urgent care centers: key legal and business...

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Presenting a live 90-minute webinar with interactive Q&A

Urgent Care Centers:

Key Legal and Business Considerations Complying With Corporate Practice of Medicine Laws,

State Licensure Requirements, EMTALA Mandates, and Reimbursement Laws

Today’s faculty features:

1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific

WEDNESDAY, SEPTEMBER 21, 2016

Jon M. Sundock, General Counsel and Chief Administrative Officer,

CareSpot Express Healthcare, Brentwood, Tenn.

David F. Lewis, Esq., Butler Snow, Nashville, Tenn.

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5

Forming Urgent Care Centers:

Addressing Complex Legal Challenges

September 21, 2016

David F. Lewis Jon Sundock

Butler Snow CareSpot and

MedPost

6

What is an Urgent Care Center?

• No universal definition

• Provide services that fall in between primary care and emergency

department

• Can also include some primary care services and could branch into other

areas, e.g., weight loss, allergy care, wellness, etc.

• Urgent Care Association of America:

• The delivery of ambulatory medical care outside of a hospital emergency

department on a walk-in basis, without a scheduled appointment

• Generally focused on episodic, acute care rather than

on long-term management of chronic illness or preventive care

7

Common Features of Urgent Care Centers

Retail healthcare

High focus on customer convenience

No appointments required and short wait times

Extended hours, including weekends and evenings

Broad list of services beyond primary care offices

X-ray

EKG

Onsite lab for CLIA waived testing

Ability to perform minor procedures like laceration repair and

splints

8

Why the Growth in Urgent Care Centers?

• Growth spurt began in mid-1990s and has continued

• Since 2008, the number of urgent care centers has increased from 8,000

to more than 11,000

• Why the continued growth?

• Acceptance by the public

• Lack of access to primary care (no access or delayed access)

• Overcrowding in Emergency Departments (ED)

• Affordable Care Act has not slowed growth in ED visits

• Long wait times at other providers (EDs especially)

• Convenience of longer hours and walk-ins

• Emphasis on high-quality care

• Increased healthcare consumerism spurred by

high-deductible plans

9

Current State of Urgent Care Centers

Over 150 million patient visits to urgent care centers

each year in the United States

By 2018, total urgent care industry revenue is projected

to exceed $18 billion

There have been significant transactions in the urgent

care industry

Tenet Healthcare’s purchase of CareSpot Express Healthcare

Wellpoint’s purchase of Physicians Immediate Care

Dignity Health’s purchase of US Healthworks

10


Would anticipate additional consolidation in the industry

More health systems acquiring urgent care centers and

developing additional urgent care centers

Continued interest by private equity players in having interests in

urgent care companies

Various strategies remain viable:

Urban focus

Rural focus

Pure play urgent care

Hybrid models

primary care focused

Telemedicine

11


2015 UCAOA Benchmark Report

Nearly 90% of urgent care centers saw an increase in the

number of patient visits from 2013 to 2014

Nearly 25% of all urgent care centers are owned by hospitals or

health systems

Approximately 20% of urgent care centers are owned by two or

more physicians

About 27% of all emergency room visits could take place in

urgent care centers (with approximate cost savings of $4.4

billion)

By 2019, large metropolitan areas could support two to three

times the number of current urgent care centers

12

Current Distribution of Urgent Care Centers

13

Key Legal Considerations

Corporate Practice of Medicine

Staffing Models

State Licensure and Permits

Documentation and Coding

Other Focus Areas

Medical Director

Accreditation

EMTALA

Other Compliance Matters

14


The corporate practice of medicine doctrine prohibits

employment of clinical personnel by corporations

Purpose is to protect the integrity of medical profession

by keeping it separate from corporate interests

State laws vary on the doctrine

Strict prohibitions

Some Limitations

No prohibitions

15


Certain states are very strict - any corporation

employing a licensed physician to treat patients and

receive fees for those services is unlawfully engaged in

the practice of medicine

Texas, New York, California, and Illinois are examples of states

with strict corporate practice of medicine perspectives

Employee-physician subject to disciplinary action or

license revocation

In strict states, structuring arrangements carefully is very

important.

