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Healthcare
Doctor Not Paying Rent for Surgery
A doctor not paying rent for a surgery space, equipment, or medical suite leads to consequences that extend beyond a typical lease default. In addition to potential eviction or legal action, the situation can raise serious regulatory and compliance risks. This happens if the lease wasn’t properly structured under laws like the Anti-Kickback Statute (AKS), Stark Law, or corporate practice of medicine (CPOM) restrictions In healthcare, rent can be interpreted as a form of compensation or referral incentive if not properly documented. For landlords, clinics, MSOs (Management Services Organizations), and medical facility owners, a doctor’s failure to pay rent might raise red flags about how the lease was structured in the first place. If the agreement isn’t legally compliant, even well-meaning parties can face fines, investigations, or enforcement actions. With over 25 years of experience, Cohen Healthcare Law Group specializes in structuring legally compliant leases and resolving high-risk healthcare contract issues. When you partner with us, you gain clarity on fee splitting rules and other critical compliance laws. Contact us today to learn how we can support your healthcare business. This blog explores what happens when a doctor fails to pay rent for surgery space and why it’s more than just a landlord-tenant issue. It also highlights the legal and compliance risks involved, especially under healthcare laws like the Anti-Kickback Statute, Stark Law, and corporate practice of medicine rules. What Are the Rent Payment Obligations for Doctors? Typically, doctors who rent surgery space or use specialized equipment within a medical office facility are bound by legally enforceable lease agreements. These contracts outline key rent payment obligations and often include provisions that account for the unique nature of medical practice, such as access to imaging centers, operating rooms, or radiology departments. A typical medical office lease agreement will specify the amount of rent, payment schedules (often monthly or quarterly), responsibilities for repairs and maintenance of equipment, and who is liable for shared services like janitorial staff, HVAC systems, or medical waste disposal. For surgery centers in particular, lease agreements usually contain more detailed provisions due to the higher cost and sensitivity of the premises. These may include specialized rental terms, responsibilities related to the delivery of surgical services, clauses for early termination, and how space is shared among physicians, specialists, or hospital departments. In many cases, doctors are also responsible for a portion of the common area fees or building systems required to keep the facility operational and suitable for patient care. Failure to meet these rent obligations can disrupt not only the landlord-tenant relationship but also the operations of other tenants in the facility. For example, when a physician stops paying rent or attempts to walk away from the agreement early, it can create legal and logistical challenges for landlords, patients, employees, and other practices connected to the space. In some circumstances, the landlord may refuse to allow continued use of the premises or may begin the process of finding a new tenant, which raises more questions about who is responsible for rent payments during the transition. What Are the Consequences of a Doctor Not Paying Rent for Surgery? The most immediate consequence is a breach of the lease agreement, which may lead the landlord to file a lawsuit for unpaid rent, early termination penalties, or damages related to loss of use. Depending on the provisions in the agreement, the clinic, imaging center, or hospital facility may also be entitled to recover costs associated with finding a new tenant or maintaining the premises during the vacancy. From a business standpoint, non-payment can disrupt clinic operations, especially if other tenants or departments share the facility. Patients may lose access to vital services, employees might face instability, and the entire health ecosystem within the building could suffer. Physicians who default on lease payments also risk damaging their reputation among other professionals, hospital systems, and even patients. This potentially reduces future referrals or collaboration opportunities with specialists and contractors in their field. In the worst-case scenario, the physician may lose access to critical equipment, be evicted, face a lawsuit that affects their credit or licensure status, and encounter difficulty securing rental space in another facility. Additionally, if improper arrangements around rent and services are flagged, there could be legal exposure under healthcare law, particularly regarding the Anti-Kickback Statute or fee-splitting violations. These consequences may extend to the MSO or business entity that employs or contracts with the physician, especially if the rental arrangement lacked proper legal review. Can a Doctor Be Evicted for Not Paying Rent for Surgery? Yes, a doctor can be legally evicted for not paying rent for surgery space, provided that the landlord follows the correct process under the lease agreement and applicable landlord-tenant law. Eviction in the healthcare industry is not taken lightly due to the sensitive nature of the services involved and the specialized needs of the premises. However, if rent goes unpaid and the facility owner decides the relationship cannot continue, they have the legal grounds to begin the eviction process. The eviction process usually begins with a formal notice of non-payment, followed by a demand for payment within a set period. If the doctor fails to pay or negotiate new terms, the landlord may then file an unlawful detainer action in court. After receiving a judgment, the landlord can request that law enforcement remove the tenant from the premises. During this process, the physician may be denied access to equipment, patient records, and office systems, which can further disrupt clinic operations and negatively impact health services. How to Stay Compliant With Surgery Space Lease Agreements To stay compliant, begin by aligning your lease terms with federal statutes, such as the AKS and the Stark Law. This means ensuring rent payments are not based on the volume or value of referrals, and that any compensation or service exchange does not appear to be a disguised incentive. Fee-splitting is particularly risky and may be deemed illegal if not structured properly. It’s equally important to document all lease communications, payment issues, or proposed changes in writing. Avoid making side arrangements outside of the official lease, and maintain records of all rent invoices, delivery of services, and any disputes that arise. If a physician becomes unable to afford rent or requests early termination, that conversation should be handled formally with clarity around liability, suitable replacement terms, and responsibilities during the transition period. Furthermore, a lease review should not be a one-time task. Build it into your broader compliance plan and revisit the agreement regularly, especially as your business, tenants, or services evolve. Finally, always consult a qualified healthcare attorney before signing or breaking any lease connected to surgery space, imaging centers, or other regulated medical facilities. With the right legal guidance, you can protect your business, avoid costly regulatory action, and maintain healthy relationships with tenants, patients, and other healthcare providers. What to Do If You’re Struggling to Pay Surgery Rent If you’re a doctor or healthcare entity struggling to pay rent for a surgery center, imaging center, or shared clinic space, the first step is to notify your landlord in writing. This is not only a professional courtesy, but also to protect yourself legally under the lease agreement. You should also avoid making unilateral decisions such as subleasing to other tenants without consent or reducing rent payments without formal negotiation, as these actions can violate contract provisions and trigger liability. In many cases, financial strain may be temporary and negotiable, but landlords are less likely to cooperate if they’re blindsided. Legal consultation can help you determine if your current lease allows for flexibility in payment terms, early termination, or replacement with a new tenant. But attempting to modify or exit the agreement without understanding its legal structure can expose you to fees, lawsuits, or even impact your connection to hospital departments and referral partners. Renegotiating your rental terms is possible, but it must be done with healthcare-specific legal oversight. These leases often involve shared use of equipment, employ multiple contractors, and touch on specialized services, which makes compliance with healthcare law a critical factor. By seeking proper legal advice, you’ll be better positioned to negotiate a fair and lawful arrangement that helps your practice stay open and your relationships with patients and employees intact. How a Healthcare Lawyer Can Help Protect Your Practice A healthcare lawyer can review your lease to ensure it aligns with state and federal law, particularly with respect to rent provisions that could violate the Anti-Kickback Statute, fee-splitting prohibitions, or the corporate practice of medicine doctrine. This is especially important when the space involves shared clinic access, radiology departments, hospital premises, or specialized delivery systems. If you’re already in breach of your lease terms or the landlord refuses to renegotiate, a qualified attorney can help you file a legal response, defend your rights, or explore early termination options that minimize liability. Legal professionals also assist in structuring rent arrangements that reflect fair market value and don’t inadvertently tie payments to the volume or value of referrals, which is a common compliance misstep in medical business agreements. Ready to Protect Your Medical Practice? Lease agreements in the healthcare industry are legally binding arrangements that carry significant regulatory and financial consequences. By fully understanding your lease terms, negotiating in good faith, and maintaining open, written communication with landlords or facility owners, you can prevent disputes and preserve the integrity of your practice. If you’re navigating a rent-related conflict, considering early termination, or simply want to ensure your agreement is compliant with healthcare law, Cohen Healthcare Law Group can help. With deep experience in structuring, reviewing, and defending medical leases, our attorneys are equipped to guide you through the legal process while protecting your business, your patients, and your reputation. To learn more about how we support healthcare providers and scalable medical businesses, visit our homepage. You can also find us on Google or contact us directly to schedule a consultation and get the legal clarity your practice needs. FAQs Rent disputes involving surgery space can raise complex legal and compliance issues for doctors, especially when medical practice laws intersect with standard lease terms. Below are some quick answers to common questions healthcare providers face when dealing with lease challenges. Can I Be Sued for Not Paying Rent on a Surgical Suite? Yes, if you breach your lease agreement, your landlord can sue for unpaid rent, damages, or early termination fees. Will Non-payment Affect My Medical License? While non-payment alone may not directly affect your license, related legal issues or regulatory violations (like improper arrangements) could draw scrutiny from licensing boards. What Happens if I Try to Sublease the Space to Another Provider? Subleasing without landlord approval or proper legal structure may violate your lease terms and trigger liability or compliance issues under healthcare law. Is a Verbal Lease Agreement Legally Valid? In some jurisdictions, verbal agreements may be recognized, but they are risky and hard to enforce, especially for complex arrangements like surgical or imaging center rentals. How Do I Know if My Lease Violates the Stark or AKS Laws? If your rent is tied to referrals or not based on fair market value, it may violate the Stark Law or the Anti-Kickback Statute. A healthcare attorney should review your lease for compliance. How Can Doctors Resolve Disputes With Landlords Over Rent for Their Surgery Space? Start by reviewing the lease terms, documenting the issue in writing, and seeking legal counsel to negotiate or mediate a resolution. Are There Any Options for Doctors to Renegotiate Their Rent Payment Terms for Their Surgery Space? Yes, rent terms can often be renegotiated. But it should be done through formal legal channels to protect both parties and maintain regulatory compliance.
