Concierge medicine raises legal issues

Concierge or boutique medical practices raise legal issues requiring knowledge of insurance laws, contract legal issues, and ethical rules applicable to medical doctors and other clinicians.

Concierge medicine, also known as retainer medicine, involves charging patients or clients subscription (or access) fees for medical and other health care services.

Frequently physician entrepreneurs will create a model of high-end, primary care through concierge medicine, but be unaware of the legal pitfalls from laws relating to insurance, contracts, and so on.

One of the key legal issues is the extent to which the access or retainer fee for the concierge medical practice includes services that are routinely covered by insurance -- such as physical exams, routine medical office visits, and routine diagnostic tests.

Typically, the concierge medical practice is on safer legal ground when it includes only medical services that are typically non-covered by insurance.

The insurance legal problem is most thorny where Medicare is involved.  If the concierge practice charges patients an access fee for services that are covered under Medicare, federal enforcement authorities could see this as violating Medicare rules.  In such case, the safest legal strategy may be to simply opt out of Medicare.  Opting out of Medicare, however, requires precisely following the opt-out rules set by Medicare.  It is not a default; the default mode is to be non-participating (or non-par), which still subjects the medical doctor to Medicare rules.  Physicians often get caught in the regulatory cross-hairs by failing to fill out the proper forms (or fill them out properly), failing to properly inform their patients, billing when they are not supposed to, communicating poorly with their Medicare carrier, or thinking they are opted out when they are simply non-par.  Medicare billing violations are common and the legal consequences are steep.  The OIG has warned that substantial penalties and exclusions from federal health care reimbursement programs may apply.  The risk is even greater for a par (participating) physician. 

Services that are non-covered by Medicare do not raise the same red legal red flag for a concierge medical practice.  However, it is sometimes difficult to determine whether the proposed medical service is a covered or non-covered one under Medicare, as there are large areas of overlap.  Where Medicare specifically exempts a given service, this creates a clearer legal situation.  (Note that physicians can be reimbursed for non-covered services if the Medicare patient signs an ABN or Advance Beneficiary Notice, acknowledging that some services may not be covered by Medicare and that if Medicare denies coverage, the beneficiary must pay the physician for the medical service).

Of course, if the provider is not under Medicare then the issue arises not under Medicare but under the private insurance agreements wherever the clinician is under contract.  These must be carefully analyzed by an attorney familiar with insurance law who can help navigate through the various contractual provisions at stake.

A second issue that arises is that of illegal kickbacks and fee-splitting legal rules.  When concierge practices offer "free" services this raises concerns under the federal anti-kickback statute (AKS) if Medicare is involved, and otherwise and additionally under state antikickback laws.  The "free" service can be viewed by enforcement authorities as an illegal inducement for clinical services.  There is usually a "fair market value" safe harbor which can be utilized; however, the transaction must be carefully scrutinized for legal compliance.

The third issue is whether the access fee could be considered the practice of insurance, and therefore subject the entity or medical practice offering the pre-paid medical service to state regulation as an insurer. It is possible that fee-for-service arrangements will be viewed as outside insurance regulations; however, access fees for prepaid services raise legal issues. 

Sometimes it is helpful to contact the state insurance and/or managed care departments.  Some states have exceptions for prepayment or "fast payment" arrangements.

Whether or not the concierge, boutique, or direct access practice is deemed the business of insurance under state law, there could be other state insurance regulations that apply to the practice.  For example, there could be concerns about balance billing.  Once again, non-covered services may pose less of a legal issue for insurance commissioners at the state level; and fee-for-service may be less risky than providing unlimited access or prepaid clinical services for a flat fee.

Fourth, the arrangement must comply with any contractual arrangements the entity or provider has with private insurance companies or third-party payers, as noted.  For example, the private insurance company may have a clause that prohibits balance billing - i.e., billing the patient for a service after or in lieu of the rate of reimbursement allowed by the insurance agreement.  The prohibition on balance billing usually only applies to covered services so there may be an "out" here.  Once again, the contract should be carefully reviewed by an attorney familiar with insurance contracts in the medical arena.  Deciding to not accept insurance is one option, although that may reduce overall revenues.

Another concern is how to terminate patients after a set level of services has been provided.  State laws and ethical rules prohibit patient abandonment.  The patient must be given enough time to find a new and satisfactory physician.