16

Strict Prohibition Against Corporate

Practice of Medicine

Narrow exceptions could apply:

Professional corporations formed by physicians – this is a

common permitted corporate structure in states

Texas utilizes the “501(a)” structure as a unique exception

California permits the use of a “foundation” model

The “Friendly PC Model” is commonly used in strict

corporate practice of medicine states

Physician owned professional corporation is managed by a

corporate entity for a fair market value management fee.

17

Less Strict Approach to


Permits physician employment as long as the terms of

relationship do not violate statutory requirements:

“Entity does not direct or control independent medical acts,

decisions, or judgment of the licensed physician”

Most physician-entity employment relationships

permitted as long as physician’s professional medical

discretion is preserved

Indiana and Florida are examples of states with this

approach.

18

Urgent Care Staffing Models

Common staffing models for urgent care centers:

Physician-only staffing

Primarily physician staffing supplemented on a limited basis by

mid-level providers

Primarily mid-level staffing with supervision provided by

physicians most often through “indirect supervision”

Considerations for choice of staffing models:

Economic considerations

Public perception considerations

Availability of staffing to meet needs

19


Here are some 2014 statistics on staffing models used at

urgent care centers:

11% are physician only

Will this percentage decrease over time?

29% have a physician and midlevel working together

54% have physician supervision with the physician not onsite

4% have no physician supervision (permitted by state regulation)

For non-clinicians, over half of the urgent care centers use

medical assistants (40% used RNs) and nearly all urgent care

centers (93%) use X-Ray Technicians

20


Direct Supervision versus Indirect Supervision

Direct supervision - when the physician is working at the same

time in the same building with the mid-level provider

Indirect supervision – when the physician and the mid-level

provider are not working at the same time but the physician is

available for consultation

State requirements impact supervision arrangements

Scope of practice for nurse practitioners and physician

assistants may not be the same

Supervision requirements for NPs and PAs may not be same

State requirements may be harder to satisfy

21


Items to Consider when Exploring Indirect Supervision

Can PAs and NPs perform the same scope of services?

What written agreement is required?

With what agencies are forms or agreements to be submitted?

What requirements must the supervising physician fulfill?

Chart reviews – a certain percentage each month, other charts?

Availability?

Regular meetings?

Periodic reviews of protocols?

Clinical quality assessments?

What are the legal consequences for the supervising physician?

22


Additional considerations for indirect supervision:

Limits on the number of mid-levels that may be supervised at

any one time

Prescription pad requirements vary widely by state

Prescribing controlled substances

How do you document that supervision requirements are met?

Key to indirect supervision – follow the rules and do

more than simply “check the box” in satisfying the state

requirements

23

State Licensure

Facility licensing varies greatly from state to state

The general rule is that most states do not have an urgent care

license or any state licensure for urgent care centers

Will that remain the case?

Some states do have license requirements for urgent care

centers:

Florida

Massachusetts

Arizona

States with urgent care licensure require pre-opening surveys

and periodic surveys thereafter

24

State Licensure (continued)

Case Study: Massachusetts

State license process is very involved, complicated and lengthy

Massachusetts has many requirements with respect to the

physical layout of the urgent care center, for example

The application is substantial and the review process is very

detailed.

At the inspection, multiple inspectors took three days to

complete the review

Case Study – Florida

While not as involved as Massachusetts, Florida has an

application and physical space review requirement prior to

opening

25


Even if a state does not have an urgent care license,

patient complaints may lead to an inspection or survey

Urgent care centers should have documented policies

and procedures in place and a way to confirm that those

policies and procedures are consistently followed

An example of a key policy and procedure is a triage

policy:

Front desk staff need to understand what to do when an

emergent patient comes into the center and requires immediate

attention

26


These licenses and permits are commonly required:

CLIA Certificate

Necessary if the center offers certain clinical laboratory testing

Make sure the correct level of CLIA certificate is obtained (i.e,

waived versus provider performed microscopy)

X-ray permit

Watch out for extra requirements (Texas, for example)