July 14, 2025
Healthcare
How to Transfer Medical Records Between Doctors Safely
When a medical clinic is sold or merges with another practice, one of the most critical and legally sensitive tasks is transferring patient medical records. These records contain protected health information (PHI) and must be handled with strict compliance with HIPAA and state privacy laws. The process of transferring patient medical records requires a structured protocol, typically involving data encryption, secure health IT systems, written patient notifications, and signed authorizations where necessary. If clinics fail to meet legal and ethical standards, the consequences can be severe, ranging from patient care disruptions to lawsuits, regulatory penalties, and loss of licensure. The safest way to manage medical record transfers during a clinic sale or merger is to seek legal counsel from experts in healthcare law. At Cohen Healthcare Law Group, we have over 25 years experience in offering specialized legal guidance to help healthcare providers maintain HIPAA compliance and avoid regulatory pitfalls. Contact us today! This post will cover your legal obligations when transferring medical records. It will also let you know who can and how to transfer medical documents. When Are Clinics Required to Transfer Medical Records? Clinics are required to transfer medical records in several key situations where continuity of care or legal compliance is at stake. One of the most common scenarios is during a merger, acquisition, or sale of a medical practice. In these cases, patient records must be securely handed over to the new provider to maintain care and comply with HIPAA requirements. Similarly, when a physician retires, relocates, or otherwise leaves the practice and another doctor assumes responsibility for patient care, the medical records must be transferred appropriately. Transfers are also necessary in cases of medical group restructuring, hospital consolidation, or the dissolution of a practice, where patient care responsibilities shift between providers or entities. In each of these cases, the transfer process must be handled with strict attention to legal and ethical standards to protect both the patients and the healthcare providers involved. What Happens if Your Clinic Mishandles Medical Record Transfers? Mishandling the transfer of medical records can have serious legal, financial, and reputational consequences. One of the most immediate risks is violating the Health Insurance Portability and Accountability Act (HIPAA), which strictly regulates how protected health information (PHI) must be managed and transferred. Non-compliance can lead to investigations, enforcement actions, and steep civil penalties, even if the violation was unintentional. Beyond regulatory consequences, clinics may also face lawsuits from patients if their data is mishandled or privacy is breached during the transition. These claims can be costly and damaging to your practice’s credibility. In some cases, mishandling medical records can also result in a loss of trust from patients and peers, reputational harm in your community, and increased scrutiny from medical boards and regulatory agencies. In addition to legal penalties, your clinic could lose critical payer relationships, including Medicare or private insurance contracts, if your compliance failures are deemed substantial. For practices undergoing a merger or sale, this could jeopardize the entire transaction. The best way to avoid these outcomes is to work with experienced healthcare attorneys who understand the legal nuances of record transfers and HIPAA compliance. Cohen Healthcare Law Group can guide your clinic through every step of the process, ensuring that your practice transition is legally sound and fully compliant. What Are Your Legal Obligations When Transferring Medical Records? Transferring medical records between doctors or healthcare organizations isn’t as simple as forwarding files to a new provider. It’s a legally sensitive process governed by federal law, state regulations, and professional standards, all designed to protect patient rights and ensure the secure handling of private health information. Whether the records are in paper form or part of an electronic health record (EHR) system, the process must follow specific rules under the Health Insurance Portability and Accountability Act (HIPAA) and other relevant laws. Healthcare providers also have a duty to ensure that any transfer of medical history or health records is done securely, only for lawful purposes, and with proper authorization or implied consent in the context of continuity of care. Failing to meet these obligations can lead to serious compliance violations and loss of patient trust. HIPAA Requirements HIPAA, or the Health Insurance Portability and Accountability Act, is the cornerstone of privacy and security compliance when transferring personal health information (PHI) between covered entities. Under the HIPAA Privacy Rule, healthcare providers must protect patient information during every step of the transfer process, whether the request comes from the patient, a personal representative, or another doctor’s office taking over care. The HIPAA Privacy Rule includes the “minimum necessary” standard, which requires healthcare providers to disclose only the minimum amount of patient information needed to accomplish the intended purpose. For example, if a patient is referred to a new doctor, only the relevant portions of their health records should be transferred, not their entire medical history, unless required for treatment. When transferring electronic health records, providers must maintain an audit trail. This involves logging who accessed or transmitted the patient’s data, when it occurred, and for what purpose. These logs are crucial for compliance and can serve as documentation if the provider is ever audited or must respond to a records request. In most cases, transferring medical records for the purpose of treatment does not require formal written authorization. HIPAA allows an implied consent exception for continuity of care between providers. However, if the request is coming from an insurance company, lawyer, or non-treatment-related third party, a signed release form or written patient authorization is required. State Laws In addition to federal HIPAA requirements, state laws also govern the transfer of medical records, and these can vary significantly. Some states impose stricter privacy protections, extended retention periods, or more detailed records release protocols. For example, California and Texas have additional privacy requirements that go beyond the federal law, including notification duties and limits on the use of sensitive health data. Healthcare organizations must understand both HIPAA and their specific state’s medical privacy regulations to remain compliant. State medical boards and laws often determine how long medical records must be kept before they can be destroyed. In many states, healthcare providers must retain records for at least 7–10 years. When a patient or new provider submits a records request, there must be a clear process for verifying identity, collecting proper forms, and responding within mandated timeframes, typically within 30 days under HIPAA. Other Regulations (Where Applicable) Other laws may apply depending on the nature of the data and the method of transfer. For example, the HITECH Act (Health Information Technology for Economic and Clinical Health Act) expands HIPAA’s scope for electronic health records, including breach notification requirements and enhanced patient rights to access their data. Additionally, state medical boards may have specific rules about how and when providers must notify patients or transfer information in the case of practice closure or provider retirement. Do You Have to Notify Patients About Record Transfers? Yes, healthcare providers have a legal and ethical obligation to notify patients when their medical records are being transferred to another doctor or healthcare organization, especially in situations involving a practice sale, merger, closure, or provider retirement. Under the HIPAA Privacy Rule, while patient authorization is not always required for transfers made for treatment purposes, patients must still be informed when there is a change in the custodianship of their health records. Notification ensures patients are aware of who now has access to their private health information, how it will be used, and what rights they have regarding that information. It also supports the broader principle of patient autonomy and transparency in healthcare. Clinics should notify patients as early as possible, ideally at least 30 days in advance of the transition. Accepted methods of communication may include mailed letters to the patient’s last known address, secure patient portal messages, emails (if consented to), and notices posted in the clinic or on its website. The patient notice should clearly explain that the clinic is undergoing a change (such as new ownership or the doctor’s retirement), who will be responsible for maintaining the patient’s medical records moving forward, how records will be handled (e.g., stored, transferred, or archived), and how patients can request copies or transfer their records to a provider of their choice. The notice should also include a mailing address or contact information for submitting a records request, along with deadlines or instructions for any follow-up. Failing to notify patients properly can lead to legal and regulatory consequences, including HIPAA violations, patient complaints, loss of goodwill, and in some states, disciplinary actions from medical boards. In the event of a dispute, poor or absent communication about records transfers could also expose a practice to liability for abandonment or privacy violations. What Is The Process of Transferring Medical Documentation? Whether transferring paper records or electronic health records (EHRs), the process begins with a formal records request, either from the patient, a new provider, or another covered entity. The healthcare provider or administrative team must verify the identity of the requesting party, review any required release forms, and document the request. For transfers initiated due to a change in care, such as a new doctor taking over treatment, HIPAA allows the disclosure of private health information (PHI) without separate authorization under the treatment exception. The step-by-step process typically includes: Verifying the patient’s identity or authorization via a valid release form. Identifying the receiving doctor’s office or healthcare provider. Preparing the medical history or health records for transfer, limiting data to the minimum necessary unless required for ongoing treatment. Logging the date, content, and method of the transfer for compliance tracking. Delivering the records securely, either through physical mailing address using certified mail or electronically through an encrypted EHR system. The role of EHR systems is critical in modern record transfers. These platforms streamline access, improve data security, and ensure that healthcare providers can deliver continuity of care efficiently. However, even when using an EHR, practices must have the proper Business Associate Agreements (BAAs) in place with any third-party vendors who handle PHI. These agreements are required under federal law and confirm that the business associate will safeguard the data in compliance with HIPAA. Without a valid BAA, any involvement of outside vendors in storing, accessing, or transferring health records could be considered a HIPAA violation, putting your clinic at serious legal risk. Who Can Transfer Medical Documentation? Only certain individuals are authorized to initiate the transfer of medical documentation. This typically includes the healthcare provider, designated administrative personnel, or a properly appointed personal representative acting on behalf of the patient. The process must always protect the patient’s health information and honor their rights under the HIPAA Privacy Rule and the Portability and Accountability Act. Why Hiring a Healthcare Attorney Is Essential Given the complexity of transferring medical records, the involvement of federal law, state-specific privacy rules, and the use of electronic health systems, hiring a knowledgeable healthcare attorney is essential. An experienced lawyer can help you interpret the HIPAA Privacy Rule, manage compliance across jurisdictions, and prevent violations that could result in fines, lawsuits, or loss of your insurance contracts. One of the attorney’s primary roles is to create or review Business Associate Agreements, ensuring that any third-party vendors, cloud-based services, or software platforms used in the transfer process are fully compliant with federal and state law. They can also assist with drafting patient notices, helping you inform individuals about how their patient information is being used and where it’s going. During mergers, acquisitions, or provider transitions, an attorney ensures all aspects of the transfer of medical records are addressed, including due diligence on data handling, reviewing forms, clarifying access rights, and preventing liability exposure. They also help clinics maintain the necessary documentation to defend their practices during audits or inquiries from state boards or federal regulators. Need Help Ensuring HIPAA-Compliant Record Transfers? Transferring medical records between doctors, practices, or healthcare organizations is a legal obligation that directly impacts patient care, privacy, and your clinic’s reputation. From complying with the HIPAA Privacy Rule and the HITECH Act to meeting state-specific regulations and maintaining secure audit trails, every step of the process must be handled with precision. Improper handling of medical documentation can result in costly HIPAA violations, lawsuits, regulatory penalties, and loss of trust from patients and payers. That’s why it’s essential for clinic owners, physicians, and healthcare systems to work with experienced legal counsel when planning or executing any medical record transfer. Whether you’re facing a clinic sale, a provider departure, or a group restructuring, the right legal partner can help you stay compliant, reduce risk, and protect your practice. Cohen Healthcare Law Group is a trusted legal resource for healthcare providers nationwide. Our team of healthcare attorneys specializes in HIPAA compliance, patient data management, and legal strategy for clinics undergoing transitions. Contact us now! FAQs Do Clinics Need Patient Consent to Transfer Medical Records? In most cases, patient consent is not required when records are transferred for treatment purposes, such as continuity of care. However, if the transfer is for other reasons, like insurance or legal requests, written patient authorization is typically required under HIPAA. How Should Medical Records Be Transferred Securely? Medical records should be transferred using encrypted electronic health record (EHR) systems or secure mail with proper tracking. Unencrypted email or unsecured methods violate HIPAA regulations and put patient data at risk. How Long Do Clinics Have to Retain Patient Records After a Sale? Retention periods vary by state, but most require clinics to keep patient records for at least 7 to 10 years after the last date of service. Pediatric records may need to be kept longer, depending on state law. Can Medical Records Be Transferred Without the Patient’s Knowledge? Yes, if the transfer is for treatment purposes, HIPAA permits it without explicit patient notification. However, patients should still be informed of changes in care or record custodianship as a best practice. Can You Transfer Medical Records to a New Doctor? Yes, patients have the right to request that their medical records be sent to a new provider. Clinics must comply with this request within a reasonable time frame, typically 30 days under HIPAA. How Can I Transfer Medical Records to a New Doctor? Submit a written records request or release form to your current provider, including the name and contact information of the new doctor. The current provider will then send the necessary records securely. Who Has Ownership of Health Care Records? Healthcare providers or facilities legally own the physical or electronic medical records. However, patients have the right to access, review, and obtain copies of their personal health information under HIPAA.
July 10, 2025
Healthcare
Examples of Pharmacy HIPAA Violations
