concierge medicine: key legal...

Concierge Medicine:

Key Legal Considerations Complying With Medicare Regulations, Insurance Laws and the Anti-Kickback Statute

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TUESDAY, APRIL 17, 2012

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

Robert M. Portman, Principal, Powers Pyles Sutter & Verville, Washington, D.C.

Julie E. Kass, Principal, Ober|Kaler, Baltimore

Thomas J. Cuccia, CFA, ASA, Managing Director, Valuation Services,

Reimbursement and Advisory Services Division, Altegra Health, Los Angeles

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Concierge Medicine: Key Legal Considerations

Overview and Practice Models

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

6 1501 M Street NW Seventh Floor Washington, DC 20002 202-466-6550

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

Potential Risks

Medicare, state insurance laws, private insurance contracts

Ethical dilemmas

Contract issues

Positive outcomes

Personal care

Professional satisfaction

May make preventative care affordable and accessible


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

Concierge Care


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


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

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


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

Practice Models


750-2000 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)

The Numbers


Concierge Care Examples MD2 – www.md2.com

Seattle based/closed model started in 1996

Original concierge practice

Now has offices in Portland, Chicago, and Dallas

Mercedes medicine

All the primary care you want for $13.5-20K/year

Plus spa-like amenities, physician escort for specialist visits, prescription drug pickup/drop-off service

Guaranteed same day appointments

50 families per physician


http://www.md2.com/

Concierge Care Examples MD2

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

$1500-1800 annual fee

600 patients per physician

Provides standard concierge services, but does not guarantee same day appointments

does not provide unlimited office-based services

does not provide spa amenities


http://www.mdvip.com/

Concierge Care Examples MDVIP--http://www.mdvip.com/

Does accept insurance

Will franchise turn-key operation for percentage of franchisee’s concierge fees.

Franchisee keeps all insurance reimbursements


http://www.mdvip.com/

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


http://www.personalphysicians.net/

Concierge Care Examples 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


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


April 17, 2012

www.ober.com


Best Practices to Comply with Medicare Regulations

Julie Kass 410-347-7314

[email protected]

www.ober.com 25

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

www.ober.com 26

Medicare Reimbursement Issues

Participating physicians

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

Patients seek reimbursement from Medicare

Limiting charge 115% of Medicare

www.ober.com 27


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

www.ober.com 28

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


www.ober.com 29

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

www.ober.com 30

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”

www.ober.com 31

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

www.ober.com 32

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

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

www.ober.com 33

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??

www.ober.com 34

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

Non-Covered Services

Additional or extra-ordinary services

www.ober.com 35

Government Pronouncements

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

www.ober.com 36

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

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

Government Pronouncements

www.ober.com 37

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

www.ober.com 38

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


www.ober.com 39

Alleged violation of assignment agreement because

SOME of the services were already covered by

Medicare

Legality of agreement turns on what additional fees

cover


www.ober.com 40

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)

Potential Fraud and Abuse Issues

www.ober.com 41

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)

www.ober.com 42

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


AMA Ethical Guidelines

The AMA provides that retainer contracts:

www.ober.com 43

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


www.ober.com 44

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



State Laws

Private Insurance

Contracting Issues

Robert M. Portman, JD, MPP

[email protected]

Powers Pyles Sutter & Verville, PC

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


Potential State Insurance Requirements If a concierge practice is subject to state insurance regulations, it

could have to meet requirements such as

Capital maintenance

Reserve requirements

Filings

Certificate of authority

In Florida in order to obtain a certificate of authority, an insurer must maintain a surplus of not less than five million dollars for a property and casualty insurer, or $2.5 million for any other insurer.

In Washington in order to obtain a certificate of authority, the insurer must maintain four to five million dollars in combined capital and surplus funds.

State Insurance Law


Other Potential State Law Limitations

State law might preclude physicians who have contracts with health insurers from collecting anything other than copayments and deductibles from patients.

Some states might also preclude or limit balance billing by out-of-network physicians who have no insurance contracts.

Other states might prevent HMOs and other insurers from contracting with providers whose services are not equally available to all plan members within the same class.

