concierge medicine: key legal considerations complying with medicare regulations, insurance laws and...

Concierge Medicine:Key Legal Considerations

Complying with Medicare Regulations, Insurance Laws and the Anti-Kickback Statute

Texas Health Law Conference

October 15, 2012

David W. Hilgers, [email protected]

Brown McCarroll, L.L.P.

Robert M. Portman, JD, [email protected]

Powers Pyles Sutter & Verville, PC

Road Map

• Overview of Concierge Medicine and Models

• Federal Legal Issues

• State Law and Private Insurance Issues

• Contracting Issues

• Valuation Issues

Concierge Care

a/k/a “boutique” or “retainer” medicine Reasons for development

lower reimbursement payment denials, delays rising malpractice premiums greater liability risk/regulatory burdens increasing overhead/paperwork higher patient loads

Concierge Care

Positive outcomes Personal care Professional satisfaction

May make preventative care affordable and accessible

Looks a lot like a family medical home

Concierge Care

Common Characteristics Primary care Fixed monthly or annual fee Limited number of patients—300-800 Special services/attention Greater physician access Plan of care Amenities

Must pay retainer to receive any services

Services Provided

Typical Services/Amenities priority/extended/Sat. appointments nicer, less crowded waiting rooms 24/7 pager/email/cell phone access house calls/visits to specialists preventive/wellness care telephone/email consultations Prescription/claims assistance

Services Provided

Premium Services Unlimited appointments Same day appointments All physician office services covered Transportation Spa-like amenities (bathrobes/slippers) “free” x-rays

Practice Models

Non-participation (no insurance)/all preventive and primary care (which can include specialists)

Participation (accepts insurance)/retainer only covers non-covered services

Participation/amenities only

Practice Models

Variations Hybrid – concierge and non-concierge services within

same practice Direct Care – retainer plus high deductible insurance Bifurcated corporate structure Franchise/Practice Management Direct non-physician ownership – only in states with

weak corporate practice of medicine laws

Practice Models

Key Decisions Participation vs. Non-participation All concierge vs. hybrid What services included in the fee

What fees to charge Size of patient panel Independent practice or affiliate with franchise

or management company

The Numbers

750-2,000 doctors

200,000 patients Retainer fees ranging from $600-30,000

100-500 patients Concierge practices in most states All but 11 states have concierge practices (per 2010

MedPAC report)

Concierge Care Examples

• MD2 – www.md2.com Portland based Does not accept insurance Will franchise for $75k plus 5% royalty Goal is to create international network of

similar practices


• MDVIP – http://www.mdvip.com/

• Boca Raton based closed model • Starbucks approach – over 450 physician affiliates in

32 states

• $1500-1800 annual fee • 600 patients per physician

Does accept insurance Will franchise turn-key operation for percentage of

franchisee’s concierge fees Franchisee keeps all insurance reimbursements


Personal Physician Health Care, LLC/PC www.personalphysicians.net

Boston based/closed model

Dual corporate structure – LLC and PC PC accepts Medicare/private insurance LLC provides concierge services

$5,000 per patient 300 patients per physician


Health Access RI Network of independent medical practices Monthly membership fee of $25-30 per month Per visit fee of $5-10 Provides primary care services Does not accept insurance


Qliance Medical Management, Inc. Seattle-based “Direct Care” – retainer for concierge

services backed up by high deductible insurance Funded by venture capital and other investors Shows growing interest of venture capital firms in

direct care model

Monthly fee of $39-79 for unlimited preventive and primary care


Other Examples SignatureMD – Arizona, California, Georgia,

Indiana, Missouri, Montana, New York, Oklahoma, Pennsylvania and Washington D.C

Concierge Choice Physicians (National) PartnerMD – Virginia

Concierge Medicine: Key Legal Considerations

Best Practices to Comply with Medicare Regulations

Concierge Medicine Under Medicare

Secretary of HHS, 2002:

Physicians participating in Medicare can charge patients a special fee to provide services that are not covered by Medicare

2002 – Congress sent letter to HHS and OIG Alleged that fees charged by MDVIP violated