Concierge medical practices must also be aware of advertising laws applicable to physicians and non-physician providers (both allied health and complementary and alternative medicine practitioners), and also refrain from claims of effectiveness, result, and cure that cannot be realized and may only accelerate potential liability. An experienced attorney can review marketing materials for compliance with relevant laws and to help minimize potential liability exposure.

In general, the concierge practice would benefit not only from clear legal review by an experienced health care and contracts attorney, but also by having the lawyer draft a contract between the practice and the patient that clearly specifies the services to be covered by the access or subscription fee; the Medicare status of the physicians involved; whether those providers accept insurance; how the billing will be done; and what will happen when the patient is terminated from the program.

Another concern that arises is when non-physician practices try to package clinical services (such as, for example, acupuncture) and non-clinical, spa services.For example, the wellness center offers the client a package.  The package consists of 10 sessions: 3 acupuncture sessions, 2 massage therapy sessions, and 5 sessions in the infrared sauna.  The client will prepay for all 10 session.  The question is whether this practice violates some of the above legal rules.

There are several issues here.  One is whether the above rules relevant to concierge medical practices will similarly apply to non-physician practices such as acupuncture (or chiropractic, massage, naturopathic medicine, psychology, counseling and hypnotherapy, and other services). 

The answer depends in part on state law and what arrangements the clinician has with insurance. 

Another area of legal inquiry is whether conflating clinical and non-clinical services raises kickback or fee-splitting issues, or subjects the clinician to potential charges of exceeding scope of practice.  For example, suppose the only arrangement is one in which the patient pre-purchases acupuncture visits, but can see any acupuncturist in the practice.  The question is whether this involves fee-splitting or a kickback, in that the discount could potentially be viewed as an illegal inducement (or incentive) from acupuncturist A to see acupuncturist B (especially if A owns the clinic).

CPM, the corporate practice of medicine, may also be triggered if state law applies this legal rule to professions outside of medicine and views the arrangement as the entity itself interfering with clinical practice.

Yet another potential area of law is that applicable to gift cards, since state law could have legal rules regarding discounts and packaged services.

Once again, the arrangement must be structured carefully by an attorney well-versed in corporate practice of medicine, fee-splitting and kickback laws, insurance law, and other legal rules, so that the transaction passes legal muster and is legally compliant.

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Michael H. Cohen is an experienced business law and health care law attorney.  He has taught health care law and policy at Harvard University and counseled many different kinds of practitioners and businesses, including:

  • entrepreneurial start-up ventures in many different industries
  • physicians (MD's and DO's)
  • physician groups, hospitals, and clinical facilities
  • integrative medicine centers
  • professional health care educational institutions and associations
  • dentists
  • registered nurses and advanced practice nurses
  • clinical psychologists
  • chiropractors
  • acupuncturists
  • massage therapists
  • homeopathic physicians and homeopaths
  • naturopathic doctors and naturopaths
  • energy healers, hypnotists, medical intuitives
  • dietary supplement manufacturers and distributors
  • cosmetics manufacturers
  • entrepreneurs and start-ups
  • publishers
  • wellness clinics
  • herbalists
  • bio-energy companies
  • medical device inventors
  • telemedicine enterprises
  • many different businesses

As an attorney  at the cutting edge of health care and business law, he represents enterprises whose leaders are conscious and committed to a better world.  He provides legal and regulatory expertise to a multitude of businesses and corporations, as well as to attorneys and law firms involved in various health care legal issues including:

  • fee-splitting, Stark and anti-kickback
  • corporate practice of medicine (including New York, California, Massachusetts, D.C.)
  • medical board disciplinary proceedings and other professional discipline
  • negligence, informed consent, and medical malpractice liability (negligence)
  • HIPAA and patient privacy and confidentiality issues
  • Medicare (including opting out vs. participation vs. non-participation)
  • professional liability insurance and insurance (billing and coding) issues
  • telemedicine, tele-psychiatry and telehealth
  • litigation (plaintiff's counsel and defense) and negotiation
  • other legal and regulatory compliance issues.

To speak with a lawyer about health care law issues pertaining to complementary and alternative medicine, or to consult a business lawyer about laws and legal issues for entrepreneurs and new enterprises that are seeking legal advice, contact attorney Michael H. Cohen today.