The Health Insurance Portability and Accountability Act (HIPAA) is a federal law enacted in 1996 to protect patients’ private health information (PHI). HIPAA establishes rules around how healthcare providers, including pharmacies, store, use, and share sensitive health data. Due to their direct access to sensitive data, pharmacies are especially vulnerable to HIPAA violations and enforcement actions. Common examples of pharmacy HIPAA violations include improper disclosure of PHI, failure to secure electronic records, and inadequate staff training. With over 25 years of experience, Cohen Healthcare Law Group specializes in helping healthcare providers, including pharmacies, navigate HIPAA compliance, audits, and legal risks. Contact us today to schedule a consultation. This blog will give a quick overview of HIPAA and its role in healthcare and how it applies to pharmacies. It will then share common examples of pharmacy HIPAA violations. What Is HIPAA? The Health Insurance Portability and Accountability Act (HIPAA) is a federal law enacted in 1996 to protect individuals’ health information and ensure patient privacy. Overseen by the U.S. Department of Health and Human Services (HHS) and enforced by the Office for Civil Rights (OCR), HIPAA established national standards for safeguarding Protected Health Information (PHI) across the healthcare system. Two key HIPAA rules are especially relevant to pharmacies: The HIPAA Privacy Rule: This rule regulates how covered entities, such as pharmacies, healthcare providers, health plans, and healthcare clearinghouses, may use and disclose a patient’s protected health information. It ensures that only the minimum amount of information necessary is shared, and that patients are aware of and can control how their health records are used. The HIPAA Security Rule: This rule requires pharmacies to implement security measures to protect electronic PHI (ePHI) from unauthorized access, loss, or tampering. This includes technical, physical, and administrative safeguards for medical records and prescriptions. Because pharmacies regularly handle health information, maintain prescription bottles, and process data for insurance companies, maintaining HIPAA compliance is important. Violating HIPAA can lead to civil penalties, corrective action plans, and even court orders. Does HIPAA Apply to Pharmacies? Yes, HIPAA applies to all pharmacies. As covered entities, both large chain businesses (like CVS Pharmacy and Walgreens) and small pharmacies must comply with HIPAA requirements. They are responsible for safeguarding every patient’s PHI, whether in paper or electronic form. Pharmacy staff, including pharmacists and technicians, must follow internal monitoring, procedures, and policies to ensure they do not disclose PHI without patient authorization or a valid court order. HIPAA governs how pharmacies collect patient information, share health insurance details with insurers, and store psychotherapy notes and medical records. They also govern processing and labelling prescriptions to protect privacy. What Happens When a Pharmacy Violates HIPAA? When a pharmacy violates the Health Insurance Portability and Accountability Act (HIPAA), the consequences can be severe, both legally and financially. Legal and financial penalties for HIPAA violations in pharmacies vary depending on the nature and severity of the breach. Civil penalties can range from $100 to $50,000 per violation, with annual maximums reaching up to $1.5 million for each category of violation. In some cases, especially those involving willful neglect or intentional misconduct, criminal charges may also apply. Pharmacies found in violation may be required to undergo a corrective action plan (CAP), which typically involves overhauling internal policies, retraining staff members, and committing to ongoing compliance monitoring. HIPAA violations don’t just bring fines; they also erode patient trust and tarnish the pharmacy’s reputation. Patients rely on healthcare providers, including pharmacies, to keep their health records and personal information confidential. When a violation occurs, such as an employee accessing medical records without patient authorization or improperly disposing of prescription bottles with visible labels, it can severely undermine confidence in the pharmacy’s ability to protect patient privacy. Even a single breach may lead to public backlash, negative media coverage, and loss of customer loyalty. Real-world examples underscore how seriously HIPAA enforcement is taken. CVS Pharmacy, for instance, paid a $2.25 million settlement after it was discovered that several of its locations improperly disposed of pill bottles and patient information in unsecured trash bins. The long-term risks of ignoring HIPAA compliance extend far beyond initial fines. Pharmacies that do not take HIPAA requirements seriously may face the revocation of their operating licenses, the loss of contracts with health plans and insurance companies, and increased vulnerability to lawsuits. Regulatory scrutiny can also intensify, leading to frequent audits and mandatory internal monitoring. Over time, failure to enforce privacy rule requirements, train staff, and implement proper security measures can compromise a pharmacy’s ability to operate effectively and legally. To avoid these risks, pharmacies must treat HIPAA compliance as a non-negotiable part of their business operations. Every member of the pharmacy staff, from technicians to pharmacists, plays a role in protecting patient information. If your pharmacy is uncertain about its compliance status or has experienced a potential violation, now is the time to act. 7 Examples of Pharmacy HIPAA Violations Below are seven common examples of how pharmacy staff can violate HIPAA and put both patients and the pharmacy at risk: Unauthorized Access to Patient Information One of the most frequent HIPAA violations in pharmacies involves employees accessing health records without a valid reason. Under the HIPAA Privacy Rule, only authorized personnel with a legitimate work purpose may view or handle a patient’s protected health information. However, violations occur when staff members access medical records out of curiosity, such as looking up a family member’s or celebrity’s prescriptions, as seen in the Britney Spears case. These actions violate not only HIPAA rules but also patients’ rights and privacy. Improper Disposal of Patient Records Improperly discarding prescription bottles, patient records, or printed health information can lead to serious compliance issues. HIPAA requires that health care providers, including pharmacies, implement secure procedures for destroying PHI. Throwing away prescription labels or documents without shredding or placing them in unlocked trash bins, as seen in the high-profile CVS Pharmacy settlement, can expose sensitive data. Such incidents often result in OCR investigations, corrective action plans, and fines for failing to make reasonable efforts to protect patient information. Sharing Patient Information Without Consent Discussing PHI in public areas where others can overhear, or disclosing it to unauthorized individuals, constitutes an impermissible disclosure under the privacy rule. For example, talking about a patient’s medications at the counter loud enough for others to hear violates their confidentiality. Additionally, sharing PHI with an insurance company, family member, or other third party without proper patient authorization breaches HIPAA requirements. These incidents often trigger complaints to the human services office or direct OCR investigation. Failure to Secure Electronic Records HIPAA’s Security Rule requires covered entities to adopt technical security measures to safeguard electronic health information (ePHI). Unfortunately, many pharmacies, especially small pharmacies, fall short by failing to secure their computer systems. Leaving terminals unlocked, using weak passwords, or not implementing proper internal monitoring exposes patient data to theft or unauthorized access. Inadequate protection of electronic PHI is one of the most common potential violations pharmacies face. Misuse of Fax or Email for Sending PHI Transmitting health information by fax or email without proper safeguards is another frequent cause of violating HIPAA. For example, sending PHI to the wrong recipient, such as the incorrect fax number or email address, or failing to use encryption, are clear HIPAA violations. Despite being common tools for health care providers, fax and email systems must follow HIPAA standards to prevent breaches of health information (PHI) and reduce the risk of impermissible disclosure. Lack of Proper Staff Training HIPAA requires that pharmacy staff receive ongoing training about privacy and security obligations. However, a lack of proper education results in employees unknowingly mishandling PHI, failing to follow procedures, or breaching patient privacy. When staff don’t fully understand their role in HIPAA compliance, they may accidentally disclose PHI or fail to implement necessary policies and procedures, leaving the pharmacy vulnerable to audits and penalties. Inadequate Physical Security Measures Failing to physically secure areas where patient information is stored, like leaving unlocked filing cabinets, unattended prescription bags, or exposing records to unauthorized personnel, can result in civil rights violations under HIPAA. These HIPAA privacy rule breaches are especially dangerous in high-traffic areas such as the health center, department office, or pharmacy consultation counters. Proper compliance requires pharmacies to implement safeguards that protect health records from both physical and digital threats. How to Stay Compliant With Pharmacy HIPAA Regulations Staying compliant with HIPAA regulations is essential for any pharmacy that handles protected health information (PHI). To maintain HIPAA compliance, pharmacies must implement clear and consistent policies and procedures that align with both the HIPAA Privacy Rule and Security Rule. Best practices include assigning a designated HIPAA compliance officer, conducting regular risk assessments, and establishing protocols for secure data handling. Regular self-audits, proper documentation, and active monitoring are key to identifying weaknesses before they result in civil penalties or an OCR investigation. Start by identifying all areas where patient information is handled. From there, create and enforce written privacy policies that limit PHI access to authorized staff members only. Pharmacies should also develop breach notification procedures, require patient authorization when needed, and comply with state laws in addition to federal rules. Establishing secure disposal methods for medical records, maintaining minimum necessary use policies, and monitoring for potential impermissible disclosures are also critical. Typically, a pharmacy’s ability to protect patient privacy depends heavily on its employees. Every team member, from pharmacists to technicians, must receive comprehensive HIPAA training upon hiring and at regular intervals thereafter. This training should cover how to properly access health records, secure PHI, and avoid actions that could violate HIPAA, such as discussing prescriptions in public areas or accessing psychotherapy notes without cause. Additionally, implement security measures such as locked cabinets, password-protected computers, and monitored access to sensitive files. Educating staff not only reduces risk but also strengthens your pharmacy’s overall compliance posture Furthermore, modern pharmacies rely on technology to manage patient records, process prescriptions, and communicate with healthcare providers and insurance companies. While convenient, this digital landscape presents new risks if not properly managed. To stay compliant, ensure that all electronic systems handling PHI are encrypted, password-protected, and backed by access controls. Use secure portals for transmitting PHI, never send sensitive data via unencrypted email, and verify fax numbers before transmission. Regular updates, anti-virus protections, and secure networks are vital for defending against unauthorized access or breaches. Given the complexity of HIPAA rules, working with a healthcare attorney who understands the accountability act, federal regulations, and real-world enforcement is a smart move for any pharmacy. An experienced HIPAA attorney can help implement compliant procedures, guide staff training, and represent your interests if an OCR investigation or enforcement action occurs. They can also interpret regulatory updates, address potential violations, and advise on handling court orders, patient complaints, or compliance audits. With legal guidance, your pharmacy can go beyond just meeting minimum standards – it can operate with confidence. What to Do if Your Pharmacy Is Not HIPAA Compliant The first step is to identify the source and scope of the compliance issue. Whether it involves patient records, mishandled prescription bottles, unsecured electronic PHI, or untrained pharmacy staff, act quickly to contain the situation. You should immediately cease any activity that could further compromise patient privacy and secure any data that may have been at risk. Conduct a preliminary internal review and document everything. This shows the Office for Civil Rights (OCR) that you’re taking the issue seriously and making reasonable efforts to correct it. Once a HIPAA violation is identified, you must assess whether it qualifies as a reportable breach under the HIPAA Breach Notification Rule. If it does, you are required to notify affected individuals, the Department of Health and Human Services (HHS), and in some cases, the media. It’s important to notify individuals promptly within 60 days of discovering the breach, and to provide clear information about what occurred, what data was affected, and what steps the pharmacy is taking in response. Failure to follow these steps can lead to an enforcement action and a mandatory corrective action plan. Bringing your pharmacy back into compliance means implementing both short-term fixes and long-term system improvements. This includes updating your policies and procedures, strengthening security measures (physical and digital), and improving how PHI is accessed, stored, and shared. Your pharmacy may also need to consult with a healthcare attorney to navigate the process and respond to government inquiries. If your pharmacy has experienced a breach, you must follow federal guidelines for reporting. For minor incidents involving fewer than 500 individuals, you can submit an annual report to HHS through the OCR Breach Portal. For breaches affecting 500 or more individuals, you must report the incident within 60 days of discovery and notify local media outlets as required by law. In both cases, maintaining detailed records of how the breach was handled and the corrective actions taken is essential. Transparency and cooperation during this process will help demonstrate your pharmacy’s commitment to HIPAA compliance and may mitigate the risk of heavier civil penalties. In some cases, patients, staff members, or other concerned individuals may wish to file a complaint about a potential violation. Complaints can be submitted directly to the Department of Health and Human Services’ Office for Civil Rights via the HHS website. Pharmacies should take every complaint seriously, even if it seems minor, and respond appropriately. A complaint can trigger an OCR investigation, which may uncover other compliance issues. Being proactive about resolving complaints internally, conducting a thorough review, and maintaining compliance documentation can help prevent escalation. Want to Avoid HIPAA Violations and Stay Compliant? As covered entities, pharmacies are on the front lines of handling sensitive health information, and even a small oversight can lead to costly violations, legal penalties, and damage to your reputation. Now more than ever, pharmacies must remain vigilant. From securing patient records to training staff and properly handling prescriptions, every action matters. Patients, too, should feel empowered to ask questions and understand how their protected health information (PHI) is being used and protected. If you’re unsure whether your pharmacy is truly HIPAA compliant or you’ve recently experienced a potential violation, it’s time to take proactive steps with the right legal support. At Cohen Healthcare Law Group, we have the best healthcare lawyers who specialize in helping healthcare providers, including pharmacies, navigate complex HIPAA requirements, avoid enforcement actions, and implement airtight compliance programs. Contact us today!. FAQ About Pharmacy HIPAA Violations Below are common questions and clear answers about how HIPAA applies in pharmacy settings: Are Pharmacies Covered Entities Under HIPAA? Yes, pharmacies are considered covered entities under HIPAA and must follow all privacy and security rules to protect patient information. They are legally required to handle PHI in compliance with federal regulations. What Are Common HIPAA Violations in Pharmacies? Common violations include unauthorized access to patient records, improper disposal of prescription bottles, unsecured electronic systems, and sharing patient information without consent. These actions can result in civil penalties and OCR investigations. How Can Patients Protect Their Privacy at the Pharmacy? Patients should avoid discussing sensitive medical information aloud and ask how their health information is stored and shared. They can also request a copy of the pharmacy’s HIPAA privacy practices. Can Pharmacy Employees Access Any Patient Information? No, pharmacy employees can only access PHI when necessary for their job duties. Accessing information out of curiosity, such as looking up a friend or celebrity, is a HIPAA violation. What Should I Do if I Suspect My Pharmacy Violated HIPAA? You can report the incident to the Office for Civil Rights (OCR) at the Department of Health and Human Services (HHS). Filing a complaint can lead to an official investigation and corrective actions. How Often Should Pharmacies Conduct HIPAA Training? HIPAA training should be conducted upon hire and regularly thereafter, typically once a year. Ongoing education ensures staff members understand evolving HIPAA rules and how to avoid violations. Are Electronic Prescriptions Covered Under HIPAA? Yes, electronic prescriptions are considered electronic PHI (ePHI) and are fully protected under the HIPAA Security Rule. Pharmacies must use secure systems and encryption to protect this data. Book a Legal Strategy Session TodayContact our healthcare law and FDA attorneys for legal advice relevant to your healthcare venture.
July 8, 2025
Healthcare
Can I Open a Clinic Without Being a Doctor?