Medicare limiting charge rules and false claims act

HHS response did not call practices illegal as long as charges were for non-covered services

Cautioned that physicians entering arrangements should seek legal counsel

Medicare Reimbursement Issues

Participating physicians Physician accepts assignment

Medicare pays physicians 80% of fee schedule directly

Physician bills patient co-payment of 20%

80% plus 20% is payment in full

Non-participating physicians Patients pay physician directly Patients seek reimbursement from Medicare

Limiting charge 115% of Medicare


Opting Out

Physician has private agreement with Medicare beneficiary and Medicare is not billed by physician or patient for any services provided by physician

Review Medicare’s Opt-Out rules carefully Be certain to properly opt out before billing any

patients

Failure to properly “opt-out” renders any contracts entered into with Medicare beneficiaries void and nullifies the physician’s decision to opt-out


Physicians who opt-out may not receive ANY remuneration from Medicare, including sharing in practice income where other practice physicians have not opted out for two years

Other physicians in practice are not required to opt-out

Recognize that opt-out is for two years

Medicare Prohibition

Physicians cannot charge patients for services already covered by Medicare Applies to participating and non-participating

physicians

Violation of assignment agreement and carries civil money penalties

Opt-out physicians are not subject to rule

Medicare Coverage Issues

What does practice bill patient for?

Medicare prohibits billing patients for covered services beyond limiting charges

Unclear distinction between “covered” and “not-covered”

Covered Services

Generally, routine photocopying, routine overhead (including malpractice insurance costs, heating, lighting, staff salaries, etc), supplies, rent, continued education or certification fees

Malpractice fees

Covered Service?

Annual Wellness Physical

Medicare covers annual wellness visit

Is it the same as an annual physical?

Many screening tests now covered

But, covered under specific intervals: cardiology screen every 5 years, pap smears 24 months, colonscopy 10 years

Women’s health issues: screening pap tests, pelvic exams, and mammography

Medicare enrolled physicians with retainer practices must clearly be certain they are well aware of current Medicare coverage guidelines

Non-Covered Services

Same day appointments

Cell phone access

Email consultations/texting

Lectures to patients on wellness

Claims facilitation

Home visits

Access that has been explicitly expanded in measurable ways

Is this enough??

Non-Covered Services

Additional or extra-ordinary services

CDs, booklets, or pamphlets prepared by the physician regarding the patient’s health, well- being, or a plan to achieve either

Testing or treatment that is explicitly not covered by Medicare

Any other services which provide a genuine value and which are not part of a patient’s covered service

Is the retainer fair market value for the services?

Government Pronouncements

2004 – OIG Alert to physicians about added charges for covered services

2004 OIG settlement with physician for Personal Health Care Medical Care Contract with $600 annual fee because some covered services were included in the contract services

2007 OIG settlement for over $100,000 with physician in North Carolina allegedly violating Civil Money Penalty Law for violating assignment agreement

OIG Roadmap for New Physicians: Avoiding Medicare Fraud and Abuse

• OIG education materials to teach physicians

• Issued in 2011

• Specifically discusses “’boutique, concierge, retainer’” practices

– Explains that can’t get paid a second time for a Medicare covered service

– IMPORTANT – Explicitly states that it is legal to charge for service not covered by Medicare

– Access fees or administrative fees are not allowed where they are to obtain Medicare covered services


Alleged violation of assignment agreement because SOME of the services were already covered by Medicare

Legality of agreement turns on what additional fees cover


Specifically notes CMP settlement Physician paid $107,000 to resolve allegations of

charging patients annual fee for Medicare covered services

Fee covered

Annual physical, same or next-day appointments, dedicated support personnel, around the clock physician availability, prescription facilitation, expedited and coordinated referrals, and other amenities at the physician’s discretion

Potential Fraud and Abuse Issues

When dealing with Concierge Practice Management Companies be sensitive to: State Fee Splitting Prohibition: prevent a physician from sharing

any part of their fees with a third-party without the third-party performing certain substantive services

e.g., often payments are appropriate, but need to be tied to the value of the services

Potential kickback issues for marketing; see Advisory Opinion 10-23 (November 4, 2010)

Amenities as inducements that violate antikickback rules

Prognosis for Concierge Care After the ACA

• Primary care doctors at a premium– Many more patients– Primary care can opt for the better paying

practice methodologies

• ACO’s—Can concierge doctors be participating providers if they are seeing Medicare patients.

