Packaging services raises anti-kickback and fee-splitting issues, even in “concierge” medicine practice

Our concierge medicine lawyers represent physicians and medical practices seeking to develop concierge medicine practices, and so we see many questions about the legality of “packaging” medical services. Although we structure many concierge medical practices for our clients, we do advise that any bundling of services immediately raises kickback and fee-splitting issues that must be dealt with smartly, creatively, and efficiently. Medical boards do not like “packages,” and delivering medical services is not like selling a used car (buy this, get that free).

See our longer blog post on concierge medicine legal issues.

Consider also this gem from California Business & Professions 651, which regulates physician advertising:

(c) Any price advertisement shall be exact, without the use of phrases, including, but not limited to, “as low as,” “and up,” “lowest prices,” or words or phrases of similar import. Any advertisement that refers to services, or costs for services, and that uses words of comparison shall be based on verifiable data substantiating the comparison. Any person so advertising shall be prepared to provide information sufficient to establish the accuracy of that comparison. Price advertising shall not be fraudulent, deceitful, or misleading, including statements or advertisements of bait, discount, premiums, gifts, or any statements of a similar nature. In connection with price advertising, the price for each product or service shall be clearly identifiable. The price advertised for products shall include charges for any related professional services, including dispensing and fitting services, unless the advertisement specifically and clearly indicates otherwise.

So stay away from some of the obvious no-no’s such as advertising healthcare services for “as low as” a specified price.

But what about the more subtle provisions of this paragraph, such as telling healthcare licensees to avoid “statements or advertisements of bait, discount, premiums, gifts, or any statements of a similar nature?”

Remember that Business & Professions Code 650 prohibits any “rebate, refund, commission, preference, patronage dividend, discount, or other consideration, whether in the form of money or otherwise, as compensation or inducement for referring patients, clients, or customers to any person….”

Stating any type of discount is therefore legally perilous.

For example, say you’re a functional medicine physician and want to offer patients two packages — one where the patient pays for 9 physician visits and gets the 10th free, and one where the patient pays for 20 visits but gets a year’s supply of certain vitamins. Both would violate Business & Professions Code 651.

On the other hand, concierge practices can be structured so the patient pays in advance for a bundle of services, where the price is set in advance, at fair market value for the services, and the retainer contract between physician and patient is clear about the services and cost. It takes skill and experience as a concierge medicine lawyer to understand how to draw these lines.

If you are moving to a concierge medical or other concierge wellness or healthcare practice, consult a concierge medicine attorney versed in this area of law. Contact us for more concierge medicine legal information.

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