Many assume only licensed physicians can own and operate a healthcare clinic. While this may hold true in some cases, particularly when medical diagnosis and treatment are involved, there are corporate structures and legal strategies that allow non-physicians to own or co-own a clinic, if they do it the right way. This is where compliance with corporate practice of medicine (CPOM) laws, HIPAA rules, and state-specific healthcare regulations becomes important. You must not be a doctor to open a clinic. However, there’s a complex legal framework involved, and failing to follow the rules can lead to serious consequences like fines, license revocation, or even criminal charges. At Cohen Healthcare Law Group, we specialize in helping entrepreneurs and professionals legally structure and operate clinics, even if they’re not doctors. With over 30 years of experience, our team can help you with HIPAA compliance help and much more. Contact us today! This blog will help you know the types of clinics you can open without a medical license. It will also break down the steps involved in opening a clinic without being a doctor in California. Who Can Open a Clinic in California? Under California law, not just anyone can open a medical clinic. Only certain individuals and entities are legally allowed to own or operate a clinic, especially when the services offered involve direct medical care or clinical decisions. Licensed medical professionals such as MDs, DOs, chiropractors, and dentists are authorized to own and operate a medical practice, as they have the required medical training and are regulated by professional boards. However, non-physicians can also participate in the healthcare industry by owning or investing in clinics as long as they do not violate California’s corporate practice of medicine. This typically means they must avoid directly providing or supervising medical services and instead focus on the business aspects of running a clinic, such as management services, human resources, billing services, and marketing. Business people and corporate entities can legally operate clinics through compliant legal structures that respect the division between clinical expertise and business operations. These include models like Management Services Organizations (MSOs), where non-doctors manage administrative functions but leave all clinical operations and medical decisions to licensed healthcare providers. To legally open a clinic in California, it’s not just a matter of setting up an office and hiring staff. It requires full compliance with state laws, especially California Business & Professions Code §2400, which governs the corporate practice of medicine. The law is designed to ensure that only licensed professionals make decisions about patient care, safeguarding the integrity of medical services. This separation of roles is fundamental to maintaining quality healthcare and legal compliance across the state. What Happens if You Break California Healthcare Laws? Failing to comply with California’s healthcare laws can have devastating consequences, as the state takes violations of the corporate practice of medicine very seriously. If you open or operate a clinic illegally, especially without being a licensed medical professional or without ensuring compliance, you could face steep fines and civil penalties from state regulators like the Medical Board of California. These fines may reach thousands or even hundreds of thousands of dollars, depending on the severity of the offense. Beyond financial penalties, the state may shut down your clinic entirely or revoke any associated licenses, even if the only issue is with the clinic’s ownership structure, which alone can render the entire operation unlawful. In some cases, individuals may face criminal charges for the unauthorized practice of medicine, which can be charged as a misdemeanor or felony under Business & Professions Code §2052. The financial risks are also immense. If your clinic is shut down, you could lose all your investment, such as your leased office space, your staff, your equipment, your branding, and everything you’ve built. Physicians who lend their names to non-compliant clinics risk disciplinary action from their licensing board, which could result in license suspension or permanent revocation. Insurance companies may also refuse to cover malpractice claims or defend you in court if your clinic was not legally structured. This could leave you open to civil lawsuits from patients or employees who claim harm due to improper oversight or an illegal operation. A violation can also lead to a permanent ban from owning or investing in another healthcare business and could trigger serious investigations from state and federal agencies, including the Department of Justice, the Department of Consumer Affairs, or even the FBI, especially if fraud is suspected. Can a Non-Physician Own a Medical Practice in California? No, a non-physician cannot legally own a medical practice in California if that ownership involves exercising control over clinical decisions or providing medical services. Under California’s Business & Professions Code §2400, the state enforces a strict ban on the corporate practice of medicine. Therefore, only licensed medical professionals such as medical doctors (MDs), doctors of osteopathy (DOs), and other regulated healthcare providers can legally own medical practices and directly provide medical services. This law protects the quality of patient care by ensuring that clinical expertise and medical decisions remain under the control of those with proper medical training and licenses. However, non-physicians are not entirely excluded from the healthcare industry. With the right legal structure, such as a Management Services Organization (MSO), a non-doctor can participate in the business aspects of a clinic without violating the law. In this arrangement, the non-physician may own and operate a management entity that provides billing services, human resources, medical equipment procurement, and general administrative support to a physician-owned Professional Medical Corporation (PMC). The key is to ensure that the non-physician has no control over patient care, clinical operations, or any medical decisions. What Types of Clinics Can You Open Without a Medical License? If you’re not a licensed doctor but want to enter the healthcare industry, there are still several types of clinics and health-focused businesses you can legally open, especially those that do not involve the practice of medicine. For example, non-physicians can fully own and operate non-medical clinics, such as wellness centers offering services like yoga, massage therapy, nutrition coaching, and fitness programs. These services do not require a medical license and fall outside the purview of the corporate practice of medicine laws. Similarly, mental health services provided by licensed therapists such as psychologists or licensed clinical social workers can be offered through a legally compliant structure, provided the clinical side is managed by the appropriate licensed providers. Non-doctors can also run cosmetic clinics staffed with licensed estheticians, although the services offered must be within a limited, non-medical scope. For more medically inclined ventures, non-doctors can open clinics that provide medical services, but only if they follow legal guidelines that maintain clinical oversight. Examples include Botox and filler clinics, which must have a supervising medical doctor or nurse practitioner, and urgent care or family medicine clinics, which must be structured through an MSO model and properly staffed with licensed medical professionals. In all cases, the non-physician must not interfere with the clinical side of the practice or attempt to provide medical services without proper licensure. What You Can and Can’t Offer Without a License If you’re not a licensed healthcare provider, you’re still allowed to offer a wide range of services related to the business and operational support of a clinic. You can manage booking systems, office staff, marketing, financial management, and other in-house services that support the delivery of healthcare services. You can own the building, manage the brand, and even collect fair market management fees from your partnership with a licensed provider. However, you cannot engage in any aspect of practicing medicine. This includes offering diagnoses, treatment plans, prescribing medications, or performing any form of surgical or invasive procedures. Even suggesting certain treatments or implying medical expertise without the proper license can be seen as violating state laws. These restrictions are enforced by the Medical Board of California and apply equally to all healthcare providers, whether you run a med spa, new clinic, or are simply a business person trying to get involved in the healthcare space. In addition to California’s laws, federal regulations, including those from the FDA and the Health Insurance Portability and Accountability Act (HIPAA), also apply. If your clinic handles protected health information, you must comply with privacy and security regulations under the Health Insurance Portability and Accountability Act (HIPAA), even if you’re not directly involved in patient care. What Do You Need to Open a Clinic in California? Starting a new clinic in California involves more than just leasing a space and hiring staff. You must carefully follow state laws and set up the right legal structure to avoid violating California’s corporate practice of medicine rules. Your goal should be to build a successful medical practice that delivers quality healthcare while ensuring full compliance with regulatory standards. The steps outlined below are essential for both medical professionals and business people aiming to operate healthcare services legally in California. Entity Formation To open a clinic legally in California, the first step is to choose the correct legal structure. If you’re a licensed medical professional, you can form a Professional Medical Corporation (PMC) to directly own your medical practice and provide medical services. If you’re a non-physician, you cannot practice medicine or interfere in clinical decisions, but you can operate through a Management Services Organization (MSO). The MSO model allows you to manage the business aspects of the clinic, such as billing services, human resources, financial management, and medical equipment procurement, while a licensed provider retains full control over the clinical side of the operation. Depending on your structure and goals, you may register your business as an LLC, S corp, or traditional corporation, but the setup must be done in compliance with California’s healthcare law. Licenses & Permits Every clinic in California must obtain the proper licenses and permits to operate. At a minimum, you’ll need a California business license and may need to file a Fictitious Business Name if the clinic operates under a name different from the legal entity. If you’re a medical doctor or another licensed provider, you may also need approvals or registration through the Medical Board of California. Beyond licensing, your physical location must pass zoning, fire, and building inspections to ensure it meets all health and safety requirements. These steps are essential whether you’re opening a med spa, urgent care, or federally qualified health center serving Medicaid patients. Staff & Supervision Whether your clinic offers mental health, medical care, or wellness services, it is important to hire only licensed medical professionals for roles that require clinical expertise. For non-physicians who want to operate medical practices, it is required by law to designate a medical director to oversee all patient care and clinical operations. This ensures that all medical decisions are made by properly credentialed individuals and not influenced by the business aspects of the clinic. All licenses and credentials should be verified with the relevant state boards to maintain compliance and uphold patient safety. Insurance Requirements To protect your clinic and meet healthcare compliance standards, securing appropriate insurance coverage is essential. Every clinic should have general liability insurance, and those offering medical services must carry malpractice insurance to cover potential patient claims. If you employ staff, workers’ compensation insurance is also required by California law. Clinics that manage digital health records must ensure that their cybersecurity insurance is HIPAA-compliant, in line with the Health Insurance Portability and Accountability Act (HIPAA). Following these insurance requirements not only protects your medical providers, staff, and patients, but also helps in ensuring compliance with state and federal laws. How to Open a Clinic Without Being a Doctor in California Opening a clinic as a non-doctor in California is possible, but only if you follow the same rules that apply to all legally compliant medical practices. Due to California’s strict corporate practice of medicine doctrine, non-physicians must take special care to avoid practicing medicine unlawfully. Below is a step-by-step guide to help business people and entrepreneurs enter the healthcare industry safely and successfully: Define Your Clinic Type and Services: Decide whether your clinic will offer medical services (such as Botox, family medicine, or urgent care) or non-medical services like nutrition coaching, massage therapy, or yoga. This decision determines your clinic’s legal structure, licensing, and supervision requirements. Offering healthcare services without a license can lead to serious penalties, so it’s not just a matter of choosing what’s popular. But your scope must align with what licensed medical professionals are legally allowed to provide. Structure the Business Legally: As a non-physician, you cannot own a medical practice directly. Instead, form a Management Services Organization (MSO) to handle the business aspects of the clinic, such as billing services, human resources, and financial management. Partner with a licensed Professional Medical Corporation (PMC) that provides the clinical expertise. Working with a healthcare law firm is essential to avoid violating California state laws and the corporate practice of medicine ban. Our team at Cohen Healthcare Law Group can help ensure your entity is structured for legal compliance, fair market compensation, and long-term success. Hire Licensed Medical Professionals: To provide medical services, your clinic must employ or contract with licensed healthcare providers, including physicians, nurse practitioners, and other medical staff. You’ll also need a medical director to oversee all clinical operations, ensuring that medical decisions are made by those with proper medical training and licensing. Verifying credentials through the Medical Board or relevant state authority is mandatory for ensuring compliance and protecting your patients. Secure Premises and Licenses: Choose a physical location that meets zoning requirements and complies with building and fire safety regulations. You’ll also need to obtain a California business license, any required clinic permits, and a Fictitious Business Name filing if applicable. All in-house services must be conducted in a properly approved space to avoid interruptions from city or state inspections. Ensure Compliance Systems Are in Place:Implement systems that meet HIPAA and Health Insurance Portability and Accountability Act requirements, especially if you’re handling protected health information. Furthermore, draft legally sound contracts, including the MSO service agreement, and ensure your legal structure clearly separates the clinical side from the business side. It’s also wise to prepare for possible audits from regulators or insurance companies. This is where ensuring compliance becomes critical to maintaining a successful medical practice. Launch With Legally-Compliant Marketing: When promoting your new clinic, stay cautious with advertising. Avoid making medical claims or promoting medical care services unless reviewed and approved by your medical director or attorney. All messaging should be aligned with what your licensed professionals are authorized to provide. Misleading promotions can result in investigations, civil penalties, or complaints to the Medical Board. Need Compliance Help Before Opening a Clinic? Non-doctors can open clinics in California, but only if they follow strict legal and regulatory guidelines. The key is setting up the right legal structure, such as a Management Services Organization (MSO), and ensuring that all clinical operations remain under the control of licensed medical professionals. Without this, you risk violating California’s corporate practice of medicine laws, and it could lead to serious legal, financial, and reputational consequences. You need experienced legal support to navigate complex healthcare laws, draft solid contracts, and ensure your business model doesn’t cross into unauthorized medical practice. Partnering with the right medical professionals and legal advisors ensures your clinic operates both legally and ethically from day one. At Cohen Healthcare Law Group, we are leaders in healthcare compliance and legal structure. Contact us today to work with some of the best lawyers in the healthcare industry. FAQ Section Can I Hire Doctors and Nurses if I’m Not a Doctor? Yes, you can hire licensed doctors and nurses through a legally structured Management Services Organization (MSO), but they must retain full control over clinical decisions and patient care. Can a Non-Physician Own a Medical Practice? In California, non-physicians cannot directly own a medical practice that delivers medical care, but they can operate the non-clinical side through an MSO while partnering with a licensed provider. Can a Medical Practice Be an LLC? A medical practice itself cannot be an LLC in California unless it is a Professional Medical Corporation. However, an MSO providing non-clinical support services can be structured as an LLC. What Qualifications Do I Need to Open a Clinic? You don’t need a medical degree to open a clinic. But you must have the proper business licenses, entity formation, and legal oversight from licensed medical professionals if you offer medical services. Can I Open a Botox or Medspa Clinic Without a Medical Degree? Yes, but only if you partner with a licensed medical director who supervises all treatments and ensures compliance with California healthcare law and scope-of-practice rules. How Do I Protect Myself Legally as a Non-Doctor Owner? Use a compliant MSO structure, separate business and clinical operations, have clear service agreements, and work closely with a healthcare attorney to avoid violating the corporate practice of medicine ban.