ACA and Concierge Care

• ACA Expanded Medicare Covered Services– Prevention Plans– Annual Wellness visits

• Potential Limitations on DME and other prescriptions

• Will Medicare restrictions be expanded to exchange policies.

• Family Medical Homes

Guidelines for Contracting with Patients

AMA Ethical Guidelines AMA acknowledges that retainer contracts

enhance patient choice and pluralism in the delivery and financing of health care.

However, AMA is concerned that a proliferation of retainer practices might “threaten access to care”

The AMA provides that retainer contracts: Be entered into without duress, with full disclosure

(including any knowledge the physician has regarding the patient’s insurance coverage)


AMA Ethical Guidelines

The AMA provides that retainer contracts: Must be cancelable without financial penalty or “undue

inconvenience”

Cannot promise “more or better diagnostic and therapeutic services”

a guideline which conflicts with the physician’s obligation to provide “more” in return for non-covered service fees

In sum, AMA cautions against a physician’s use unfair persuasion in the contracting process and emphasizes the need to uphold quality of care standards for both retainer and non-retainer patients alike


Where a physician runs a “dual” practice (serving both retainer and non-retainer patients) they must provide the same level of diagnostic and therapeutic service to both

Physician must facilitate transfer of patients to other physicians where necessary, or, if no other physicians are available, they must continue to treat them

Contracts should clearly and specifically describe all “non-covered” services and physicians must always be honest in their insurance or other payor billings


For Medicare beneficiaries Contracts with beneficiaries must be available for

inspection (although not necessarily filed with CMS)

Missed appointment fees may be charged, but you must charge all patients the same at the same rate

Never bill a patient for services covered by Medicare

Concierge Medicine: Key Legal Considerations

State LawsPrivate InsuranceContracting Issues

State Insurance Law

Unlicensed insurance companies? Practices that provide health care services for fixed,

prepaid fee may be health plans under state insurance laws (e.g., Knox-Keene Act in California)

No other entity in chain of treatment/payment to accept risk/subject to state regulation (e.g., reserve requirements)

If practice goes under, patients left high & dry Ex.: Washington medical group offered their own insurance plan

that was put in state receivership

State Insurance Laws

State Limitations on Concierge Medicine West Virginia – Determined that a physician providing

care for a flat fee was operating as an unlicensed insurer.

Maryland-2008 warning of insurance concerns New Jersey – Warned that NJ physicians serving on

HMO or PPO panels could not require a concierge fee, because it discriminates against HMO and PPO patients.

New York – Issued an informal warning against double billing for services already covered by private insurance. Reoccurring Issue: Which services are covered and which are not?

State Insurance Laws

Positive State Trends WVA legislature has pilot program allowing physicians/health

clinics to charge prepaid fee for primary care and preventive services

Florida – Found that MDVIP did not require an insurance license because the concierge fees were not considered insurance.

Massachusetts – Found that Personal Physicians Healthcare did not violate state insurance laws, and the state licensing board for physicians also found that the concierge model was legal.

Other State Laws

Abandonment Concierge docs must be careful in how they

drop patients who do not become members Must provide adequate written notice and

appropriate referrals Do not leave patients in unstable condition;

provide transition care Check state law

Other State Laws

Corporate Practice of Medicine For franchise/practice management models,

physicians must control medical decision-making

Anti-kickback (all payor)/Fee Splitting Will affect franchise or practice management fees

Franchise Laws Check to see if state franchise laws apply if

franchise/practice management model is chosen

Private Insurance

• Balance Billing and Nondiscrimination Most provider agreements and some state insurance

laws preclude balance billing of covered patients for covered services

Key is to show these are not covered services However it is not always easy to distinguish what is a

covered service and what is not. Examples: 24/7 doctor availability, physical examinations, and

coordination of care with specialists

Notice to patients Nondiscrimination issue

Private Insurance

Negative Reactions

Premera Blue Cross in Washington and Blue Shield of Rochester: extra fees violate balanced billing and non-

discrimination laws

Harvard Pilgrim Health Care in Mass: no longer contracts with physician groups that charge access fees

