Advisory Opinion 26-02: OIG greenlights MSO-owned laboratory in urgent care, with important caveats

The facts

The requestor is an MSO affiliated with four urgent care centers operated through various management companies and one affiliated professional corporation. Because of state corporate practice of medicine restrictions, the requestor does not own the professional corporation that holds the urgent care licenses. Nonetheless, the requestor oversees and manages all four centers and holds ownership interests in the management companies associated with each site.

Under the proposed arrangement, the requestor would own and operate an independent clinical laboratory through a separate legal entity. The laboratory would perform clinical testing for the affiliated urgent care centers but would be located offsite and would not be owned or operated by any individuals or entities in a position to refer specimens.

OIG’s conclusion

OIG ultimately determined that the AKS would not be implicated because neither the requestor nor the laboratory would provide any remuneration to induce referrals. In reaching its conclusion, OIG highlighted several key safeguards:

• Compensation for urgent care center providers and suppliers would not be tied to the volume or value of tests ordered from the laboratory.
• No remuneration would flow, directly or indirectly, between the laboratory and the urgent care centers (or any of their providers or suppliers).
• The requestor would not share laboratory-related revenue, directly or indirectly, with the urgent care centers.
• The laboratory would directly bill federal healthcare programs and other payors and would not bill the urgent care centers or other providers for services furnished.
• Patients of the urgent care centers would receive written notice of the affiliation and would retain the option to have their tests sent to an unaffiliated laboratory.
• The requestor would not track referrals from the urgent care centers.
• The urgent care centers’ electronic health record system would allow ordering from multiple laboratories without preference.

Analysis

AO 26-02 provides a practical roadmap for urgent-care-focused MSOs seeking to structure affiliated laboratory arrangements without violating the AKS. As underscored by the opinion, urgent-care-focused MSOs may own and operate clinical laboratories serving affiliated sites as long as referral influence is sufficiently separated from ownership. Key compliance considerations include maintaining a distinct physical location for the laboratory, implementing direct billing to payors, disclosing the affiliation to patients, preserving patient choice, and, most importantly, ensuring no remuneration is paid based on referrals of specimens to the laboratory.

AO 26-02 is fact-specific and should not be applied beyond the structure discussed in the opinion. The proposed arrangement involves four tightly controlled urgent care affiliates with limited downstream referral dependency. Other arrangements, such as those involving more predictable ancillary utilization and those that grant providers more flexibility in driving ancillary revenue, may inherently present greater risk under the AKS. The urgent care MSO structure also may be less likely to implicate the AKS than other types of physician practice management structures, which frequently involve large multispecialty networks and more complex referral dynamics, and may include ownership of ambulatory surgery centers and other complicating factors. In contrast, urgent care centers usually heavily leverage advanced practice providers, who make the lion’s share of referrals for ancillaries and are compensated on an hourly or salary basis with incentives for productivity rather than a model that allows them the potential to share in ancillary revenues.

While the opinion is favorable, it arrives against the backdrop of continued OIG and US Department of Justice enforcement activity involving MSO-structured ventures and ancillary services arrangements. AO 26-02 explicitly warns that similar arrangements involving the payment of remuneration to referral sources to induce or reward the referral of laboratory specimens to a particular laboratory for testing would implicate the AKS and “would not be low risk.” The opinion goes on to list sham consulting arrangements, sham investment opportunities, and the provision of free personnel or equipment as potentially high-risk arrangements under the AKS.

Even when AKS risk is mitigated, arrangements may still run afoul of the Physician Self-Referral Law (Stark Law) or state analogues, particularly in MSO-supported arrangements where service lines may generate designated health services. Other laws may also be implicated, such as the Ending Kickbacks in Recovery Act of 2018, which, similar to the AKS, prohibits paying remuneration to induce or reward referrals for certain services, including laboratory services, but applies regardless of payor. Entities evaluating similar models must carefully consider all dimensions of the healthcare fraud and abuse landscape, particularly with respect to financial incentives.

Conclusion

AO 26-02 endorses a narrow but important pathway for urgent care MSOs to structure affiliated laboratory arrangements without triggering AKS liability. The opinion reinforces that certain MSO-owned ancillary service lines do not implicate the AKS, as long as the business is insulated from referral pressure and no remuneration, whether direct or indirect, is paid based on referrals. That said, OIG’s detailed discussion of safeguards signals that it will continue to scrutinize MSO arrangements with ancillary service providers. Even seemingly modest deviations from the proposed arrangement, such as introducing compensation tied to laboratory utilization, can materially shift AKS risk.