Pharmacy license - in some states, highly restrictive pharmacy

provisions have led urgent care centers to forego offering

prescription medications

Other licenses and requirements depend on the location

City or county business permits or special signage requirements

27


Be aware of additional requirements that may come with

licenses and permits

Annual inspection of the lab

Inspection of the X-ray equipment and other diagnostic

equipment not located in the lab

Proper storage of medicines and supplies

Signage requirements:

Notice to patient requirements

X-Ray notices

Posting of provider licenses

Notification to patients if a mid-level provider is on duty

28


Not unlike other areas of healthcare, a key area of

compliance for urgent care is appropriate documentation

and coding of claims for services

Expectation is that proper training and oversight is

maintained for clinician documentation and coding

Evaluation and Management (E/M) coding is a key

aspect of urgent care coding:

New patients (99201 – 99205)

Established patients (99212 – 99215)

1995 versus 1997 Guidelines

29


If using an electronic health record system:

Does the system suggest an E/M code?

If so, then need to understand how the system determines

Is it entirely up to the provider to determine the E/M code?

Does the system have one check box that results in multiple

boxes being checked?

Is “copy – paste” features available to clinicians?

Who is responsible for completing the Review of Systems and

Past Family and Social History?

Medical Decision Making

Do providers understand the elements in deciding the proper level?

How much time they spend with the patient is not a factor

30


Even if an electronic medical record system is used, the

urgent care center should have a paper process for

documentation available with related policies and

procedures for proper completion

A paper documentation process is necessary when the

electronic medical record system is not available

When locum tenens are used, they may need to document on

paper because they are not trained on the electronic system

Do you give the regular clinicians the option to document on

paper when the center is busy or when they are still new in using

the electronic system?

31


Beyond E/M coding, other aspects of documentation are

important to consider Is a modifier, like the 25 modifier, appropriate to use?

Are procedures, like fracture care and laceration repair, properly

documented to support the charge for the procedure?

Does the documentation contain all of the elements to establish not

only the results of testing but what action the provider takes in

response to testing results?

The “hindsight test” is a good way to evaluate documentation –

would the documentation in a professional liability case stand up

to scrutiny if challenged by the patient?

32


How do you properly monitor documentation and

coding?

No financial incentive for providers with respect to coding

Monitoring programs should be implemented, followed and

documented

Random claims reviews

Statistical analyses should also be performed to detect outliers

Particular focus paid to high coding – 99205/99215

Proper documentation also avoids malpractice issues

Does the electronic medical record system prompt clinicians at all?

Balancing complete documentation and need for efficiency is a

constant effort

33

Other Areas of Focus

Medical Directorship Requirements

Some states require urgent care centers have a medical director

Florida requires a “market medical director” (maximum of 5

locations per medical director)

Massachusetts requires a “professional services director” for each

urgent care center

Those states with required medical directors, applicable statutes

spell out the duties of those medical directors

Florida requires medical directors review charts to ensure proper

documentation and coding

Most states have no medical director requirement

How does an urgent care center ensure proper provision of medical

services to patients without medical directors?

34


Case Study – Allstate Ins. Co. v. Vizcay (No. 14-13947

(11th Cir, June 23, 2016)

Company was accused of violating False Claims Act because

medical director did not review documentation and coding as

required by Florida statute spelling out medical director duties

Court found medical director did not fulfill the statutory duties

and permitted claims to go out for services not provided and

incorrectly documented and coded

“The plain meaning of the statutory language shows that the

Florida legislature intended to establish, not eschew, a principal-

agent relationship between a clinic and its medical director.”