Cigna and United Healthcare in Florida and Texas: physician concierge care practices no longer qualify for their networks

Positive Reactions

Regence Blue Shield in Washington: extras fees okay as long as for noncovered services

BCBS of Mass: will contract with concierge practices as long as they notify patients of nature of practice and fee structure

Contracting Issues

Business Entity-Practice Contracts If franchise/practice management model

chosen, business entity will need to enter into contracts with participating medical practices

Contract will specify whether business entity or practice will collect retainer fees

Practice receives license to use entity’s name and logo

Contracting Issues

Patient Contracts – should contain: Services covered by the subscription fee What services/costs are not covered and any out-of-pocket

costs Whether the physician accepts Medicare/private insurance When the retainer fee is payable/refundable When services covered by Medicare or private insurance will be

billed or collected

How much practice will charge for services not covered by retainer fee

Contracting Issues

Patient Contracts Contract should specify duration of membership and

whether it automatically renews or patient must affirmatively

renew

Patient should be able to terminate without financial

penalties or excessive inconvenience

Patient must be able to understand the contract and

sign it voluntarily – practice staff assistance Contract should not make exaggerated claims about the

quality of care

Tips to Reduce Legal Risk

Charge retainer fees only for noncovered medical services

Take proper steps to transfer nonparticipating patients to other competent physicians

Fully inform patients which services are covered by the annual fee, which are covered by insurance, and which will require additional out-of-pocket payments by the patient

Tips to Reduce Legal Risk

Follow carefully rules for opting out of Medicare as well as the termination provisions in agreements with managed care and other insurers

For those who do not opt out of Medicare or private insurance, do not require insured patients to pay a retainer fee as a condition of receiving covered services

To avoid bumping up against state insurance laws, do not offer all necessary medical services in exchange for a fixed, prepaid fee; rather provide clearly defined services for retainer fee

Concierge Medicine:

Key Legal Considerations

Fair Market Value Considerations

Between Practice & Patient

and

Between Concierge Company & Practice

Case Study 1: Practice & Patient

Determine FMV of Concierge Medicine Program Annual Patient Fee • Facts to Consider

• Program Offering & Patient Benefits – Wellness Program with Annual Visit

» Wellness Plan

» Metabolic Panel, Heart Health, Diabetes Prevention

» Respiratory Health, Bone Density, Sleep, Vision, Hearing

» Comprehensive Risk Factor Analysis

» Comprehensive Lab Test Program

» 24/7 access to personal doctor, same day appointments, access to network of physicians when traveling & access to nationally renowned specialists


What to Consider when Determining FMV • Internal Information

• All Promotional Literature

• Membership Application & Agreement

• Encounter Forms

• Physician Curricula Vitae

• Annual Visit CPT Codes & Description of Services with Time

Estimates for Provision of Services

• Does Medicare Reimburse for Service?

Case Study1: Practice & Patient

• External Sources of Information • The Centers for Medicare & Medicaid Services (“CMS”) • Physician Fee Schedule (“PFS”)

• The Frank Cohen Group Advanced Healthcare Analytics • Sinaiko Healthcare Consulting’s Proprietary Paid Claims

Database

• American Medical Group Association: 2010 Medical Group Compensation and Financial Survey (“AMGA Compensation Survey”);

• Medical Group Management Association: 2010 Physician Compensation and Productivity Survey (the “MGMA Survey”);

• Sullivan Cotter and Associates: 2010 Physician Compensation and Productivity Survey (the “2010 SCA Survey”); and

• Economic Research Institute Salary Assessor (“ERI Survey”).