June 26, 2025
Healthcare
MSO Rules for Med Spas
Med spas are booming across the U.S., blending aesthetic beauty treatments with medical-grade services like Botox, fillers, and laser therapy. With demand soaring, many entrepreneurs and non-physicians are eager to enter the market. However, state laws often prohibit non-doctors from owning or directly operating medical practices. That’s where Management Services Organizations (MSOs) come in. An MSO is a separate business entity that handles non-clinical operations such as staffing, marketing, billing, and office management, while the medical side must remain fully under the control of a licensed healthcare professional. If you’re looking to build or grow your med spa business while staying fully compliant with healthcare laws, our team at Cohen Healthcare Law Group offers the legal experience you need. With over 30 years of experience, we specialize in helping entrepreneurs and physicians navigate complex MSO structures, medical spa compliance, and regulatory strategy. Contact us today! This post explains what an MSO is and how it operates. It also highlights the core rules MSOs must follow, and points you to trusted legal experts who can help you set up or scale your med spa the right way. What Is an MSO in Healthcare? A Management Services Organization, or MSO, is a separate business entity that provides non-clinical management services to healthcare practices. The MSO does not participate in medical procedures or clinical practice, nor does it make medical decisions. Instead, it operates on the business side of a healthcare venture, enabling licensed physicians, nurse practitioners, and physician assistants to focus on patient care. In both general healthcare and aesthetic medicine, MSOs serve a critical function by allowing medical professionals to delegate administrative and operational duties. For medical spa practices, in particular, this separation is essential due to strict state laws that regulate who may own or operate a medical practice. MSOs help align with these healthcare laws by separating medical services from business management, ensuring that healthcare providers remain compliant while benefiting from improved operational efficiency. Why Med Spas Use MSOs The rise of medical aesthetics and the popularity of medical spas have led to increased interest from entrepreneurs, investors, and professionals without a medical background. However, in many states, corporate practice of medicine laws prohibit non-physicians from owning or controlling a medical practice. This legal restriction exists to prevent unfair business practices and to ensure that only qualified healthcare providers make decisions related to patient care, informed consent practices, and medical treatments. To navigate these legal barriers, med spas often adopt the MSO model. In this setup, the clinical side of the med spa must be owned and controlled by a licensed physician or medical doctor, while the MSO, usually owned by a non-physician, handles all non-medical management services. This includes everything from branding, marketing, support services, and financial management to handling malpractice insurance, medical equipment, and laws governing marketing and medical devices. This arrangement provides regulatory compliance and gives non-physician stakeholders a legal pathway to operate medical spas. For many, the MSO structure offers increased branding/licensing flexibility, better control of financial health, and the ability to build a profitable healthcare business without violating corporate practice restrictions. What Is the Difference Between an MSA and an MSO? An MSO is the legal entity that offers non-clinical services, while an MSA, or Management Services Agreement, is the legal contract that defines the relationship between the MSO and the professional entity or medical practice. The MSA outlines which management services the MSO will provide, the scope of its business operations, and how the management fees will be structured. It is crucial that this agreement respects fair market value principles to avoid issues with fee-splitting or violations of state laws. For example, MSOs cannot be paid a percentage of revenue from medical services in jurisdictions that strictly enforce the corporate practice of medicine. Instead, payments must reflect fair market compensation for the specific services rendered, whether that’s handling financial management, providing office space, or overseeing administrative functions like patient referrals or good-faith exams. The MSA is what legally binds the healthcare providers and the MSO together, clearly separating the medical interests of the licensed professionals from the business interests of the MSO. This clear division supports regulatory compliance, protects against liability, and ensures that medical board expectations are met. What Activities Can the MSO Perform for My Medical Spa? A Management Services Organization (MSO) plays a vital role in supporting the business operations of a medical spa, especially in states that enforce corporate practice of medicine (CPOM) laws. While the medical practice remains under the control of licensed physicians, the MSO is responsible for a wide range of non-clinical services that keep the spa running smoothly and efficiently. These include: Administrative support: The MSO can manage daily operations, coordinate staff, and ensure compliance with healthcare regulations. Payroll and human resources: It may handle staff payroll, hiring, onboarding, and benefits administration for non-clinical employees. Marketing and advertising: The MSO can promote the med spa’s brand, develop marketing campaigns, and manage digital and print advertising, while avoiding any claims of medical outcomes without physician approval. Office space and equipment leasing: It can lease and maintain office space and arrange for medical and non-medical equipment used in the facility. Scheduling and front desk operations: The MSO can oversee appointment booking, receptionist tasks, and client intake processes. Billing and collections (non-clinical): It may manage payment collections for cosmetic or elective services that do not involve third-party insurance billing. Vendor and supply management: The MSO can handle relationships with product vendors and ensure adequate inventory of medical and spa supplies. IT support and software systems: It can maintain practice management software, electronic health records systems, and other IT infrastructure. Financial reporting and bookkeeping: The MSO may oversee accounting, generate financial statements, and track revenue and expenses for the business. Staff training (non-medical): It can organize training programs for front office staff, receptionists, and management personnel in areas like customer service and HIPAA compliance. What the MSO Cannot Do? While the MSO is instrumental in managing the business side of a medical aesthetics practice, it must strictly avoid any involvement in clinical practice or medical services. Under CPOM laws, here are some things the MSO cannot do: Provide or supervise medical treatments: The MSO cannot administer injectables, perform laser therapy, or oversee any clinical care. Employ or control medical professionals: Physicians, nurse practitioners, physician assistants, and registered nurses must be hired and supervised by the medical entity, not the MSO. Make medical decisions or set clinical protocols: Only licensed clinicians may create treatment plans, determine clinical procedures, or alter care protocols. Diagnose, treat, or prescribe: The MSO cannot be involved in any form of diagnosis or prescription, which are strictly medical functions. Influence patient care or outcomes: Business personnel must not influence clinical outcomes, patient decisions, or the type of treatment provided. Share in medical revenue tied to procedures: The MSO cannot receive compensation based on a percentage of medical income, as this may violate fee-splitting laws. Advertise services as “medical” without physician oversight: All marketing related to medical treatments must be reviewed or overseen by a licensed medical provider. Determine pricing for clinical services: Only the physician-owned medical entity can set prices for Botox, fillers, or other regulated medical procedures. Own the medical entity (in states with CPOM laws): The MSO may not have an ownership interest in the professional corporation or PLLC that delivers medical care. Represent the practice as a healthcare provider: The MSO should never present itself as the source of medical care. All medical services must be clearly attributed to the physician-owned entity. Core MSO Rules Med Spas Must Follow MSOs allow non-physicians to provide certain important business management and support services to a professional entity that delivers medical services, such as Botox, dermal fillers, and laser procedures. However, to remain compliant with healthcare regulations, it’s essential that both the MSO and the medical practice follow specific rules that govern their relationship, especially when it comes to dividing medical interests from business operations. They include: Separation of Clinical and Management Services One of the most important rules for operating under an MSO model is the strict separation of clinical and management services. Only licensed physicians, nurse practitioners, and physician assistants are allowed to engage in the clinical practice of medicine. The medical doctor or medical director must retain full control over medical decisions, including informed consent practices, treatment planning, good faith exams, and supervision of medical procedures. The physician is also responsible for staffing clinical personnel, developing clinical protocols, and ensuring patient safety and ethical standards in patient care. On the other hand, the MSO is permitted to handle non-clinical business operations. This includes marketing, administrative functions, financial management, office space leasing, human resources, and managing payroll for non-medical staff. The MSO may also implement practice management software, oversee medical equipment logistics, provide IT support, and manage vendor relationships. These duties help improve operational efficiency while keeping the MSO away from any direct involvement in medical treatments or medical decisions. Compliance With Corporate Practice of Medicine (CPOM) Laws Every MSO arrangement must comply with corporate practice of medicine restrictions, which are designed to prevent non-physicians from owning or controlling medical practices. These state laws ensure that only healthcare providers with the appropriate medical background make clinical decisions and supervise medical professionals. CPOM regulations are especially relevant in medical spas, where the line between cosmetic services and regulated healthcare services can blur. Some states, such as California and Texas, have detailed CPOM laws and allow MSO models under strict guidelines. Others prohibit any kind of ownership or control of a medical entity by a non-physician, making it critical to structure the business using a separate business entity for the MSO. Understanding and following state-specific laws is essential to avoid unfair business practices, loss of license, fines, or investigations by the medical board. Ultimately, the MSO must never represent itself as a healthcare provider or interfere in clinical practice. Fee Structuring Must Avoid “Fee Splitting” Another key area of concern in MSO arrangements is fee structuring, particularly in avoiding what is known as fee splitting. Fee splitting occurs when a non-physician entity receives a share of the medical practice’s revenue in exchange for referrals or general business services. This is illegal in many states because it can influence medical judgment and violate healthcare laws. To maintain regulatory compliance, MSOs must be paid based on fair market value for the key services they provide. Acceptable arrangements often include a fixed management fee or reimbursement based on actual costs and labor. This protects both the MSO and the medical entity from liability and ensures the relationship is built on ethical business practices. Management services agreements should clearly define the services rendered, the scope of the relationship, and the basis for management fees, all while complying with healthcare venture laws and avoiding any tie to clinical performance or volume. Licensing and Credentialing Only licensed physicians may provide medical services at a medical spa, and those medical providers must be credentialed and authorized under state laws. This includes all clinical staff involved in medical aesthetics, such as registered nurses, physician assistants, and nurse practitioners. The MSO cannot employ or supervise these providers nor can it play any role in decisions related to medical coding, diagnoses, or medical treatments. If a non-physician crosses into the territory of providing or directing medical services, it may be considered unlicensed practice of medicine. This is a serious violation that could lead to fines, criminal penalties, or the shutdown of the entire operation. Therefore, all medical spa owners and MSO operators must clearly define the boundary between the business side and clinical side. This ensures that healthcare providers handle the medical services and the MSO remains focused solely on support services. How Do MSO Rules Vary by State? MSO rules for medical spas can vary significantly depending on the state laws governing the corporate practice of medicine (CPOM). States like California, Texas, and New York are known for having some of the strictest CPOM restrictions, making it illegal for non-physicians to own or control any part of a medical practice that provides medical services. In these jurisdictions, only licensed physicians or properly structured professional entities may own or direct the clinical practice. This includes medical decisions, patient care, medical treatments, and supervision of medical professionals like registered nurses, physician assistants, and nurse practitioners. Because of these strict regulations, the Management Services Organization (MSO) model in states like California must be carefully tailored to ensure that the MSO operates strictly on the business side of the practice. The MSO may provide management services such as marketing, office space leasing, human resources, financial management, and IT support, but it must avoid any involvement in clinical practice, including medical coding, setting medical protocols, or determining pricing for medical procedures. Contracts like a Management Services Agreement (MSA) must reflect fair market value for services rendered and avoid any arrangements that could be interpreted as fee splitting. In contrast, some states are more flexible with CPOM laws and allow greater collaboration between non-physician investors and medical entities, though even in these states, medical decisions must remain under the control of a licensed medical doctor or medical director. For example, in states with relaxed CPOM enforcement, limited liability companies may be used creatively to structure healthcare ventures, but care must still be taken to maintain proper separation between medical services and business operations. Because state-specific regulations and interpretations of CPOM laws can differ greatly, it’s best to consult with local legal counsel experienced in healthcare law, particularly in medical spa compliance and regulatory guidance. A qualified attorney can help structure your MSO and professional entity properly, ensure that your practice management software, marketing strategy, and management fees are compliant, and protect your business from regulatory violations, malpractice insurance issues, and medical board investigations. How Can You Keep Your Med Spa MSO Compliant? To ensure your medical spa and Management Services Organization (MSO) remain compliant, it is important to build a structure that respects the boundaries between medical services and business operations. First and foremost, always consult with experienced healthcare attorneys who understand the intricacies of state laws, CPOM regulations, and medical spa practices. Legal guidance at the outset of your healthcare venture can help you avoid costly mistakes and regulatory violations. It is also important to clearly define and separate the two legal entities: the professional entity that delivers medical treatments, and the MSO that handles the administrative functions. The medical entity must be owned and controlled only by licensed physicians or otherwise qualified medical professionals, while the MSO should be a separate business entity that provides management services like marketing, office space, financial management, and practice management software. These roles should be outlined in a carefully drafted Management Services Agreement (MSA) that reflects fair market value and avoids illegal fee-splitting arrangements. Financial independence is another cornerstone of compliance. Your MSO should not receive revenue tied to medical procedures or patient care, and all payments must be structured as fixed or cost-based management fees to ensure regulatory compliance. Finally, schedule regular legal compliance audits to review your business structure, operations, and contracts. These checks can help catch issues before they escalate into violations involving the medical board, malpractice insurance risks, or allegations of unfair business practices. When Should You Hire a Lawyer for Your Med Spa MSO? A healthcare attorney should be part of your team early on, not just when trouble hits. Here are key moments when legal guidance is essential: When starting a new med spa: Before launching your healthcare venture, legal advice is critical for setting up compliant ownership structures and avoiding violations of corporate practice laws. When forming or reviewing an MSO agreement: A healthcare attorney can draft or review your Management Services Agreement (MSA) to ensure that roles, payments, and responsibilities between the MSO and medical practice are clearly and legally defined. During state investigations or audits: If your medical spa is facing scrutiny from the medical board, health department, or other regulatory agencies, you’ll need legal representation to protect your license and operations. If you’re unsure who should “own” what part of the business: Ownership and control must be carefully split between the clinical practice and the MSO. A lawyer can help ensure that only licensed physicians are making medical decisions, while non-physicians stay on the business side of things. At Cohen Healthcare Law Group, we specialize in MSO structures, medical spa compliance, and regulatory risk mitigation. Let our experienced team help you navigate complex state laws and build a sustainable, legally sound business. Contact us today to get started. Common Legal Mistakes With MSOs in Med Spas Below are common legal mistakes you should avoid with MSOs in med spas: Co-mingling clinical and non-clinical finances: One of the most frequent compliance errors occurs when the medical practice and Management Services Organization (MSO) fail to maintain separate financial accounts. This can blur the line between medical services and business operations, creating exposure to violations of corporate practice of medicine (CPOM) laws and risking sanctions by the medical board or other regulatory bodies. Letting the MSO influence medical decisions: Under no circumstances should an MSO control or direct patient care, clinical protocols, or medical decisions. Only licensed physicians, nurse practitioners, or physician assistants working under proper supervision can provide medical treatments. If the MSO crosses this line even unintentionally, it can result in claims of practicing medicine without a license. Poorly drafted MSO agreements: A weak or vague Management Services Agreement (MSA) can lead to confusion over responsibilities, improper delegation of authority, and violations of healthcare laws. Your MSA must clearly outline the MSO’s role in areas like marketing, office space, human resources, and practice management software, while making it clear that the medical professionals retain control over all aspects of the clinical practice. Revenue-based compensation that risks fee-splitting violations: Tying MSO compensation to a percentage of the medical spa’s income from medical procedures is a major red flag. This is often considered illegal fee splitting, especially in states with strict CPOM rules like California, Texas, and New York. Instead, MSOs should be compensated through fair market value or fixed management fees based on specific key services provided. Don’t Risk Legal Trouble – Set Up Your MSO the Right Way Setting up a Management Services Organization (MSO) for your medical spa can be a powerful way to grow and streamline your business, but only if done correctly. Without clear legal boundaries between medical services and management services, you risk violating corporate practice of medicine (CPOM) laws, exposing yourself to regulatory investigations, medical board scrutiny, and potential loss of licensure or revenue. When properly structured, an MSO allows non-physicians to participate in the business side of the med spa, handling everything from financial management to office space, human resources, and marketing. This ensures that licensed physicians and other medical professionals retain full control over patient care, medical procedures, and clinical decisions. With a well-drafted Management Services Agreement (MSA), a compliant legal entity structure, and ongoing legal oversight, an MSO becomes a smart, strategic tool rather than a legal liability. Our team at Cohen Healthcare Law Group has some of the best lawyers for med spas you will ever work with. Don’t leave your med spa vulnerable to costly mistakes! Contact us now! FAQs About MSOs and Med Spas Who Can Own a Medical Spa? Only licensed physicians or approved healthcare providers can legally own the medical side of a med spa in states with corporate practice of medicine (CPOM) laws. Non-physicians can own an MSO that manages non-clinical business operations. Can a Non-Doctor Own a Med Spa? Non-doctors cannot own clinical practices, but they can legally own and operate MSOs that provide management services to medical entities as long as they do not influence medical decisions. What Are the Benefits of an MSO? An MSO allows licensed physicians to focus on patient care, while the MSO handles administrative functions like marketing, payroll, and office operations. It also enables non-physician investors to legally profit from a med spa without violating healthcare laws, while improving operational efficiency and scalability. Can I Make Money From a Med Spa if I’m Not a Physician? Yes, non-physicians can earn income through fixed or fair market value management fees via an MSO, but cannot receive a percentage of revenue tied directly to medical procedures. Do Med Spas Need an MSO? Med spas may not legally require an MSO, but in states with corporate practice of medicine (CPOM) laws, it’s often the only compliant way for non-physicians to participate in ownership and management. An MSO ensures the business side is separated from the clinical practice, protecting both parties from legal risks. What Happens if I Violate MSO Rules? Violating MSO rules can result in regulatory investigations, medical board sanctions, civil penalties, or even criminal charges for unauthorized practice of medicine or fee splitting. How Much Control Can an MSO Have? An MSO can control administrative functions like marketing, staffing (non-clinical), financial management, and office operations, but cannot direct patient care, hire medical professionals, or set clinical protocols.
