Basically, management services organizations or MSOs are entities created in order to provide services, whether administrative or management, to just about any organization. With regards to healthcare MSOs, they are any organization established by a group of physicians, investors in association with multiple physicians or a physician hospital joint venture.
Individual physicians and group practices are generally what healthcare MSOs provide their services for, one of their goals is to provide aide to physicians under non-medical business functions in order to let them concentrate on the other clinic aspects or MSO compliance.
Some Reasons for MSO Compliance Failure
In order to achieve standard compliance, the physicians should be certain that the documents they offered do not contain the following mistakes:
- Physicians don’t really contribute anything meaningful to the MSO – as the name states, ‘service’ is a major part of MSO. On the other hand, we can’t really say that a number of physician owners are thoroughly engaged in any services unrelated to the referring business under related and affiliated pharmacy or toxicology laboratory.
- The Physician-Syndicated Management Services Organizations or PSMSO gets hold of compensations from any connected based on referrals, prescriptions or based on a percentage of revenue. Because of the risks of anti-kickback violations, the Office of Inspector General and the Department of Justice thoroughly express their concerns regarding percentage-based compensation relevant to Physician Joint Ventures and issued various Fraud Alerts on the subject.
- Distribution to certain physicians might affect anti-kickback statutes – in cases where PSMSO service fees do not meet the fair market value by a long shout and can’t honestly be considered as reasonable in a commercial point of view, kickbacks become a real concern. The said concern is associated with the fact that the said physicians pay for a stated amount but only receive unfair returns for their investments. An obvious sign that something wrong is happening especially in the eyes of the Department of Justice kickback assessments.
- The fair market value was not used when evaluating the MSO compensation. Sure, almost all the operating agreements of PSMSO mention that they show only the fair market value of the compensation, but that’s hardly true for most cases. According to studies conducted, various PSMSOs actually charge shockingly high service fees without any legal foundation to show. In order to make sure that any fees displayed are actually legitimate, it’s better to have them assessed by third party CPAs.