Overcoming Compliance Hurdles for Direct Pay (a/k/a “Conceirge”) Medical Practices

calculator-stethoscope-1004851-m.jpgMore than ever, physician innovation is needed in business models for medical practices to deal with problems associated with our cumbersome third party payer healthcare system. Our Atlanta health care law firm supports direct pay practice medicine as a positive trend. Many doctors are now setting up direct pay (a/k/a “concierge”) medical practices. This practice model in its purest form eliminates third party payers, and the patient-“member” of the concierge plan pays a fixed, prepaid fee for a menu of physician services that typically offer the patient greater access to the doctor. Varying hybrid concierge models exist that include some limited use of insurance plans. Direct Pay practices will likely continue to emerge and flourish as doctors seek smart business alternatives to deliver care in spite of a challenging regulatory and third-party payer healthcare environment.

For patients, belonging to a concierge practice usually means more access to and time with a doctor who really gets to know them and increasingly with flexible, affordable financial options to suit individual needs. For doctors, direct pay practice models can offer handsome compensation and desired relief from the medical hamster wheel of having to see a patient every six minutes to make reimbursement numbers work, with all the red tape and other burdens that attend having to spend too much time dealing with insurance companies. So what is the downside to a direct pay practice?

There are many legal and business issues unique to health care that confine doctors in how they set up a medical practice. These issues must be carefully evaluated to ensure medical compliance and avoid unpleasant business issues down the road. Although policy makers have not created direct restrictions prohibiting the concierge practice model, for those physicians who want to start or convert to this model, many legal considerations warrant caution and special care in setting up the business. Medicare presents a strong example. Doctors that accept Medicare reimbursement can either accept assignment and bill Medicare directly for their services or seek payment from the patient (who, in turn, seeks reimbursement from Medicare). Physicians can execute “participation agreements” with Medicare and receive greater reimbursement (5%). However, Medicare participating doctors cannot charge more than what is allowed by the Medicare fee schedules. Non-participating doctors who do not accept assignment cannot charge more than 115% of applicable amounts in the Medicare fee schedules. Violations of Medicare assignment rules can be prosecuted under the federal False Claims act.

Tension arises between the limitations required by these basic Medicare rules and the very nature of direct pay practice models, which tend to market “unlimited” or very comprehensive access to medical care for a fixed price, thereby including (often unintentionally) services that, technically, are covered by Medicare. Medicare covers medical services that are “reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body member.” 42 U.S.C. ยง 1395y(a)(1)(A). Determining covered versus non-covered services does not always involve a clear answer. The more comprehensive the offered services of a direct pay practice are, the greater the risk of violating Medicare laws (unless the physician drops out of Medicare completely, which many direct pay physicians do).

Surveys show that direct pay practices are providing physicians with some better and financially rewarding alternatives than insurance-based practices. Whatever the particulars of a physician’s individual circumstances and desired concierge practice model are, careful evaluation of potential legal and regulatory pitfalls is important to ensure applicable rules are followed. Fortunately, for physicians committed to following the law, setting up a direct pay practice model in a legally compliant way can be accomplished.

If we can answer your questions about this article, contact us at info@ksllawfirm.com or our Atlanta (404) 685-1662 or Augusta (706) 722-7886 office.

*Disclaimer: Thoughts shared here do not constitute legal advice.

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