinical laboratory supplies or services of any kind, drugs, medication, or medical supplies, or any other goods, services or supplies prescribed for medical diagnosis, care or treatment. Ownership of a financial interest in any firm, corporation or association which furnishes any kind of clinical laboratory or other services prescribed for medical, surgical, or dental diagnosis shall not be prohibited under this section where (1) the referring practitioner affirmatively discloses to the patient in writing, the fact that such practitioner has a financial interest in such firm, corporation, or association; and (2) the referring practitioner provides the patient with a list of effective alternative facilities, informs the patient that he or she has the option to use one of the alternative facilities, and assures the patient that he or she will not be treated differently by the referring practitioner if the patient chooses one of the alter- native facilities.

 Louisiana. La. Rev. Stat. Ann. 37, § 1745 (1998). Part VII. Health Care Providers

§ 1745. Prohibition on payment for patient referrals.

1. For the purposes of this Section, the following terms shall have the following meanings:

(1) "Board" means the Louisiana State Board of Medical Examiners, Louisiana Board of Chiropractic Examiners, Louisiana State Board of Optometry Examiners, Louisiana State Board of Physical Therapy Examiners, Louisiana State Board of Examiners for Psychologists, Louisiana State Board of Nursing, Louisiana Licensed Professional Counselor Board of Examiners, Louisiana State Board of Practical Nurse Examiners, and Louisiana Board of Pharmacy.

(2) B. No health care provider shall offer, make, solicit, or receive payment, directly or indirectly, overtly or covertly, in cash or in- kind, for referring or soliciting patients. Payments representing a return on investment based upon a percentage of ownership are not considered a direct or indirect payment for the purposes of this Section.

II. COMPLIANCE AND RENEGOTIATION

The impact of the state laws on ventures is reflected in operating and share- holder agreements and in disclosure materials. It also is reflected in structures which may have interests in management companies but not the venture itself.

Operating agreements typically define who is eligible to invest and hold interests and whether physicians might be required to divest ownership if they can no longer perform cases at the center. Agreements may also indicate a process for resolving situations in which laws change or a practice, such as ownership by referring physicians, becomes illegal. An example of agreement provisions related to these areas is as follows:

Limited Renegotiation. This Agreement shall be construed to be in accordance with any and all federal and state statutes, including Medicare, Medicaid and all federal and state rules, regulations, principles and interpretations. In the event there is a change in (or the interpretation of) Medicare, Medicaid or other federal or state statutes, rules, regulations, principles or interpretations that renders any of the material terms of this Agreement unlawful or unenforceable, including any services rendered or compensation to be paid hereunder, if the continuation of this Agreement would render any other relationship(s) amongst the parties hereto illegal, or if the Institutional Member determines that its continued participation as a Member of the Company and ownership of Membership Units adversely effects or may adversely effect the Section 501(c)(3) tax exempt status of the Institutional Member's tax exempt corporate parent or Affiliates, either party shall have the immediate right to initiate the renegotiation of the affected term or terms of this Agreement, upon notice to the other party, to remedy such condition in a manner that substantially maintains the then existing economic relationships of the parties if it is legal to accomplish the change while maintaining substantially such economic relationship. If the parties cannot renegotiate such relationships, the Institutional Member shall have the option to acquire all Units held by Physician Member Class at amount equal to fair market value as determined in accord with Section 5.4 hereof without discount. If the parties do not agree to renegotiate the Agreement, and the Institutional not exercise the acquisition rights described herein, then the Company shall be dissolved in accord with Article XII.

The PPM is often used both to inform investors of the impact on the venture of

regulations as well as to develop defenses to government challenges. Typical disclosures relating to state self-referral issues may read as follows:

Section 44-113-10 South Carolina Self-Referral Law. The South Carolina Provider Self-Referral Act of 1993 ("Self- prohibits physicians from referring patients to an entity in which the physician has an investment interest unless the physician directly provides health care services within the entity, or is personally involved in the provision, supervision, or direction of care to the referred patient.

The Self-Referral Act also does not apply to certain non-publicly held entities that satisfy the following statutory requirements:

o No more than fifty percent (50%) of the value of the investment interests are held by investors who are in a position to make referrals to the entity; o The terms under which an investment interest is offered to an investor who

is in a position to make referrals to the entity are no different from the terms offered to investors who are not in a position to make referrals; o The terms under which an investment interest is offered to an investor who

is in a position to make referrals to the entity are not related to the previous or expected volume of referrals from that investor to the entity; and

o There is no requirement that an investor be in a position to make referrals to the en for becoming or remaining an investor.

When a physician owns an investment interest in an en satisfies the foregoing conditions, he or she may refer to such entity if the patient is provided with a written disclosure form informing the patient of:

o The existence of the investment interest;

o The name and address of each applicable entity to which a referral is made in which the referring physician is an investor;

o The patient's right to obtain the items or services for which the patient has been referred at the location or from the provider of the patient's choice, including the entity in which the referring physician is an investor;

o The names and addresses of at least two alternative sources of the items or services available to the patient; and

o A schedule of typical fees for items or services usually provided by the entity, or, if impracticable because of the nature of the treatment, a written estimate specific to the patient.

The Self-Referral Act by implication does not prohibit a Physician Member from owning an interest in an ASC to which he or she refers cases. However, there is no assurance that the applicable laws will not change to prohibit such physician ownership.

In addition, the Self-Referral Act prohibits physicians from offering, paying, soliciting, or receiving a kickback (whether directly or indirectly), in cash or in kind, for referring or soliciting patients. As noted above, the Center will not provide remuneration to any person with the intent of inducing referrals to the Center. As such, the Company believes that it will be operated in compliance with the anti-kickback provision of the Self-

5. REIMBURSEMENT

This chapter discusses reimbursement for outpatient surgical procedures. Specifically, it discusses each current and proposed payment method for ASCs and for hospital

outpatient departments ("HOPDs"). The chapter also examines (1) what is included in the technical fee for outpatient surgery, (2) what procedures are reimbursed as outpatient surgical procedures, and HCFA policy related thereto, (3) the fee schedules used by HCFA under the current and proposed fee schedules, (4) the requirement for inclusion as an ASC under HCFA requirements and (5) a variety of other issues.

I. CURRENT METHODOLOGY