June 24, 2025
Healthcare
Durable Medical Equipment Compliance
Durable Medical Equipment (DME) refers to medically necessary devices intended for repeated use, often prescribed by physicians and reimbursed by Medicare, Medicaid, or private insurers. Because DME plays a direct role in patient treatment, and often involves federal reimbursement, the industry is tightly regulated. The DME industry is governed by a complex web of federal and state regulations, and failing to comply isn’t just a bureaucratic misstep. This is because failing to comply can lead to shutting your business down entirely. From FDA oversight to CMS supplier standards, billing compliance, and fraud laws, every stage of your product’s lifecycle is under scrutiny. Our attorneys at Cohen Healthcare Law Group specialize in helping medical device manufacturers navigate FDA regulations. With over 30 years of experience, we are here to guide you through medical devices regulations, avoiding billing and marketing missteps, and building legally sound operations. Contact us now! This blog will break down what counts as Durable Medical Equipment (DME) and why legal and regulatory compliance is critical for every DME company. We will also share the key compliance areas you need to know. What Is Durable Medical Equipment (DME)? Durable Medical Equipment (DME) refers to medical devices designed for long-term use, prescribed by a licensed healthcare provider to aid in a patient’s daily activities or treatment plan. DME must meet some specific criteria, such as being durable, used for a medical purpose, not typically useful to someone who isn’t sick or injured, and appropriate for home use. Common examples of DME include wheelchairs and mobility scooters, hospital beds and home care beds, oxygen tanks and concentrators, CPAP machines for sleep apnea, nebulizers, suction pumps, and infusion devices. Walkers, canes, crutches, commode chairs, and patient lifts are also examples of DME. While prosthetics, orthotics, and medical supplies are also critical in healthcare, they are distinct from DME. Generally, prosthetics replace missing body parts, orthotics like braces or shoe inserts provide structural support, while supplies include disposable items like wound dressings or diabetic test strips. In contrast, DME is categorized separately due to its durability and long-term use in patient care. DME is often used by patients with chronic illnesses, mobility impairments, or those recovering from surgery. This includes seniors, individuals with disabilities, and people managing respiratory or neurological conditions at home. Because DME directly affects patient safety, quality of care, and medical outcomes, compliance is not just a regulatory box to check, but a moral and legal obligation. Equipment that is defective, improperly labeled, or sold without proper clearance can put patients at serious risk and expose manufacturers and sellers to devastating legal consequences. Who Can Create and Sell Medical Equipment Manufacturing and distributing medical equipment in the U.S. is heavily regulated by the FDA and other federal and state agencies. To ensure patient safety and maintain public trust, only qualified entities are permitted to make and sell DME. They include: Licensed Manufacturers: Only companies or individuals with appropriate licensing from regulatory agencies, such as the FDA, are authorized to manufacture medical equipment. These manufacturers must comply with rigorous safety, labeling, and production standards. Regulatory Approval: Before a medical device can be sold or distributed, it must go through the FDA medical device classification system (Class I, II, or III) and may require premarket notification (510(k)) or premarket approval (PMA) depending on the risk level. Quality Standards Compliance: DME manufacturers must comply with the FDA’s Quality System Regulation (QSR), which outlines processes for design control, production, process validation, complaint handling, and more. Many companies also adopt international standards like ISO 13485 to reinforce quality assurance. Distributors and Suppliers: Distributors must have valid business licenses and ensure that all medical devices they sell are FDA-compliant and properly labeled. They are responsible for tracking, reporting adverse events, and ensuring storage conditions meet safety requirements. Healthcare Providers and Pharmacies: In certain cases, licensed healthcare providers and pharmacies may sell or dispense DME directly to patients. However, they must still comply with state and federal laws, including billing regulations if products are reimbursed by Medicare or Medicaid. Registration Requirements: All manufacturers, repackagers, relabelers, and sellers must register their establishments with the FDA and list the devices they market. This ensures traceability and accountability throughout the device lifecycle. Importers and Exporters: Medical device companies that import or export DME must navigate both U.S. regulations and international compliance standards. This includes documentation, labeling, and proper declarations at customs. Compliance with State Laws: In addition to federal laws, each U.S. state may have its own licensing requirements and DME supplier regulations. Some states require Board of Pharmacy permits or separate registration processes for DME businesses. Prohibited Sellers: It is illegal for unauthorized individuals or unlicensed companies to manufacture or sell medical equipment. Doing so can result in FDA enforcement actions, civil penalties, criminal charges, and business closure. What Happens If You Don’t Comply With DME Regulations? Operating a durable medical equipment (DME) business without full compliance is both risky and catastrophic. From financial penalties to loss of your ability to bill Medicare and Medicaid, the consequences of non-compliance with federal regulations can destroy a business and damage your reputation beyond repair. As a durable medical equipment provider, your compliance obligations span multiple layers, including FDA rules, CMS reimbursement guidelines, and state licensing requirements. Failing to meet these standards can quickly trigger investigations by the Office of Inspector General, audits by federal healthcare programs, and even civil and criminal penalties. If your DME company submits reimbursement claims for products that lack medical necessity, or if you operate without a proper DME license, you risk being removed from federal healthcare benefit programs altogether. Losing the ability to bill Medicaid services or Medicare beneficiaries can immediately stop revenue flow, placing your entire operation in jeopardy. Worse still, improper billing, lead generation arrangements, or marketing practices that violate the Anti-Kickback Statute or Stark Law can result in lawsuits, criminal penalties, and publicized disciplinary actions that permanently stain your brand. The risks go beyond just financial loss. Distributing faulty or non-compliant medical equipment, such as hospital beds, portable oxygen equipment, or other devices intended for long-term patient use, can lead to patient harm. When a durable medical device fails or is improperly authorized, the patient pays the price. Why Compliance Matters in Durable Medical Equipment Your DME business must adhere to a maze of compliance requirements, including FDA rules for medical devices, CMS billing policies, and state law mandates on licensure and disclosures. Navigating these rules often requires conducting internal monitoring, implementing written policies, and ensuring HIPAA compliance to safeguard protected health information. For companies engaging in marketing, especially with a lead generation company, obtaining disclosure and written authorization is essential to avoid improper payments and associated penalties. The financial implications of noncompliance are massive. Denied claims, regulatory fines, costly penalties, and interrupted revenue cycles can leave even well-established DME companies scrambling. Developing corrective action, responding promptly to government inquiries, and working with a knowledgeable compliance officer or compliance team are essential steps to reduce risk. In many cases, forming a compliance committee and conducting effective training for staff can provide early warning signs before problems escalate. However, these are intricate steps, best handled under the guidance of experienced legal counsel. That’s where Cohen Healthcare Law comes in. With years of experience helping DME suppliers, medical practices, and DME retailers build legally sound operations, our team helps providers obtain accreditation, manage licensing needs, and stay compliant with both federal law and state regulations. Whether you’re dealing with marketing materials, complex financial relationships, or need help understanding how to bill Medicare on a case-by-case basis, we can help you design effective compliance measures from day one. Compliance is also a matter of ethics and patient trust. The patients using your oxygen equipment, mobility devices, and other DME rely on providers who operate transparently, legally, and with care. When your organization implements strong compliance systems, you show that patient safety is not an afterthought. That integrity goes a long way in building your reputation among healthcare partners, referral sources, and regulators. Regulatory Framework for Durable Medical Equipment Compliance Understanding the regulatory framework for durable medical equipment compliance is critical for every DME business operating in the healthcare industry. Failure to adhere to your compliance obligations can result in civil and criminal penalties, denied reimbursement claims, and significant disruptions to business operations. That’s why successful DME companies must build a strong compliance team, implement written policies, and stay vigilant through conducting internal monitoring and continuous education. Which Regulatory Bodies Oversee Durable Medical Equipment? Multiple government agencies and recognized organizations oversee the regulatory compliance of medical equipment in the United States. There is The Centers for Medicare & Medicaid Services (CMS) that plays a central role in defining how DME is billed, what documentation supports medical necessity, and what standards DME suppliers must meet to maintain billing privileges under federal healthcare benefit programs. Losing access to CMS programs can be devastating for DME retailers, especially those relying heavily on Medicare beneficiaries for revenue. Then there is the Food and Drug Administration (FDA) that governs the safety, labeling, and classification of medical devices, including durable medical products. Depending on the type of equipment, manufacturers must meet the FDA’s quality system standards and may require premarket notification or approval. Operating without proper FDA clearance or failing to meet quality standards can subject your organization to criminal penalties and product recalls. Similarly, the Office of Inspector General (OIG) monitors for fraud, waste, and abuse across federal healthcare programs. DME providers that engage in improper billing, improper payments, or questionable lead generation arrangements may be investigated and penalized under well publicized disciplinary guidelines. OIG also issues advisory opinions and provides compliance education to reduce risk. Furthermore, accrediting organizations like The Joint Commission and other agencies approved by CMS offer formal accreditation for DME suppliers. Achieving this accreditation not only fulfills certain regulatory requirements but also enhances your business’s credibility. To obtain accreditation, a DME company must demonstrate effective compliance measures, such as a functioning compliance committee, effective training programs, and clear protocols for addressing compliance challenges. What Are the Key Laws and Regulations for Durable Medical Equipment Compliance? Several laws and regulatory codes directly impact how DME suppliers operate. The Medicare Conditions of Participation (CoPs) set forth the basic rules that must be met for participation in Medicaid services and Medicare. These conditions affect everything from clinical documentation and prior authorization to how DME is dispensed and billed. Adherence to CoPs is critical for maintaining eligibility under federal healthcare benefit programs. Likewise, the 21 CFR (Code of Federal Regulations), particularly Title 21, outlines the FDA’s standards for medical devices and the required manufacturing, labeling, and post-market surveillance processes. Failing to meet these federal regulations can lead to product seizures, warning letters, and even the shutdown of operations. Another essential law is the Health Insurance Portability and Accountability Act (HIPAA). DME companies must maintain HIPAA compliance when handling protected health information (PHI). Furthermore, the federal anti-kickback statutes and the Stark Law impose strict rules on financial relationships between medical practices, DME businesses, and referral sources. How to Stay Compliant With Durable Medical Equipment Regulations Staying compliant with durable medical equipment regulations is not just about avoiding penalties, but also about protecting your patients, your business, and your standing within the healthcare system. Below are helpful tips: Understand and Follow Regulations Effective DME compliance begins with understanding the complex network of federal regulations and state laws that affect your medical equipment operations. Every durable medical equipment DME company must be proactive in keeping up with changing compliance requirements. Key agencies like the FDA, CMS, and state departments of health set the rules that govern DME suppliers. These federal and state entities define how to handle medical necessity, prior authorization, and equipment classifications under various federal healthcare programs. Ignorance is not an excuse when you’re facing civil and criminal penalties. Maintain Licensing and Accurate Documentation All DME businesses must hold the proper licenses, including a valid DME license, and in