Can a Telehealth App Pay Its Healthcare Providers a Percentage of Revenue or Per-Client, Per-Patient Fee?

In today’s video, we canvass whether a telehealth software platform can pay its healthcare providers a percentage of revenue or per-client, per-patient fee.  In today’s example, the healthcare startup wants to hire a bunch of psychiatrists and psychologists as independent contractors.

Hi, I’m Michael H. Cohen, founding attorney of Cohen Healthcare Law Group. And it’s a sunny day, so my photograys are working. But basically glasses on or off, we’ve helped hundreds and hundreds of healthcare startups just like you, to navigate these tricky, arcane health and wellness regulations and laws.

We are very familiar with these kinds of telehealth business models, whether they involve online services or a healthcare app, medicine or mental and behavioral health, and everything in between and around it.

First, we advise typically against paying a percentage of revenue or per-client (per-patient) fee to the physicians, psychologists, social workers, or other clinical care providers deployed in the healthcare software or on the health and wellness app.

Why? Paying—or receiving—monies on a per-patient basis is frequently defined as the essence of an unlawful kickback.  A kickback occurs when the compensation given the healthcare provider varies by value or volume of patients.  So, if you make the compensation per-patient, then the total compensation varies by total patient value or volume.  Ergo, kickback. It’s the essence of kickback.

Similarly, if your health and wellness app hires the clinical providers as independent contractors, then essentially, you are taking in revenue and you’re remitting a portion to the providers for their services.  A regulatory enforcement body could say a lot of things, in this case, you are paying the providers a kickback for sending the patients (or clients) to you or through you.  Or, put the opposite way, they could creatively say that the providers are in essence paying you for sending them the patient referrals.

Let’s give an example. Let’s say your customers pay $100 per month and you give the providers $80 of the $100 and you retain $20.  So here an enforcement authority could say that you’re paying all or part of that $100 to make the referral.

The better and legally safer model is to style the platform like an MSO.  The telemedicine platform provides management and marketing services to all the providers.  This is of course a bit of a fiction, because you have got a software platform and/or an app, and not a management company running a bunch of brick-and-mortar practices.  Yet the model works and covers the by in large the digital situation.

In other videos, we cover other topics like the role of the professional medical corporation or psychological corporation; the MSA or MSO Agreement between the professional corporation and the MSO; whether a good faith exam is necessary for either diagnosis, treatment, or prescription; and legal rules around creating a healthcare app or software company styled more for health coaching. So be sure to watch the other videos to get more.

Thanks for watching. Contact us with your questions. As always, we have helped lots and lots of healthcare companies just like you. Some of them have made it really big time and we look forward to working with you on the journey to success!