SEC Filings

AMSURG CORP filed this Form 10-12G/A on 11/03/1997
Entire Document
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obtaining capitated managed care contracts and managing the medical risk
associated with such contracts. Such capitated managed care contracts typically
are with HMOs. Under such contracts the provider accepts a pre-determined amount
per patient per month, referred to as a "capitation" payment, and in return is
responsible for providing all necessary specified covered services to the
patients covered by the contract, thus shifting much of the risk of providing
care from the payor to the provider. Such an arrangement results in a greater
predictability of revenue, but exposes the provider to the risk of adequately
predicting the costs of providing the services. To the extent that patients
covered by such contracts require more frequent or extensive care than is
anticipated, operating margins may be reduced and the revenue derived from such
contracts may be insufficient to cover the costs of the services provided. There
can be no assurance that AmSurg will be able to negotiate satisfactory
risk-sharing or capitated arrangements on behalf of its surgery centers, owned
physician practices and specialty physician networks. See "BUSINESS OF AMSURG."
EXCLUSION FROM MANAGED CARE ARRANGEMENTS.  AmSurg is dependent upon private and
governmental third-party sources of reimbursement for services provided to
patients in AmSurg's centers and physician practices. In addition to market and
cost factors affecting the fee structure implemented by centers and practices
operated by AmSurg, numerous Medicare and Medicaid regulations, cost containment
and utilization decisions of third-party payors and other payment factors over
which AmSurg has no control may adversely affect the amount of payment a center
or practice may receive for its services. AmSurg derived approximately 39%, 37%
and 36% of its revenues in 1994, 1995 and 1996, respectively, from governmental
healthcare programs, including Medicare and Medicaid. The market share growth of
managed care has resulted in some locations in substantial competition among
providers of services for inclusion in managed care contracting. Exclusion from
participation in a managed care contract in a specific location can result in
material reductions in patient volume and reimbursement to a physician practice
or to a practice-based ambulatory surgery center. AmSurg's financial condition
and results of operations may be adversely affected by fixed fee schedules,
capitation payment arrangements, reduced payments to physicians generally,
exclusion from participation in managed care programs or other changes in
payments for healthcare services. See "BUSINESS OF AMSURG -- Government
Regulation -- Reimbursement."
("ANTI-KICKBACK") LAWS.  Federal anti-kickback laws prohibit the offer, payment,
solicitation or receipt of any form of remuneration in return for the referral
of Medicare or state health program patients or patient care opportunities, or
in return for the purchase, lease or order of items or services that are covered
by Medicare or state health programs. The anti-kickback statute is very broad in
scope and its provisions are not well defined by existing case law or
regulation. Violations of the anti-kickback laws may result in substantial civil
or criminal penalties for individuals or entities. A violation of the
anti-kickback law is a felony punishable by a fine of up to $25,000 or
imprisonment for up to five years, or both. A violation may also result in civil
penalties of up to $10,000 for each violation, plus three times the amount
claimed, and exclusion from participation in the Medicare and Medicaid programs.
Such exclusion, if applied to AmSurg's surgery centers or networks, could result
in significant loss of reimbursement and could have a material adverse effect on
AmSurg. In July 1991 and September 1993, the Department of Health and Human
Services ("DHHS") Inspector General issued final regulations identifying various
"safe harbors," including two related to investment interests, which offer
exemption from the anti-kickback laws. The structure of the partnerships and
limited liability companies operating AmSurg centers and physician networks do
not satisfy all of the requirements of either of the "investment interest" safe
harbors and therefore are not immune from government review or prosecution.
However, AmSurg believes that it conducts the operations of the networks and the
centers in compliance with applicable law. Moreover, neither AmSurg nor any
affiliated physician intends for the compensation arrangements or return on
investment to constitute remuneration in exchange for or to induce the referral
of business or patients between or among the parties. Notwithstanding AmSurg's
belief that the relationship of physician partners to the AmSurg surgery centers
should not constitute illegal remuneration under the anti-kickback laws, no
assurances can be given that a federal or state agency charged with enforcement
of the anti-kickback laws and similar laws or a private party might not assert a
contrary position or that new federal or state laws might not be enacted that
would cause the physician partners' relationships with the AmSurg centers to
become illegal, or result in the imposition of penalties on AmSurg or certain of
its facilities. Even