Are online call centers illegally practicing medicine or engaging in kickbacks and fee-splitting?

Are online call centers illegally practicing medicine or engaging in kickbacks and fee-splitting?

Aldo’s Addiction Referrals: A Case Study for Online Health Directories

Aldo’s Addiction Referrals (dot com) is a Website and mobile app that contains a directory of addiction treatment centers. The directory is organized by region and then alphabetically; however, a powerful search function allows the user to hone in on the kind of addiction treatment care or providers the user prefers.

Aldo’s Addiction Referrals also has a 1-800 number which directs users to a Call Center. The Call Center operators are also licensed psychologists, licensed social workers, licensed marriage and family therapists (MFTs), and certified drug and alcohol abuse counselors.

However, Aldo’s Addiction Referrals believes that they are functioning in a non-clinical role when they do an intake and try to find an appropriate addiction treatment center for the caller.

Aldo’s Addiction gets paid by the addiction treatment centers to be listed on its site. In addition, the addiction treatment centers can pay for extra advertising space, and for feature pieces.

Aldo’s Addiction has an algorithm which determines how much to charge for a listing.

The more callers end up going to a particular addiction treatment center, the more the placement on Aldo’s site is worth and the more Aldo’s will charge for the placement.

Because of this, Aldo’s Addiction compensates its Call Center operators for their services on a “per closed patient” basis. That means that for every patient who calls Aldo’s and then ends up paying for services at the addiction treatment center to which they are referred, the Call Center operator who handled the call and made a referral, gets $50.

Corporate & Unlicensed Practice of Medicine Issues

With either licensed healthcare professionals, who are not medical doctors (MDs), or non-licensed professionals, there is a risk of unlicensed practice of medicine.

There can also be risks of unlicensed practice of psychology, social work, or another licensed healthcare profession.

The twin risk is that the corporation or LLC that employs them could be seen as engaged in illegal, corporate practice of medicine or psychology.

Typically, clinical psychologists like medical doctors and other healthcare licensees, can only provide professional healthcare services through a professional corporation (such as a professional medical corporation or professional psychology profession).

In some states, such as California, a general business corporation or LLC usually cannot directly employ a medical doctor or clinical psychologist. To the respective licensing Boards, this represents too much of an intrusion into professional healthcare practice by the business organization.

For this reason, even if the Call Center operators are licensed healthcare professionals, the counselors should not offer counseling, diagnosis, or any other professional service. They should:

  • Take sufficient intake information to create an appropriate referral.
  • Refer to an appropriate addiction treatment center based on designated criteria (such as region and type of services offered).
  • Be careful not to respond to any clinical inquiries or questions about symptoms and addiction recovery.
  • Be sure to act in a non-professional capacity—i.e., limiting their duties to an intake and appropriate referral.

The Company should

  • Understand boundaries between education and information on one hand (permissible), and clinical practice/assessment/diagnosis/prescription on the other (licensed activity).
  • Train Call Center operators regarding these legal boundaries and risks of unlicensed and corporate practice of medicine or psychology.
  • Clarify the Call Center operators’ roles (with expected, typical scripts), in its legal agreement (contract) with the Call Center operators.

Kickback & Fee-Splitting Issues

Kickbacks and fee-splitting are related, in that a “kickback” involves the payment to or from a professional in exchange for a referral, while fee-splitting involves splitting the professional’s fee to the patient between the professional and a third-party.

Using California law as an example, Business & Professions Code Section 650(a) prohibits:

  • The offer, delivery, receipt, or acceptance
  • by any person licensed under B&P, Division 2 or the Chiropractic Initiative Act
  • of any rebate, refund, commission, preference, patronage dividend, discount, or other consideration
  • as compensation or inducement
  • for referring patients, clients, or customers to any person.

Business & Professions Code Section 650(b) permits payment or receipt of consideration for services other than the referral of patients, which is based on a percentage of gross revenue or similar type of contractual arrangement, if at fair market value.

The fee-splitting prohibition poses a challenge whenever the proposed arrangement suggests that a healthcare licensee is offering or receiving compensation in exchange for a referral, but also, marketing arrangements involving such compensation are particularly suspect.

For this reason, we typically recommend that our clients structure marketing arrangements as a flat, monthly fee at fair market value; and we discourage any percentage-based or patient-based remuneration for marketing, which would take into account the volume or value of referrals.

The most conservative approach is to have the term of the marketing agreement be for at least a year (12 months), with the aggregate compensation being set in advance for the year. The agreement could terminate with or without cause before the year is up, but the parties would be prohibited from entering into a similar arrangement for the balance of the year. This is consistent with the federal safe harbor for remuneration from an entity under a personal service arrangement or management contract.

Although the federal safe harbor does not apply if the services are not reimburseable under, or submitting for reimbursement to, Medicare/Medicaid, federal rules can be, as indicated, persuasive to state authorities (including California). (And federal law will apply where referrals are being made to facilities that treat Medicare/Medicaid patients).

The more aggressive approach is to vary the marketing fee semi-annually, or quarterly. Too much fluctuation in the marketing fee could be seen by regulators as a per-patient payment.

Call Center operators could be paid on an hourly basis, at fair market value, as this involves being paid fair market value for the labor involved—such as, fielding calls, providing information about resources.

Presumably, such hourly compensation at fair market value for labor would be defensible under the safe harbor for payment at fair market value.

However, compensating Call Center operators for “closing” a patient for treatment would likely be regarded as a kickback. This is basically creating a monetary inducement for a referral.

At least in California, some of the Attorney General opinions (which we cite elsewhere on our healthcare law blog) prohibit receiving fees in exchange for referring patients. These opinions talk about the spirit as well as letter of the law. They include:

The AG opinions are uniformly negative on arrangements that potentially constitute fee-splitting. These include:

  • 00-1002 (prohibiting chiropractors from promoting online naturopathic products in exchange for a fee);
  • 99-11 (prohibiting retention of a fee, from a workers’ compensation payment, in exchange for referring patients to clinicians);
  • 93-807 (prohibiting a podiatry referral service for profit); and
  • 90-304 (prohibiting payment of fees for referral for imaging services).

In general, it’s best to structure compensation in a way that rewards effort and not result.

In this case, particularly since the Call Center operators could be seen as effectively marketing the addiction treatment center services, it would be legally perilous to reward the operators for a closed referral.

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