Sally, a licensed MD, is looking to open a second medical practice across the hall from her main practice so that she can focus on niche medical procedures, such as aesthetic medicine procedures. Now, the procedures, you know, might be billed to insurance, and they could also be, you know, regular medical procedures, but the main practice is on a cash basis. So, you know, what should Sally do?

Hi, I’m Michael H. Cohen, founding attorney of Cohen Healthcare Law group. We help healthcare industry clients like you navigate the complex terrain of healthcare and FDA law so you can grow, launch, scale your healthcare business.

And here there might be some logic to having two separate medical practices. However, you know this immediately. We have two different entities. You’ve got stark self-referral as well as anti-kickback issues.

And there’s the additional variable of having one cash practice and one based on insurance. So, you know, we got to just comb through the issues. And there are a bunch of exceptions to the self-referral laws, such as referrals within a group practice and a very nuanced. So, we’ve covered them elsewhere.

But in general, the insurance piece has to be navigated pretty well so that Sally can ensure, for example, that nothing in her agreements with insurers prohibits her from billing patients on a cash basis and part of a practice, even if under the rubric of a separate medical corporation. And the referrals from one end to another, you know, they have to make clinical sense with no economic inducements to refer from one part of the practice to the other, and there should be no medically unnecessary services.

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