35


Accreditation

There is no regulatory requirement that urgent care centers seek

and obtain accreditation

Two organizations will provide urgent care accreditation:

Joint Commission

Urgent Care Association of America

Benefits of Accreditation

Forces operational discipline and consistency across locations

Establishes minimum requirements, particularly for states which do

not license urgent care centers

Creates perception of quality to patients

May differentiate urgent care centers with payors

36


EMTALA

Emergency Medical Treatment & Labor Act

Treatment obligations of EMTALA do not apply unless

the urgent care center is owned by a hospital or in a joint

venture with a hospital AND services provided are billed

as a department of the hospital

No obligation to treat patients who arrive at the center

Triage policy – stabilize and transport

37


Additional Compliance Focus Areas

Regular and consistent compliance training

HIPAA privacy requirements

Small spaces and thin walls

Front desk personnel – critical staff member

Medical records requests

HIPAA security requirements

Agreements with providers

Compensation and bonus arrangements

38


Liability Risks

Malpractice risk for urgent care centers generally falls between

that of primary care practitioners and emergency departments

Risk factors for UCCs

Lack of long-term, well established patient relationships

Target for drug seekers

Discharge management—patient follow-up plan

Potential for underdiagnosing patients

Rely on patients to correctly self-triage and select appropriate facility for

care

Example of risk area – pulmonary embolism

39

Key Business Considerations

Location, management, and services

Issues in buying or selling an Urgent Care Center

Partnering with hospitals and investors

40

Location

Volume key to financial success

One study showed that a population of 20,000 to

30,000 was needed to sustain an urgent care center

Currently, urgent care centers are concentrated in urban

areas

Convenience for patients

Population demographics, e.g., age, average income

Free-standing v. hospital-associated

41

Management of Urgent Care Centers

How will the urgent care center be managed?

Physician managed

Management company

Customer service oriented management improves

financial success of urgent care centers

Leadership with a healthcare background is key

42

Services Provided

Target population

Know the community’s demographic in order to tailor services to

community’s needs

Specialty v. General

For example, some urgent care centers focus specifically on

pediatric care

One stop shop

All services within the urgent care center or nearby referral

locations

Goes back to the convenience factor

43

Buying or Selling an Urgent Care Center

Buying an existing urgent care center

Location

Competition

Reputation

Property—leased or owned

Valuation

Due Diligence

Exclusivity Agreement

Employment & Non-Compete Agreements

44

Buying or Selling Urgent Care Centers

Due Diligence – areas of focus

Documentation and coding

Policies and procedures

Training for staff

Marketing

Lines of business

Patient satisfaction

Turnover rates

Litigation experience

Operational audit results

45

Buying or Selling an Urgent Care Center

Governing and Ownership Agreements

Voting

Officers

Compensation

Decision making—Management and Control

Retirement

Sale of Ownership Interest

Tax Considerations

46

Partnering with Hospitals and Investors

Possible Ownership Models

Physician or group of physicians

Hospital

Corporation

Non-physician individual

Franchise

With the wide range of services offered and extended

service hours, integration is key to the successful growth

of an urgent care center

47

Management Company Model

Provides the facilities, office space, equipment, non-

physician personnel, and non-professional services to an

existing practice or other healthcare services provider

Must be commercially reasonable and reflect fair market

value payment for the goods and services

Do you obtain a third party fair market valuation?

Does state law permit a percentage-based management fee or is

a flat fee required?

May the fee be adjusted and how?

48

Investor Model

Private equity firm or investor group provides equity

funding for the business

Investors typically own a majority of the equity in the

company

Management holds a minority stake

Board of Directors is dominated by the investors

Ultimate fate of the company’s control is up to the investors

Timing and consideration for when and to whom to sell may not

be what management anticipates

Timing to achieve center-level profitability and

completing beneficial acquisitions are very important

49

Joint Venture Model

Hospital or health system and company jointly own

urgent care centers

Proper structure is very important

Operating agreement describes key business terms

How are decisions made on important decisions

What decisions may the manager make without Board

participation

How are the centers branded

Do each of the members to the joint venture have the same

goals in mind for the jointly owned locations

50

David F. Lewis

Butler Snow

The Pinnacle at Symphony Place

150 3rd Avenue South, Suite 1600

Nashville, TN 37201

[email protected]

Jon M. Sundock

CareSpot Express Healthcare

MedPost

115 East Park Drive, Suite 300

Brentwood, TN 37027

[email protected]

mailto:[email protected]

mailto:[email protected]

urgent care centers: key legal and business...

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