• Approaches to Value• Income – Not Relevant• Cost – Relevant• Market – Relevant


• Cost Approach • Use Considered Surveys to Determine

Physician Compensation per FTE • Adjust for Time Difference between Valuation

Date and Survey Date • Add Benefits • Determine Hourly Rate & Apply to High & Low

Time Estimates • Use PFS to Determine wRVU & tRVU per

CPT • Calculate Compensation per wRVU & tRVU &

Apply to wRVU & tRVU per CPT


• Results of Cost Approach Analysis • Hourly Compensation Rates


• Results of Cost Approach Analysis • Total Compensation per wRVU & tRVU


• Results of Cost Approach Analysis • Total Compensation for Annual Wellness Visit


• Market Approach • Reviewed Data by Frank Cohen Group

• National Average Charge Data per CPT

• Average Charge per CPT for Internal Medicine Specialty

• Average Charge per CPT for Family Practitioners

• Reviewed Sinaiko Proprietary Paid Claims Database

• Commercial Payor Reimbursement by CPT and location (physician

office)

• For Lab Tests CMS Clinical Lab Fee Schedule


• Analysis Summary • Cost approach approximates the physician compensation

received in clinical practice for provision of the services absent any other benefit available to the patients in concierge program.

• Family practice and internal medicine doctors generally earn more for specialized services such as those provided in the concierge program. The cost approach which looked at weighted average compensation per hour and compensation per wRVU and tRVU across all procedures does not adequately capture the complexity and specialized nature of the concierge services.

• The market approach approximates what the physicians would charge for the provision of comparable procedures to those offered. Does not consider the added benefits received by patients in the concierge program.


• Conclusion

FMV Conclusion Annual Concierge Fee

Specialty Average Charge

Internal Medicine $1,554.82

Family Practice $1,553.47

Case Study 2: Concierge Company & Practice

Determine FMV of Fee Concierge Medicine Company Charges Physician Practice • Facts to Consider

AKS Statute of Primary Importance – depends on whether physician is seeing patients participating in federal programs

State anti-kickback and fee-splitting laws may also be implicated


• Approaches to Value• Income – Not Relevant• Cost – Relevant• Market – Relevant

• What to Consider when Determining FMV– Internal Information

• All Promotional Literature• Agreement Between Physician Practice & Company

– Length of Time

– Right to Cancel

– Rights & Responsibilities of Parties to Agreement

• What Services Does Company Provide to Physicians• Staff Providing Services

– Level of Professional

• Cost to Provide the Services


• External Sources of Information– What Companies Providing Similar Marketing

Services to Non-Physicians are Charging Clients• Reasonable Markup or Gross Margin for Marketing

Companies

– Franchise Fees for Non-Medical Arrangements– Perhaps a Licensing Fee or Royalty Rate for use of a

Trade-name– Points One Cost/Market Hybrid Approach– Points Two & Three Market Approach


• Results of Analysis– Review and Reconcile Cost Approach

Information– Review and Reconcile Market Approach Info– Reconcile Two Approaches– Conclusion as to FMV of Fee


David W. Hilgers

David W. HilgersBrown McCarroll, L.L.P.

111 Congress Avenue, Suite 1400Austin, Texas 78701

512-472-5456 Main202-703-5739 Direct

[email protected]

David W. Hilgers is a Partner at Brown McCarroll, L.L.P. and is a member of the firm’s Health Care Law Section. He has practiced law for more than thirty-five years. His primary focus is on health care, corporate, and administrative law. Mr. Hilgers represents health care providers, including physicians, dentists, health systems, managed care organizations, long-term care facilities, multi-specialty groups, hospitals, hospital districts, and community mental health and mental retardation centers.

Robert M. Portman

Robert M. Portman Powers Pyles Sutter & Verville PC 1501 M Street NW Seventh Floor

Washington, DC 20005

202-466-6550 Main202-872-6756 Direct

[email protected]

Robert M. Portman is a principal in the law firm of Powers Pyles

Sutter and Verville PC in Washington, DC. Mr. Portman

concentrates his practice in health and association law, focusing

on certification law, administrative law, antitrust law, litigation,

transactions, election and lobbying law, and legislation and

regulation in the health care field. He represents a wide range of

non-profit health care organizations including a large number of

national professional societies, trade associations, other health care associations, voluntary health organizations and certification bodies, as well as numerous individual physicians, physician practice groups and other health care providers.

concierge medicine: key legal considerations complying with medicare regulations, insurance laws and...

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