Health Care Compliance Watch : New York Health Care Compliance Lawyer & Attorney : Ilana Sable : NY Physician Representation Law

Appearance enhancement and weight loss businesses that involve licensed professionals or that require a specialized business license will face complicated regulatory considerations when franchising their business. These regulatory considerations are heightened in states with strong corporate practice of medicine statutes in that the products, procedures and/or services offered by these franchise concepts may implicate what, in certain instances, may be considered the practice of “medicine.”

Is your franchise concept unlawfully practicing medicine or implicating applicable health care related regulations and/or statutes?

If you are starting an appearance enhancement or weight loss franchise, or would like to evaluate your existing concept, you must conduct a comprehensive review with a focus on the following issues:

1.       Corporate Practice of Medicine and Anti-Fee Splitting Statute. In many states, professional health care related services can only be offered by licensed health care professionals or authorized professional health care organizations. Similarly, certain federal and state regulations and statutes further mandate that licensed health care professionals and professional health care organization cannot share the fees that they earn for providing professional services with any individual or organization other than members of their own professional organization.

2.       Implication of Stark Laws and Prohibited Self-Referrals. The Stark laws and anti self-referral statues prohibit, with varying degrees, medical practices and/or facilities from submitting - and Federal and/or state regulated health care programs from paying - any claims for certain designated health service if the referral of the designated health service comes from a physician with whom the medical practice and/or facility has a prohibited financial relationship. Depending on the services being offered by the appearance enhancement center, the Stark laws or anti self-referral statutes can be violated depending on the business arrangements developed for the concept.

3.       Implication of Anti-Kickback Statutes.  Depending on the structure of the arrangement, certain joint ventures, service agreements and/or management arrangements raise a number of compliance concerns and, in many situations, can implicate both the federal and state-specific anti-kickback statutes. Accordingly, once the full appearance enhancement or weight loss concept is outlined, it is important to evaluate the proposed business arrangement in light of these, among other, federal and state-specific regulatory and compliance concerns to determine whether the desired regulatory balance can be reached and maintained.

For more information concerning the franchising of your health care related concept, please contact Ms. Ilana Sable or visit www.hccwlaw.com.

For additional information concerning setting up a franchise the following article is recommended:

How to Franchise Your Business

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For the past few weeks, my inbox has been flooded with a wave of literature focused on the upcoming conversion to the ICD-10 coding system. In almost every instance, the subject line has an extremely serious message such as “don’t be left behind” or “avoid delays in claims processing.” While I am typically an advocate for preparation and being a “go to” person, I do not see the benefit in a health care practice’s extremely early study and implementation of the ICD-10 coding system. The CMS mandated conversion date is three years away (currently set for October 1, 2013) and the entire health care industry currently uses ICD-9.

To date claims processors, insurance carriers, billing and coding programs, electronic health records systems - not to mention Medicare and Medicaid - have not yet converted to ICD-10 and are not prepared to support, receive and/or process medical bills coded to ICD-10. Furthermore, a health care practice will be hard-pressed to find a billing and coding program or an EHR system that fully supports ICD-10. 

The alarm surrounding the conversion to ICD-10 is reminiscent of the alarm surrounding the health care industry’s conversion to electronic claims processing a few years back. The similarity exists in that whether or not a practice is ready to implement a new system, namely, electronic claims processing or ICD-10 coding, the practice’s unilateral implementation is useless until processors, carriers and payors are ready to interface with the new system. The lesson learned is that the health care industry, as a whole, needs to jump on board with this type of massive system overhaul. Once the industry is ready for conversion, there will be a plethora of information, training, demonstrations and hassle for the taking.

For more information on the implementation date, logistics and so forth, see the dedicated ICD-10 page on the CMS website.

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While Congress continues to tackle the difficult decision of when (not “if”) to implement a 21% cut in Medicare payments to physicians, medical practices are facing the equally difficult decision of whether they can afford to keep treating Medicare patients.

On June 24, the House of Representatives passed a six month deferral of the proposed 21% cuts in the Medicare physician fee schedule and retroactively reversed the June 1, 2010 payment cut for 6 months. Physicians were also given a 2.2% fee schedule increase. This temporary deferral marks the tenth time in less than eight years that Congress has blocked the proposed 21% cut in Medicare payments to physicians. Although Congress has pushed the proposed cuts a bit further down the road, the deferral is nothing more than a temporary fix. The Medicare Trust is rapidly depleting and lawmakers have no long term option other than to drastically reduce the country’s Medicare spending.

The bigger issue is that even without the proposed 21% payment cut, physicians across the country have been facing the hard business decision of whether they can afford to keep treating Medicare payments for several years. Many doctors – mainly primary care physicians such as internists and gynecologists – have increasingly stopped treating Medicare patients due to Medicare’s low reimbursement rates, growing demands for supporting medical documents and audits. On average, Medicare pays providers approximately 78% of what commercial insurers pay yet demands a great deal more effort and time in receiving, and often times retaining, payment for services rendered. Plus, with the advent of the RAC program, physicians are finding that they need what amounts to a secondary degree in billing and coding just to stay ahead of the audits and recoupments.

The end result: an increasing amount of physicians are choosing to put the needs of their medical practices above the needs of their senior patients and have either stopped accepting new Medicare patients or have opted-out out of the Medicare program entirely. According to the Centers for Medicare and Medicaid Services, approximately 10 % of physicians have opted out of the Medicare program, with the number of physicians opting-out of the program steadily rising ever year.

If your practice is considering reducing the amount of Medicare patients that it accepts or opting-out of the Medicare program entirely, there are several critical questions that must be asked an evaluated when making these decisions.

·         How much time, effort and secondary support (including staff members and physicians) is allocated toward preparing, processing and submitting medical bills to Medicare? 

·         How much time, effort and secondary support (again, including staff members and physicians) goes into requests for supporting documents and audits? 

·         On average, how do Medicare reimbursement rates measure up against reimbursement rates from commercial carriers for: (a) rate of claims paid and (b) amount paid on claims?

·         How much additional time would physicians and staff members have to allocate toward other projects if the practice reduced or eliminated its treatment of Medicare patients?

·         Would the practice require less staff, space and/or secondary support if it reduced or eliminated its treatment of Medicare patients? 

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