some cases, a pharmacy license. In addition to obtaining licensing, companies are responsible for maintaining detailed records related to equipment orders, patient usage, and delivery confirmations. These documents serve as your defense against allegations of non-compliance, improper payments, or reimbursement claim fraud. Keeping these records organized and regularly reviewed should be a key responsibility for your compliance officer or compliance team. Implement Effective Billing and Coding Practices Accurate billing is essential to maintaining your status as a trusted provider under federal healthcare benefit programs. Using the correct HCPCS codes for every product reduces the risk of claim denials, audits, or accusations of fraud. DME companies must monitor each submission for compliance with CMS billing guidelines, especially when billing Medicare or Medicaid services. This is a vital step in reducing compliance issues and avoiding costly penalties or sanctions under the Anti-Kickback Statute and Stark Law. Train Your Team Continuously Ongoing education is a cornerstone of any effective compliance strategy. Your staff must receive effective training tailored to your medical practice, product lines, and the expectations of federal law. As laws shift, policies must be updated, and employees must be alerted promptly. Conducting effective training sessions also supports HIPAA compliance, proper documentation of written authorization requirements, and awareness of protected health information policies. A knowledgeable team minimizes human error and strengthens your compliance committee’s overall efforts. Conduct Routine Compliance Audits One of the most important compliance measures for any DME retailer or supplier is regularly conducting internal monitoring and audits. These checks help uncover areas of risk and ensure your documentation, coding, and processes align with industry standards. They also give your team the opportunity to respond promptly, fix errors, and develop corrective action plans before they turn into reportable violations. Consult Healthcare Lawyers for Legal Guidance Even the most experienced DME suppliers face complex situations that require legal interpretation. A specialized attorney like Cohen Healthcare Law helps clients interpret federal regulations, and manage enforcing standards when the stakes are high. Having access to legal counsel ensures you’re fully prepared for inspections, audits, or complaints from other agencies like the Office of Inspector General. The Future of Durable Medical Equipment Compliance One of the most impactful changes is the rise of automated documentation management systems. These digital platforms reduce the risk of non-compliance by securely managing patient care records and equipment logs, ensuring traceability from order to delivery. With integrated tools that track every aspect of device use, DME suppliers can maintain accurate documentation for reimbursement claims and prior authorization requests, which are essential for billing federal healthcare programs. Equally important is the use of compliance tracking software, which helps DME businesses monitor critical deadlines for license renewals, accreditation reviews, and internal audits. These systems reduce administrative burden while minimizing the chances of falling out of compliance with federal law, state regulations, or the rules set by agencies like CMS, the FDA, and the Office of Inspector General. Advanced electronic billing and coding systems are also revolutionizing how DME businesses manage HCPCS codes, reducing the frequency of errors that lead to costly penalties, claim denials, or civil and criminal penalties. These tools are often equipped with built-in checks that validate the medical necessity of items billed to Medicare beneficiaries or Medicaid services, making them indispensable for maintaining a clean billing record. For companies managing large inventories of medical devices, inventory management tools offer the ability to track product lifecycles, recall notices, maintenance schedules, and patient assignments. These systems help ensure that durable medical equipment is not only functional but also meets quality standards. This is critical for patient safety and for avoiding potential compliance issues under both federal regulations and state law. On the training side, e-learning platforms now provide DME teams with continuous access to policy updates and effective training modules tailored to their compliance challenges. Whether educating staff on the Anti-Kickback Statute, Stark Law, or HIPAA compliance, these tools support conducting effective training without disrupting daily operations. They also help compliance officers and compliance committees reinforce internal policies and prepare staff to respond promptly to compliance risks. As more DME businesses adopt data analytics and reporting tools, they’re gaining new insights into emerging compliance risks. By analyzing usage trends, billing patterns, and audit histories, DME providers can identify vulnerabilities and develop corrective action plans proactively. This kind of internal monitoring is crucial not only for meeting current compliance requirements but also for planning long-term strategies and aligning with well-publicized disciplinary guidelines. Finally, secure communication tools are enhancing collaboration among staff, legal counsel, and external partners. These platforms protect protected health information (PHI) while ensuring that important compliance conversations are documented and conducted legally. Is Your DME Business Fully Compliant and Protected? If you operate in the durable medical equipment (DME) industry, compliance isn’t just an operational task. It is a legal, financial, and ethical responsibility. With oversight from the FDA, CMS, and the Office of Inspector General, the pressure to meet strict regulatory compliance standards has never been higher. Implementing best practices such as conducting internal monitoring, maintaining accurate billing through HCPCS coding, staying up to date on state and federal law, and ensuring effective training across your team is essential. They protect your DME business from compliance issues, audits, and costly penalties. If you’re unsure whether your compliance framework is strong enough or if you’re facing compliance challenges, Cohen Healthcare Law Group is here to help. With some of the best healthcare lawyers, we assist DME companies, medical practices, and DME suppliers to build strong legal foundations through tailored compliance strategies and proactive legal guidance. Contact us today! FAQ What Does Durable Medical Equipment Compliance Mean for Suppliers? DME compliance means that suppliers must follow all federal, state, and agency regulations related to licensing, billing, documentation, and patient safety. It ensures the business can legally operate, bill Medicare or Medicaid, and avoid legal or financial penalties. How Often Should DME Compliance Audits Be Performed? Internal audits should be conducted at least annually, though high-risk or fast-growing DME businesses may need quarterly reviews. Regular auditing helps catch issues early and ensures ongoing alignment with regulatory requirements. What Are the Most Common DME Billing Errors? The most frequent errors include using incorrect HCPCS codes, missing documentation of medical necessity, and submitting claims without required prior authorizations. These mistakes can lead to denied claims or trigger government audits. What Documentation Is Required for DME Compliance? Suppliers must keep accurate records of prescriptions, delivery confirmations, medical necessity justifications, prior authorizations, and billing submissions. Proper documentation protects against audits, denials, and fraud allegations. How Often Should DME Providers Update Their Compliance Training? Compliance training should be updated annually or whenever there are changes in federal or state regulations. Frequent updates ensure staff remain informed and help prevent unintentional violations. Do I Need a Healthcare Lawyer for DME Compliance? Yes, you need a healthcare lawyer for DME compliance. Navigating DME compliance involves complex legal standards and evolving regulations that require expert interpretation. A healthcare lawyer helps mitigate risk, prepare for audits, and build a compliant, scalable business model.
June 19, 2025
Healthcare
Clinical Trial Compliance Key FDA Regulations for Research Organizations
The intricate web of clinical trial regulations is meant to safeguard study subjects, assure the ethical conduct of research, and ensure the integrity of the scientific results. Any organization that undertakes the responsibility of conducting clinical studies must comply with the rules and regulations set down by three primary authorities: the Food and Drug Administration (FDA), the Department of Health and Human Services (HHS), and Institutional Review Boards (IRBs). Violating their mandates can have serious repercussions, yielding everything from delay to legal action to outright trial rejection. This article gives an overview of the important regulatory areas that research organizations must be aware of, such as the Food and Drug Administration’s 21 Code of Federal Regulations Parts 50 and 56, obligations involving informed consent and institutional review boards, and standards for good clinical practice. It also covers some recent enforcement trends. Understanding FDA Regulations: 21 CFR Part 50 and 21 CFR Part 56 Core requirements for clinical research, as specified by the FDA, are contained in two major regulations. The first is 21 CFR Part 50, which deals with informed consent. The second is 21 CFR Part 56, which governs Institutional Review Boards. In order to start, clinical trials must secure informed consent from every participant and obtain IRB approval. The trials themselves, of course, must adhere to GCP to meet basic regulatory expectations, especially from the FDA. Even with clear regulations, research organizations still encounter frequent issues such as these: Informed consent is not properly obtained. Oversight by the IRB is neglected. Reporting of adverse events or protocol deviations is shoddy. Informed Consent: A Cornerstone of Ethical Research It is not only a legal necessity, but also a basic ethical requirement to obtain valid informed consent. It is essential that participants understand exactly what they are getting into when they sign up to be part of a research study. That understanding requires parents when minors are involved, and serious discussions when the potential participants have limited capacities. Even then consent can have a shaky foundation when the study design is complex, or the risk is high. For informed consent to be legally robust, plain language must be used; participants must be provided with enough time to ask questions; and a written, signed copy of the consent form must be given to the participant. See detailed guidance from the FDA. Related HHS regulations can be found here. IRB Oversight: Protecting Participants and Upholding Integrity The critical role of protecting research subjects falls to Institutional Review Boards. IRBs review research protocols and grant the necessary approvals so that work can proceed. They do this, of course, with the intent of limiting and minimizing risks to research subjects. It is the responsibility of these boards, also, to ensure that consent is truly informed and that the subjects understand what they are agreeing to. And finally, these boards have a responsibility to monitor the kinds of events that might be considered adverse. Researchers must submit detailed protocols, keep accurate records of all IRB communications and approvals, and report any changes or adverse events quickly to steer clear of IRB compliance problems. A handy resource is the FDA’s FAQ guide on IRB regulations. Good Clinical Practice: Building the Foundation for Quality Research GCP is an internationally accepted standard for the protection of research subjects and the reliability of research data. The principles of GCP underscore the necessity of using qualified investigators, ensuring sponsor accountability, and maintaining accurate and complete records. You can improve adherence to GCP by conducting internal audits, training all research staff in GCP requirements, and using electronic systems to manage trial data and enable real-time oversight. For a more thorough investigation of the GCP resources available from the FDA, visit this site. FDA Enforcement: What Happens When Compliance Breaks Down The Food and Drug Administration takes noncompliance seriously, conducting routine inspections of clinical research sites. Frequent violations that the FDA finds include the following: Unreported adverse events Missing or incomplete informed consent forms Research conducted without IRB approval The risk of penalties from the FDA can be substantially reduced by organizations that do three things: they train their personnel, they keep records that are adequate to show compliance with the many requirements that apply to them, and they report all unexpected adverse events to the FDA. Here are some things to think about—as well as some real-world examples—when it comes to your organization’s training and recordkeeping efforts. Real FDA enforcement actions serve as powerful motivation. Ensuring Compliance in Every Trial Ensuring compliance takes an active, not a passive, approach. It means obtaining IRB approval prior to study launch, gaining informed consent from all participants, and adhering to GCP. It also means keeping good, readable records that allow necessary information to flow easily to the right people. A qualified healthcare attorney can help ensure compliance and prepare you for the inevitable audit or regulatory review. It’s critical to navigate the legal and regulatory landscape of clinical trial research for the success of the trials and the safety of the participants. Contact us today to make sure your clinical trial is in total compliance with all relevant regulations. Contact our healthcare law and FDA attorneys for legal advice relevant to your healthcare venture.
