ASCs continue to face complex regulatory scrutiny under federal anti-kickback and fraud laws, even as they operate outside certain Stark law restrictions.
A recent Minnesota Lawyer article and guidance from the Federal Bar Association’s Turning Square Corners newsletter outline how ASC owners can reduce legal risk while maintaining compliant operations.
Here are five key things to know:
1. ASCs face anti-kickback scrutiny
ASCs often face enforcement risk under the federal Anti-Kickback Statute, which prohibits offering or receiving remuneration in exchange for patient referrals reimbursed by Medicare or Medicaid. Physicians who invest in an ASC and refer patients to it must disclose their ownership interest, and investment opportunities cannot be based on referral volume or business generated.
While failing to meet every AKS “safe harbor” condition doesn’t automatically mean a violation, it can trigger closer regulatory scrutiny, according to Minnesota Lawyer.
2. Safe harbor protections can shield ASCs from prosecution
The ASC safe harbor offers protection if physician-owners personally perform procedures at the center and the facility meets specific use thresholds.
According to Turning Square Corners, there are seven key standards for compliance, including but not limited to:
- Ownership terms cannot be tied to referral volume.
- At least one-third of a physician-investor’s income must come from ASC-eligible procedures.
- Physicians must perform at least one-third of their procedures at the ASC.
- The ASC or its investors cannot provide or guarantee loans for investment purposes.
- Payments and profit distributions must reflect ownership percentage, not productivity.
Meeting these criteria allows ASCs to avoid AKS penalties, while partial compliance reduces, but does not eliminate, legal risk.
3. Stark law does not apply to ASCs, but risks remain
Unlike hospitals or imaging centers, ASCs are exempt from Stark law, which typically bars physicians from referring Medicare or Medicaid patients to entities where they have a financial stake. This gives ASC owners greater flexibility in compensation arrangements, according to the post.
However, indirect compensation or ancillary service arrangements can still implicate Stark if they relate to designated health services or referral-based compensation structures.
For example, earlier this year, Gulfcoast Eye Care agreed to pay $615,000 to resolve alleged Stark law and False Claims Act violations involving referral-linked compensation for diagnostic testing.
A 2024 Stark law clarification now allows non-monetary compensation up to $507 annually, as long as payments don’t consider referral volume and aren’t solicited by physicians.
4. Ownership transactions must reflect fair market value
To remain compliant, ASC ownership transactions must occur at fair market value and avoid any appearance of referral-based inducements.
According to Turning Square Corners, this includes:
- Avoiding inflated purchase prices for controlling interests.
- Preventing discounted sales of non-controlling interests to referring physicians.
- Ensuring profit distributions are aligned with ownership stakes, not clinical volume or referral output.
- Independent third-party valuations are recommended to validate FMV and mitigate regulatory risk.
5. Compliance and certification requirements are complex
Operating an ASC requires Medicare certification, state registration and facility inspections to meet safety and licensing standards, per Minnesota Lawyer. ASCs cannot share space with hospitals or Medicare diagnostic facilities, and passive ownership is not allowed — physician investors must actively use the center for their patients.