The Mall Model: A Legal Structure to Handle Anti-Kickback Concerns of Integrative Care Centers

  • Email This
  • Print
  • Share Link

Our law office has developed several business structures to address self-referral (Stark), fee-splitting and anti-kickback concerns in the integrative care center.

In the "Mall Model," the medical doctor owns a professional medical corporation (in some states it may simply be a professional corporation (“PC”) composed solely of physicians), and the Center is an incorporated entity (i.e., corporation or LLC) apart from the PC.

            In the Mall Model, the Center essentially has a series of ‘storefronts’ consisting of the various independent practices. Each practice owns its patient records, and the Center cannot interfere with practitioners’ independent judgment.

            The Center leases space to its storefront, practice tenants, and in turn charges for services typical of a medical services organization (“MSO”), such as front desk and marketing. The flow of payments is as follows:

·         The patient renders payment to the individual practice.

·         The practice pays the Center for MSO services.

·         The practice also pays the Center under the lease.

            The Center may collect patient payments on behalf of the practice, deposit these as agent to the practice’s account, and withdraw funds from the account to pay for its MSO services.

            In the typical Mall Model, in addition to the lease arrangement:

·         The patient renders payment to the individual practice.

·         The practice pays the Center for MSO services (i.e., you both share the cost according to use at fair market value).

            One could argue that with the Mall Model, there is no kickback, because no practitioner (nor the Center) receives compensation (in any form) in exchange for referring patients to either the Center itself and/or to other practitioners in the Center.

            The Mall Model, if structured correctly, does not create any direct or indirect compensation in exchange for such referrals. But even were regulators to find the existence of a kickback, presumably the Rental of Office Space safe harbor would be available. Under this safe harbor, compensation must be reasonable, fair market value, based on arms-length negotiations, usual and customary rates for monthly charges without inflated hourly charges, and commercially reasonable, and not based on volume or value of referrals. However, the safe harbor requires an initial contract period of at least a year. [1]


[1] To meet this requirement under the similar exception under Stark, if an arrangement is terminated during the term with or without cause, the parties may not enter into the same or substantially the same arrangement during the first year of the original term of the arrangement.. 42 CFR 411.355(d).

* *

Our health care, business law, and alternative medicine law attorneys regularly consult and advise on telemedicine and other health care law and business legal matters involving online enterprises and emerging or established companies.  For legal advice concerning telemedicine and other health care practices, whether involving physicians, nurses, psychiatrists, psychologists, life coaches, fitness consultants, or CAM providers such as acupuncturists, nutritionists and dietitians, homeopaths, naturopathic physicians, hypnotherapists, energy healers, and others, contact our health care lawyers today.

Our law firm has many successes with health care and business law clients, whose practices are transforming the business and health care landscape as we know it.

Michael H. Cohen is an attorney providing business legal advice to green entrepreneurs and companies, and health care law advice to businesses and physicians, acupuncturists, naturopaths, homeopaths and others in the holistic health, wellness, and green industries. As a founding attorney of the Global Vision Law Group, he represents businesses poised for vertical lift, whose leaders are conscious, intuitive, and committed to shaping a better world. Michael also advises medical spas and integrative medicine clinics, physicians, chiropractors, naturopathic physicians, massage therapists, energy healers, nutritionists and herbalists, dietary supplement and cosmetics companies, and businesses with bio-energy and other technologies and medical devices. Michael offers the Entrepreneur’s Legal Toolkit as a series of legal guides to businesses. The first legal e-book deals with Contract Essentials, giving legal tips every business needs to negotiate its legal agreements; the second addresses legal issues faced by multi-level marketing companies and individuals involved in multilevel marketing and direct sales; and the third one so far is a HIPAA Regulations and Privacy Manual at far less the cost than it would take for an attorney to prepare.

Michael also sponsors Being Central, a Portal for Potential, which gives access to other, pre-paid legal services. 

Read reviews of Michael’s work on the Complementary and Alternative Medicine Law Blog. And visit the Flat Rate Legal Services page for information on legal services offered at a flat rate or project fee (such as incorporation for entrepreneurs, review and drafting of business contracts, trademark, and health law services for CAM providers and others).

Michael’s clientele  through the Global Vision Law Group includes businesses not only in California, New York, Maryland, Massachusetts, Washington, D.C., and other U.S. states, but also abroad. 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 the Global Vision Law Group today. 

 

Tags:
Send To A Friend Use this form to send this entry to a friend via email.