Telemedicine & MSO Contracts—Legal

Telemedicine & MSO Contracts—Legal

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In this video, we walk you through how we worked with a recent client, a physician who has a telemedicine practice and a management services organization, also known as an MSO.

I’m Michael H. Cohen, founding attorney of the Cohen Healthcare Law Group. We’ve served hundreds and hundreds of healthcare clients just like you and help to navigate healthcare and FDA legal issues.  Among our clients are many medical doctors, chiropractors, dentists, psychologists, and other licensed healthcare professionals; our clients also include telemedicine and digital health startups and much more.

One of our recent clients is a physician who asked us to review a “telemedicine MSA.” Now sometimes people ask for things, and it isn’t always clear what they want or if they know what they want.

So this actually introduces the first point I’d like to make today, which is that healthcare entrepreneurs usually underestimate the amount of confusion out there when it comes to legal agreements for the healthcare industry.  I like to call this, Myth & Facts.

These days, with all the information out there, all the googling on the Internet – the avalanche of news, forms, resources, and even 50-state surveys and compilations – it’s really easy to imagine that you could simply say, “hey Google,” “hey Siri,” “hey Alexa,” or “hey” whomever will be your next AI virtual assistant – and presto, you get that legal document and everything is tied up.

Oh my gosh, back when I was in my twenties, when I was dating prodigiously, and all my friends gave me the wrong advice, not to mention my own judgment was awry as I was kind of led back then by things that weren’t quite in my own best interest or maybe even by my evolutionary biology but not at all by common sense, so back then, if only I could have said, “hey Google,” or “hey Alexa,” or “hey” some other website, “Please, please just tell me the answer.” I’m sure that if the internet generates the perfect answer for me then everything will be fine. The right career, the right person, and everything’s just going to go right the way it’s supposed to.

I think this is what Sigmund Freud meant when he said, “wish fulfillment.”

But the reality is, that we use the internet, but there is human component. Even lawyers do searches online to find good precedents, and right now, it still takes professional expertise to craft that form and make it work for your business. Just like it takes in-person meetings if you are with the right person.

I suppose there might be such a thing as an MSA Telemedicine Contract somewhere, but in the case of this particular client, there were two different things and they just kind of did their own mashup, and what they needed was: a Medical Services Agreement, or MSA; and they needed an employment agreement between the Professional Medical Corporation, which the physician also owned, and that the other medical doctors worked for within the professional corporation.

I hope i’m not getting deep into legal structure or advice here, I’m trying to make this a little bit entertaining but and simply saying that, you know it’s so much stuff to deal with online and it’s just easy to model all these stuff and create a kind of word salad where healthcare startups and healthcare ventures think they’re getting what they need, canned and for free, and what they’re actually doing is setting themselves up for much more legal expense and much more trouble later.

If you remember in the old days, you could avoid going to the dentist. Maybe then they have a dentist but I remember seeing it in a movie that you could pull out a tooth yourself when it’s rotten?  It’s super simple.  You take a piece of rope, you tie one piece to your ailing tooth, and you take the other piece and attach it to the doorknob.  And then you take a hearty swig of brandy.  And then you ask your best friend to slam the door shut.  And presto – out comes the tooth!

So I think I did see that in an old Western and it worked well in the movie.

These days, though, it doesn’t pay to be a cowboy or cowgirl on the Wild West.  We don’t need whiskey because we have anesthesia.  No one needs to “bite the bullet,” because we have more sanitary, and less dangerous, ways to titrate wakefulness and consciousness so you don’t suffer.

So actually anesthesia is part of what brought in the medical profession and modernization of medicine. Really, today you want to engage the professionals.

OK, I’m pitching a little bit here but I want to tell you some things specifically that we did spot with the boilerplate, word-salad document our client handed to us, hoping to avoid some real dental surgery, some real professional advice, where he wanted the canned form to do all the work. And thank goodness, he didn’t.

So first of all, the document was trying to do too many things and therefore was muddling who exactly was promising to do what, and to whom.  So we streamlined the document to clarify that the obligations ran from the professional medical corporation to the management services organization (MSO), not the other way, and not necessarily to the physician owner or to the individual medical doctors.

Second, the compensation, the way it was written was unclear and did not even state who would be getting paid, when, for what services. That can be a real problem if you don’t know how or when you’re going to get paid or by whom.

Third, the document referenced some other state law but the agreement was supposed to be for services in California.  It’s an easy change, but one that could be overlooked if you tried to save money by just dumping in some document you found off the Internet.

Fourth, the document had no language to accommodate the client’s existing obligations under HIPAA as well as California law, or the Confidentiality of Medical Information Act (or CMIA).

Fifth, the document tried to have the MSO hire medical assistants.  Now, this was a big one, it’s a common problem—the MSO tries to do things that can create regulatory jeopardy of corporate and unlicensed practice of medicine, as well as illegal fee-splitting.

Among other things, we know that the MSO cannot hire medical assistants, because the MSO cannot practice medicine.  Although medical assistants are not licensed in California, they are still helping to provide medical care, under the direction and/or supervision of the physician.

We can talk more about corporate practice of medicine issues in other videos.

The point is that there are all sorts of serious issues that are worthy of being asked and addressed, at first blush we normally do this in a Legal Strategy Session and then after that Legal Strategy Session, we dive more deeply as we move into the retainer phase.  If you have questions about our Legal Strategy Session, please go to our website and click on the Legal Strategy Session link. You’ll find a lot of clarity, you’ll find that the model, the word-salad, the wish fulfillment, it’s going to get cleared in that Strategy Session.

Thank you for watching. Here’s to the success of your healthcare venture, we look forward to speaking with you soon.


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