Healthcare Compliance and Laser Treatments – Part Two

In part one of our discussion of laser treatments, we discussed the various medical uses for laser treatments – current and future. In this article, we focus on some of the regulatory compliance issues. We recommend that you contact us so we can review the healthcare issues that apply to your medical practice or medical business.

Healthcare compliance for aesthetic uses

Many dermatologists and other physicians use laser treatments for a variety of treatments. Many medical spas (medspas) also provide these treatments.

Starting about 40 years ago, argon and carbon dioxide (CO₂) lasers were commonly used to treat “benign vascular birthmarks such as port-wine stains and haemangiomas.” About 20 years ago, new laser technologies were developed to treat:

• Vascular lesions
• Pigmented lesions and tattoos
• Hair removal
• Facial wrinkles, scars, and sun-damaged skin
• Keloids and hypertrophic scars

Hair removal and skin rejuvenation are common uses of lasers in medical spas. Generally, laser skin rejuvenation treatments are categorized as follows:

• This type of laser therapy involves the top skin layer.
• Non-ablative. This type of therapy heats the underlying skin tissue to generate new collage.

Healthcare providers need to ensure that they have the proper medical qualifications or that their employees and contractors have the proper medical qualifications.

Possible injuries include burns, blisters, bruises, infections, pigment changes (possibly permanent), and scarring.

Laser treatments and the practice of medicine

Many states consider ablative and non-ablative therapy as “the practice of medicine.” Only licensed physicians can practice medicine.

Our healthcare compliance lawyers will explain if and when physicians can delegate these skin rejuvenation therapies and other laser treatments.

The first step is to examine the physician’s own education, medical training, and experience. Generally, in California, a physician (MD or DO) can perform medical and cosmetic procedures that involve lasers. Physicians can also supervise non-medical staff.

Generally, physicians in California can also supervise registered professional nurses (RNs), nurse practitioners (NPs), and physician assistants (PAs). We will explain when the physician must have a written agreement with these healthcare providers.

Generally, in California, non-medical personnel (cosmetologists and aestheticians) cannot provide laser treatments.

We will explain if a physician must conduct an in-person consultation with a patient before allowing their medspa staff (who do quality) to perform any laser treatments. We will also explain when a delegating doctor must provide on-site supervision.

Ownership of a medspa that provides laser treatments

In our article titled, “MSO Ownership Issues for Medical Spa,” we discuss compliance issues regarding who can own a medspa.

At Cohen Healthcare Law, we generally recommend that medical practices such as medspas refrain from using the term “medical director.” In our article, we state that “the MSO should not make flat-fee payments to a medical director because that could violate Stark Law and the federal and state anti-kickback laws.”

As we wrote, according to the American Med Spa Association, a “medical spa” (also called a medspa, a med spa, and a Medi Spa) is a:

“Branded term for a medical practice where a patient can go for a variety of cosmetic and (typically) non-invasive procedures, ranging from Botox to chemical peels and laser treatments.”.

At Cohen Healthcare Law Group, “owning” a healthcare venture usually involves two business entities:

• “A PC (professional corporation) or PLLC (Professional limited liability corporation)
• A second company (an MSO) that owns the management and marketing team. An MSO is usually either an S-corporation (for a small number of owners) or an LLC.”

The three key parts of a medical practice are:

• Generally, the physicians, physician assistants, and nurses (medical staff) work for the PC or LLC.
• Generally, a managed service organization, (MSO) hires accountants, bookkeepers, marketers, schedulers, and phone staff.
• “A contract between the PC/LLC and the MSO explains the services the MSO will provide – at fair market value – to the healthcare entity.”

The important point that medspa businesses need to know is which of its services a state (such as California) thinks are “medical.” Most laser treatments are considered “medical.”

Medical spa compliance requirements

One important requirement the medspa owners must review with their healthcare counsel is known as “the corporate practice of medicine (CPOM). The CPOM requirement ensures that “only licensed physicians or entities wholly owned by licensed physicians practice medicine, thus limiting the commercialization of medicine by non-physicians.’”

Generally, licensed MDs and DOs can own and operate a medspa in California. In California, physicians can partner with NPs, RNs, and PAs – but the physicians must own at least 51% of the medspa.

Medspas and Medical Service Organizations (MSOs)

Physicians can work with an MSO so that the physician(s) run the medical side of a medspa that offers laser services while the MSO runs the business side. The business side includes (management, technical support, marketing, and administrative assistance).

The agreement between the medspa and the MSO requires that:

• “The MSO receives a fair market value fee and has no investment in the profits of the business. The MSO will also provide the terms for any leasing arrangements.” For example, the MSO may purchase and then lease the laser equipment to the medspa. This arrangement is just one of many ways that an MSO can help avoid violations of Stark Law and the Anti-Kickback Statute (AKS).”
• “The owners of the medspa determine the salaries and profit shares for each owner through their corporate bylaws, partnership agreements, or other legal methods.”

An MSO can help a medical spa in many ways including:

• CPOM, Stark Law, and AKS compliance
• Administrative work
• Medical coding and billing
• Technical support
• Financial support
• Office leasing support
• Training compliance requirements– but NOT laser or any other type of medical training
• Many other non-medical requirements

Other medical compliance issues that physicians should review with our experienced healthcare lawyers include:

• What types of promises about laser technology’s benefits medspas and medical practices can and cannot make
• FDA compliance
• FTC compliance
• Compliance with the Health Insurance Portability and Accountability Act of 1996 (HIPAA)

Healthcare compliance for uses in general surgery, eye surgery, and dental treatments

Medical practices that provide dermatological care including laser treatments should also review who can own their medical practice to meet the corporate practice of medicine (CPOM) requirements and how an MSO can help with the financial and administrative side of the medical practice.

While laser technology has many dermatological benefits including cosmetic and surgical benefits, there are specific compliance requirements that the owners and staff must meet to ensure competent patient care. These compliance requirements include the unauthorized practice of medicine, ownership issues, referral laws such as Stark Law and the AKS, and many other medical and business issues.

Medical companies, medical practices, and medspas should contact Cohen Healthcare Law Group, PC to discuss their regulatory compliance requirements. Our experienced healthcare attorneys advise medical businesses and professionals about healthcare compliance laws and regulations.