Packaging medical services – is it a legal concierge arrangement, or an illegal kickback?

If you’re a medical doctor, dentist, acupuncturist, chiropractor, or other licensed healthcare provider, and you offer your patients “9 sessions, get 1 free,” have you violated kickback laws? Our physician, chiropractor, acupuncturist, dentist, physical therapist, nurse practitioner, and other licensed healthcare provider clients, often ask us about “packaging” healthcare services.

The legal rules are ambiguous, but we can start by looking at anti-kickback and fee-splitting legal rules, and how concierge medicine overcomes various legal obstacles.

Concierge Medicine – Legal

Concierge medicine raises various legal issues, including fee-splitting considerations; but there are legal ways to practice concierge medicine and concierge medical practice is becoming increasingly accepted as a model of medical care.

Concierge medicine does involve providing the consumer with bundle of services for a fixed fee; although more commonly, many physicians think of concierge or boutique medicine (or retail medicine) as involving a fee for access to the physician and for extra, luxury services.

Medicare may allow concierge fees for services that are clearly non-covered, provided that the concierge contract is clear that the fees will be going exclusively to those non-covered services. However, one of the hidden issues is that Medicare-covered services might be expected in, or bundled with, the services provided by the Concierge Membership Fee, even if the services described by the Concierge Membership Agreement appear to be non-Medicare-covered services.

If you are a Medicare participating or non-participating provider, then concierge medicine is still doable, but more nuanced.

If you are opted out of Medicare but participating in private insurance panels, then have legal counsel review those agreements.

Typical concierge medicine services include:

  • same-day or next-day appointments; 24-hour telephone and email access; cellphone or pager access; online access to consults
  • patient home or workplace consultations for non-urgent care
  • smoking cessation support
  • preventive screening procedures
  • periodic, preventive-care physical examination
  • extended office visits
  • mental health counseling; stress reduction counseling; wellness planning; nutritional planning
  • private waiting room
  • coordination of medical care during travel

Also:

  • cellphone access
  • email/texting
  • lectures on wellness
  • claims facilitation
  • home visits
  • CDs, booklets, pamphlets regarding the patient’s health
  • Other services that provide a genuine value and are not Medicare-covered

Anti-Kickback and Fee-Splitting Issues

Self-referral (on the federal side, “Stark”), anti-kickback, fee-splitting, and patient exploitation rules vary by state, as does the related, corporate practice of medicine rule.

In general, the legal risk is that enforcement authorities may choose to view the packaging medical or other health care services, as an illegal inducement for to refer the patient.

If your healthcare venture involves a clinic, and the idea is to package, for example, one medical visit and one chiropractic visit, then enforcement authorities could argue that you are creating an unlawful inducement for the medical doctor to refer to the chiropractor, and the reverse; the more referrals within the clinic, the more that the clinic owners and practitioners financially benefit from the incentive given to the patient.

Could you argue:

  • That services are nonetheless being provided at fair market value, and hence do not represent exploitation for financial gain?
  • There is no fee-sharing in exchange for a referral; in fact, packaging and discounting services does not involve fee-sharing. Rather, whatever discount is offered within the “package” is either taken uniformly off each service, or, the package clarifies which services are subject to the discount.
  • Packaging services is common among spas, gyms, and others, so although technically an argument could be made for a violation under various legal rules, the risk of enforcement activity is probably low as compared with more egregious offenses such as, for example, Medicare billing fraud

These are good arguments.dirtyharry

As lawyers, we structure the most defensible arrangement we can muster.

And sometimes, we present the options and the client makes a business decision as to whether to take a business risk.

As Clint Eastwood famously put it: “Do you feel lucky, punk … well, do ya?”

Of course we don’t use the term “punk” and we put the question much more artfully. There are degrees of enforcement risk, and clients must be advised appropriately. As well, states differ on the degree to which their individual laws – as well as enforcement practices – address fee-splitting issues.

For example,New York State’s Board of Regents Rule 29.2a.7 prohibits “ordering excessive tests, treatment, or use of treatment facilities not warranted by the condition of the patient.” In all likelihood, this is directed to egregious conduct and unlikely to be applied to a simple packaging of services at a chiropractic clinic, for example. But if you want to avoid even technical violations, then don’t mess with “Harry.”

At the very least, avoid “buy 9, get 1 free.” Among other things, state advertising laws and/or professional misconduct rules regulate the advertising of professional services, and cast doubt on professional advertising of “free” services. And “free” is one of those words that triggers concern about unlawful “discounts” and other inducements, as per fee-splitting prohibitions.

As well, packaging medical and chiropractic services crosses professional services boundaries, and could raise the ire of both the medical and chiropractic board.

Insurance Issues

On the insurance side, one question is whether, by having the customer pre-pay for anticipated health care services, the entity is deemed to be offering “insurance,” and therefore is regulated by the state insurance commissioner.

This legal question has arisen in concierge medicine, with states weighing in differently on the answer. This is a moving target.

For example, Washington imposes nondiscrimination, contractual, disclosure, and reporting obligations on concierge physicians, but concludes that they are not insurers.

The notion of a prepaid, discounted services definitely raises regulatory questions. For example, an arrangement involving the initial prepayment or periodic payment in exchange for discounted medical or dental services is different than the practice of granting discounts for payment in cash. Although both practices are common in the industry, the former could be seen by the Department of Managed Health Care Services in California (as one example) to fall within the Knox-Keene Act, while the latter is expressly allowed under California law.

The discounted services could be seen to fall within the statutory sweep of one who “provides, administers or otherwise arranges for the provision of health care services.”

Gift Card Issues

Another area of law to look at is law governing gift certificates and gift cards.

Sometimes these laws govern discounted services. They may, for example, prohibit expiration dates or certain fees.

See also:giftcard

Packaging Services Raises Anti-Kickback and Fee-Splitting Issues, Even In Concierge Practice

Concierge Medicine Legal Issues

Is it Fee-Splitting for Medical Doctors to Share Revenues with Non-Medical Business Owners

Our healthcare lawyers can craft ways to handle these imposing legal rules, but this requires creativity and savvy, and a strong working knowledge of all the various law and regulations, and how they work together.

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