Transcript Concierge Medicine: Key Legal Considerations Complying

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, JD
[email protected]
Brown McCarroll, L.L.P.
Robert M. Portman, JD, MPP
[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
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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
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Primary care
Fixed monthly or annual fee
Limited number of patients 300-800
Special services/attention
Greater physician access
Plan of care
Amenities
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 Must pay retainer to receive any services
Services Provided
 Typical Services/Amenities
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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 noncovered 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
Concierge Care Examples
• MDVIP – http://www.mdvip.com/
• Boca Raton based closed model
• Starbucks approach – over 450 physician affiliates in
32 states
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$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
Concierge Care Examples
 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
Concierge Care Examples
 Health Access RI
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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
Concierge Care Examples
 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
Concierge Care Examples
 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
Medicare Reimbursement Issues
 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
Medicare Reimbursement Issues
 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
OIG Roadmap for New Physicians:
Avoiding Medicare Fraud and Abuse
 Alleged violation of assignment agreement
because SOME of the services were
already covered by Medicare
 Legality of agreement turns on what
additional fees cover
OIG Roadmap for New Physicians:
Avoiding Medicare Fraud and Abuse
 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)
Guidelines for Contracting with Patients
 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
Guidelines for Contracting with Patients
 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
Guidelines for Contracting with Patients
 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 Laws
Private Insurance
Contracting 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
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Premera Blue Cross in
Washington and Blue Shield of
Rochester: extra fees violate
balanced billing and nondiscrimination laws
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Harvard Pilgrim Health Care in
Mass: no longer contracts with
physician groups that charge
access fees
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Cigna and United Healthcare in
Florida and Texas: physician
concierge care practices no longer
qualify for their networks
Positive Reactions
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Regence Blue Shield in
Washington: extras fees okay as
long as for noncovered services
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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:
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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 outof-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
Case Study 1: Practice & Patient
 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
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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”).
Case Study 1: Practice & Patient
• Approaches to Value
• Income – Not Relevant
• Cost – Relevant
• Market – Relevant
Case Study 1: Practice & Patient
• 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
Case Study 1: Practice & Patient
• Results of Cost Approach Analysis
• Hourly Compensation Rates
Case Study 1: Practice & Patient
• Results of Cost Approach Analysis
• Total Compensation per wRVU & tRVU
Case Study 1: Practice & Patient
• Results of Cost Approach Analysis
• Total Compensation for Annual Wellness Visit
Case Study 1: Practice & Patient
• 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
Case Study 1: Practice & Patient
• 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.
Case Study 1: Practice & Patient
• 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
Case Study 2: Concierge Company & Practice
• Approaches to Value
• Income – Not Relevant
• Cost – Relevant
• Market – Relevant
Case Study 2: Concierge Company & Practice
• 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
Case Study 2: Concierge Company & Practice
• 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
Case Study 2: Concierge Company & Practice
• 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. 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.
David W. Hilgers
Brown McCarroll, L.L.P.
111 Congress Avenue, Suite 1400
Austin, Texas 78701
512-472-5456 Main
202-703-5739 Direct
[email protected]
Robert M. Portman
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.
Robert M. Portman
Powers Pyles Sutter & Verville PC
1501 M Street NW Seventh Floor
Washington, DC 20005
202-466-6550 Main
202-872-6756 Direct
[email protected]