State Insurance Laws


State of Washington

In 2003, Washington considered requiring concierge practices to obtain a certificate of registration as a healthcare service contractor or HMO.

Instead in 2007, Washington required by law that concierge practices (or “direct practices”) must

Inform patients if the practice does not accept insurance, as well as about the services they provide.

Return any fees held in trust, if the physician/patient relationship ends.

Only raise fees once per year.

Submit annual statements to the Insurance Commissioner.



State of Maryland Maryland Insurance Administration 2008 report detailed certain

indicators that a practice might be engaging in the unauthorized business of insurance: Annual retainer fee covers unlimited office visits or a limited number of services

that the physician cannot reasonably provide to each patient in his or her panel.

No limitations on the number of patients accepted into the practice.

Annual retainer fee does not represent the fair market value of the promised services.

Physician has substantial financial risk for the cost of services rendered by other providers.

The retainer agreement is non-terminable during the contract year and/or does not provide for pro-rated refunds.



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.

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.


Analysis

MD2 model may be most vulnerable

provides unlimited service for prepaid fee

accepts risk

Way to reduce risk

Put fees in trust or escrow account?



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 Positive 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

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


Dr. Steven D. Knope of Arizona In 2008 Dr. Knope gave a high-profile interview about the benefits

of concierge medicine in eliminating the interference of third party payers.

A week later, Blue Cross Blue Shield called Dr. Knope to cancel his 15 year contract stating that he had violated the contract by practicing concierge medicine.

Dr. Knope explained that he does not accept insurance from his concierge patients, but that he still saw 100 regular patients who were covered by BCBS.

BCBS still canceled his contract and his patients were forced to find another doctor.

Private Insurance


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 Business Entity-Practice Contracts

Practice should retain control over physician’s services

Specify that parties are independent contractors and company does not have control over medical services provided by practice

Practice agrees to follow company’s standards and guidelines

Fees in compliance with state AK/fee splitting laws


Contracting Issues Sample practice contracts provisions:

Liability insurance Mutual indemnification provisions Clearly defined services company will provide for practice (see next

slide) Payment from practice to franchise company Practice model/size Services practice will provide Whether practice will accept insurance Term and termination Non-compete and other restrictive covenants HIPAA BA agreement if entity touches PHI


Contracting Issues Franchise/Practice Management Services

Patient demographic analysis

Initial and follow up mailings; other marketing

Patient education seminars

Processing membership enrollments

Staff support

Billing & Collections of membership fees

Electronic medical records

After hours call center

Access to lower cost liability insurance and other

products/services


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


Robert M. Portman

Robert M. Portman

Principal

Powers Pyles Sutter &

Verville PC

1501 M Street NW

Seventh Floor

Washington, DC 20005

202-466-6550 Main

202-872-6756 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.

1501 M Street NW Seventh Floor Washington, DC 20002 202-466-6550

Concierge Medicine: Key Legal Considerations Fair Market Value Considerations

Between Practice & Patient and

Between Concierge Company & Practice

Thomas J. Cuccia, CFA, ASA Managing Director

[email protected] 68

mailto:[email protected]

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 travelling & access to nationally renowned specialists

69


• 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?

70

Case Study 1 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”).

71


• Approaches to Value

– Income – Not Relevant

– Cost – Relevant

– Market – Relevant

72


• 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

73


• Results of Cost Approach Analysis

– Hourly Compensation Rates

74



– Total Compensation per wRVU & tRVU

75



– Total Compensation for Annual Wellness Visit

76


• 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

77


• 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.

78


• Conclusion

Specialty Average Charge

Internal Medicine $1,554.82

Family Practice $1,553.47

FMV Conclusion Annual Concierge Fee

79

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

80


• Approaches to Value

– Income – Not Relevant

– Cost – Relevant

– Market – Relevant

81


• 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 the Services – Level of Professional

• Cost to Provide the Services

82


• 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

– Point One Cost/Market Hybrid Approach

– Points Two & Three Market Approach

83


• Results of Analysis

– Review and Reconcile Cost Approach Information

– Review and Reconcile Market Approach Info

– Reconcile Two Approaches

– Conclusion as to FMV of Fee

84

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