June 8, 2025
Healthcare
Mobile Health Apps Legal Compliance Essentials for FDA and FTC Standards
Apps that provide services such as telemedicine, fitness tracking, remote monitoring, and medication reminders are rapidly expanding within the burgeoning mobile health (mHealth) industry. But with this growth comes an increase in regulatory scrutiny. Developers, healthcare providers, and startups in this space need to be on guard because the law is looking much more closely at the nascent mHealth industry. And a lot of the apps we’re developing are now being classified as medical devices, with some of us on the borderline of telemedicine. This manual will take you through the basic legal factors involved in mobile health apps. It will help you figure out if your app is regulated by the FDA, how to manage patient data in a way that meets the requirements of HIPAA, and how to ensure that your app’s advertising practices are in line with FTC guidelines. You will also learn about state laws—in particular, telehealth and privacy laws—that may impact the operation of your app. 1. Determining If Your App Needs FDA Approval When a mobile health app meets the definition of a medical device according to 21 CFR 801, the FDA gets involved. If your app is intended to diagnose, treat, or prevent a disease or health condition, it likely comes under FDA oversight. Apps that are concerned only with general wellness or non-medical functions are usually not directed by the FDA. For instance, an application that measures blood pressure and works together with a medical device or one that employs AI to evaluate skin conditions might be classified as a medical device and need to meet FDA requirements. However, step counting apps or those promoting meditation generally do not require such measures. The complete guidance from the FDA can be reviewed. To avoid FDA regulation, think about these strategies: State clearly that your app is not intended to diagnose or treat any medical conditions. Ensure that any connected devices are already FDA-approved. Don’t use promotional language that suggests your app can prevent, diagnose, or treat disease. 2. Complying with HIPAA When Handling Patient Data If your app gathers, holds, or communicates protected health information (PHI), compliance with the Health Insurance Portability and Accountability Act (HIPAA) is a must. This is especially true if your app works with electronic health records (EHRs), collects medical histories or test results, or corresponds with healthcare providers in its user communications. Determine whether your application qualifies as a HIPAA-covered entity. To satisfy HIPAA mandates, you must encrypt stored data and data in transit. When you’re using cloud platforms, choose from those that are HIPAA-compliant—the Amazon Web Services (AWS) platform is well-known for this, as is the Google Cloud Healthcare API. Always get consent from users before you collect or share their health data. And for good measure, implement multi-factor authentication to ensure that only authorized users can access your systems. Learn more about how the Security Rule of HIPAA applies to mobile health applications. 3. Staying Compliant with FTC Marketing Rules When you assert that your app has capabilities that can affect the health of its users, you must be certain that those assertions are accurate, and supported by solid evidence. The Federal Trade Commission keeps a close eye on the marketing of health-related matters and does not shrink from taking action against misleading or overstated assertions. Common pitfalls consist of not stating clearly the actual effectiveness of the app (e.g., saying it cures insomnia), using testimonials and not having scientific backing to use them, and not disclosing connections between the app developers and the influencers or endorsers of the app. View the complete guidance issued by the FTC on the marketing of health products. An instance that is very well known is the FTC’s case against Lumosity in 2015. The company ended up having to pay $2 million because it had made dubious claims that its brain training games could stave off cognitive decline. For details, see this page. To prevent this type of enforcement, ensure that you support health claims with rigorous scientific research; include disclaimers when necessary, and always disclose any financial or promotional relationships. 4. State Privacy Laws and Their Impact on Health Apps Your app may still have obligations under state privacy laws even if HIPAA doesn’t apply to it. Laws protecting consumer data and imposing requirements on businesses collecting personal health information have been enacted in several states. For instance, the Consumer Privacy Act (CCPA) of California underscores the need for transparency and grants users the authority to refuse permission for the collection of their data. New York’s SHIELD Act mandates that companies implement sensible security practices to protect the information of their customers. Illinois’ Biometric Information Privacy Act (BIPA) regulates the gathering of biometric data, such as fingerprints and facial recognition. For your app to remain compliant, it should have a prominent and plain privacy policy, should give users an option to not share data, and should make sure that all biometric data are encrypted and collected only after the user has consented. To see privacy laws in various U.S. states, check this page. 5. Practical Steps for Legal Compliance Assess your app and its functions for FDA oversight. If what you’re doing is in any way similar to what an FDA-regulated company would do, then most likely you must comply with FDA regulations. The same logic applies to HIPAA (It’s All About Compliance, 2021). Your app, if it handles protected health information in a manner similar to what a healthcare entity would do, must comply with HIPAA. Noncompliance can be very costly. The Federal Trade Commission (FTC) regulates truth in advertising on a federal level. Your marketing efforts must be FTC-compliant. See a list of recent enforcement actions taken by the FTC and FDA against mobile health apps. Health mobile apps are in a highly regulated area, and not completing them can lead to serious legal problems—for instance, regulatory fines, consumers suing the company, or even removal of the app from the app stores. If you need help figuring out interaction with the FDA, HIPAA, FTC, or your state compliance for your health tech product, our legal team at Cohen Healthcare Law Group is here to help. Contact our healthcare law and FDA attorneys for legal advice relevant to your healthcare venture.
May 22, 2025
Healthcare
Recent Dietary Supplement FDA Alerts and Warning Letters
The FDA has the authority to regulate dietary supplements pursuant to the federal Food, Drug, and Cosmetic Act and other laws. FDA provides guidance documents to help the developers of dietary supplements understand their compliance requirements. These guidance documents include the following: Current Good Manufacturing Practice (CGMP) New Dietary Ingredients Warning Letters & Safety Information Labeling and Claims Adverse Events Reporting and Recordkeeping General Compliance and Inspection Information for Industry Special Issues/Miscellaneous Items Archived Items of Interest We’ve discussed some of the key compliance requirements for dietary supplements previously. We also have a video presentation on the compliance requirements for dietary supplements. In this article, we discuss a few additional compliance issues. Navigating FDA and Healthcare Laws for Dietary Supplements: Compliance Made Clear Learn essential FDA and healthcare compliance requirements for dietary supplements, including labeling, marketing claims, and manufacturing practices. Insights from Cohen Healthcare Law Group. Dietary Supplement Compliance: Labeling, Marketing, and Manufacturing Strategies for Success In this video, Michael discusses the importance of making assertive yet compliant claims, adhering to good manufacturing practices, and ensuring ingredient safety to avoid FDA warnings. FDA oversight of dietary supplements The FDA coordinates its oversight of dietary supplements with the Human Foods Program’s Office of Food Chemical Safety, Dietary Supplements, and Innovation. FDA regulates the dietary ingredients for dietary supplements and the finished dietary supplement products. FDA’s oversight of dietary supplements differs from its oversight of “conventional” foods and drug products. Based on the Dietary Supplement Health and Education Act of 1994 (DSHEA), the makers and distributors of dietary supplements are not permitted to market products that are “adulterated or misbranded.” The burden is on the manufacturers and distributors to evaluate the safety of their products and the labeling of their products before manufacturers and distributors can market their products. Dietary supplements must comply with all the requirements of the Federal Food, Drug, and Cosmetic Act as amended by DSHEA and FDA regulations. If a dietary supplement is adulterated or misbranded after the supplement reaches the market, FDA can take appropriate actions. Dietary supplement alerts by the FDA FDA publishes press releases about recalls of dietary supplements that may risk the health of consumers though not all press releases have recalls. FDA also issues warning letters to companies to inform companies about FDA violations and alert companies about what corrective actions the businesses must take. In 2024, FDA issued the following notices: Update on FDA launches new directory of ingredients used in products marketed as dietary supplements. On February 21, 2025, FDA updated FDA’s Ingredient Directory, including renaming the web page to be Information on Select Dietary Supplement Ingredients and Other Substances. The changes are in response to feedback from stakeholders. The new directory includes new categories to “classify the type of FDA action or communication for each listed ingredient; recording the date each listed ingredient was added to the directory; and streamlining the introductory text on the page.” FDA issues draft guidance on new dietary ingredient notification master files for dietary supplements. On April 3, 2024, FDA announced the availability of a draft guidance for the dietary supplement industry titled “New Dietary Ingredient Notification Master Files for Dietary Supplements.” This guidance document is in response to requests from the dietary supplement industry for “recommendations about Master Files for new dietary ingredient notifications (NDINs).” NDINs can help “facilitate the submission of NDI-related identity, manufacturing, and/or safety information to the FDA for use in evaluating a potential future NDIN.” “The recommendations in this draft guidance expand upon and replace the recommendations related to Master Files in the FDA’s revised draft guidance, “Dietary Supplements: New Dietary Ingredient Notifications and Related Issues.” Ingredient directory FDA has an ingredient directory to help manufacturers, sellers, and consumers keep current about the ingredients and other substances found in products labeled as dietary supplements. The directory links to FDA’s actions and communications which include the “evaluation of health claims, safety communications, and compliance and enforcement actions.” The directory comes with this FDA caveat: “As a reminder, FDA does not approve dietary supplements for safety and effectiveness. This directory is not intended to be a comprehensive list of all ingredients used in dietary supplements and may not include all actions the agency has taken with respect to a particular ingredient.” A sample ingredient in the directory includes the following: Agency actions/statements. 21 CFR 101.72 Health claims: calcium, vitamin D, and osteoporosis Qualified Health Claims: Letter Regarding Calcium and Colon/Rectal, Breast, and Prostate Cancers and Recurrent Colon Polyps (October 2005) 1. Ingredient is the subject of an authorized health claim or qualified health claim. Entry date. April, 2023. Dapoxetine (also called Dapoxetinum) Agency actions/statements. Shoreside Enterprises, Inc. Warning Letter (December 2014) Category 4. Ingredient is excluded from the dietary supplement definition under section 201(ff)(3) of the FD&C Act Entry date. April, 2023. The list of categories includes the following: “Ingredient is the subject of an authorized health claim or qualified health claim Ingredient is the subject of a safety communication Ingredient is not a “dietary ingredient” under section 201(ff)(1) of the Federal Food, Drug, and Cosmetic Act (FD&C Act) Ingredient is excluded from the dietary supplement definition under section 201(ff)(3) of the FD&C Act Dietary ingredient has not met the safety standard in section 402(f)(1)(A) of the FD&C Act New dietary ingredient has not met the safety standard in section 402(f)(1)(B) of the FD&C Act New dietary ingredient requiring a premarket safety notification under section 413(a)(2) of the FD&C Act but for which no notification has been submitted.” Additional FDA guidelines for dietary supplements Additional guidelines for dietary supplements include the following: Information for Industry on Dietary Supplements. “Resources and links for submissions for new dietary ingredient notifications and structure/function claim notifications, applications, guidance, regulations, and other items of interest to industry members.” New Dietary Ingredient Notification Process.” Background information for industry, instructions for submitting premarket notifications, and links to relevant guidance and Federal Register documents.” Notifications for Structure/Function and Related Claims in Dietary Supplement Labeling “Background information for industry, instructions for submitting notifications, and links to relevant guidance and Federal Register documents.” Information for Consumers on Using Dietary Supplements FDA warning letters for dietary supplements A few of the more recent warning letters to makers of dietary supplements by the Food and Drug Administration include the following: A warning letter was issued on March 4, 2025, to C & A Naturistics by the Center for Drug Evaluation and Research (CDER) for an unapproved drug/misbranded. The letter states that their dietary supplement is actually a drug. A warning letter was issued to Pivo IV Inc. on March 6, 2025, by CDER for an unapproved drug/misbranded. The letter states that their dietary supplement is actually a drug. A warning letter was issued to IsoThrive Inc. on February 4, 2024, by CDER about objectionable conditions at the facility observed by an FDA clinical investigator. A warning letter was issued to Western Innovations, Inc. on 11/13/24 by Human Foods Program about adulterated dietary supplement violations, including Current Good Manufacturing Practice (CGMP) violations. The Food and Drug Administration has the authority to regulate dietary supplements and their ingredients. FDA provides numerous guidance documents to help manufacturers, medical practitioners, and consumers. When manufacturers fail to comply with the FDA regulations, FDA has the authority to enforce its regulations through warning letters and other actions. Dietary supplement manufacturers, distributors, and sellers should contact Cohen Healthcare Law Group, PC to discuss their HIPAA compliance requirements. Our experienced healthcare attorneys advise medical businesses and medical practices about healthcare compliance laws and regulations. Contact our healthcare law and FDA attorneys for legal advice relevant to your healthcare venture.
May 18, 2025
Healthcare
Risk Management and Compliance for Direct-to-Consumer Genetic Testing Companies
The DTC genetic testing industry has experienced rapid growth and now finds itself in a climate of intensified scrutiny from federal and state regulators. Numerous companies that offer DNA-based health insights, ancestry results, or genetic predisposition information are feeling the heat and being forced to ensure that their operations are in line with an increasingly fragmented federal and state regulatory scheme. It is no easy task. These companies risk enforcement actions from the FDA, penalties for lapses in data privacy, and legal exposure for making false or misleading marketing claims. This guide covers the critical legal aspects that DTC genetic testing companies must deal with, such as the following: FDA regulations concerning genetic testing; HIPAA and state privacy laws that concern you and your customers; FTC standards for marketing your product; and regulatory pitfalls that DTC companies commonly fall into. DA Regulations for Genetic Testing: Is Your Product a Medical Device? One of the first inquiries about compliance for DTC genetic testing firms to consider is whether their offering is subject to FDA oversight, specifically, whether it is a medical device. Health-related tests—those that might indicate a person’s likelihood of coming down with a specific disease, for example—usually have some federal scrutiny. That can be as light as a product being “cleared” by the FDA through a rather straightforward process for low-risk devices. Genetic tests typically can be divided into three main categories. Medical device tests, which are regulated by the FDA, comprise those that detect genetic markers linked to some disease risk, including the chance of getting certain cancers. In contrast are the general wellness tests that report, among other things, ancestry information. These tests are not regulated by the FDA. A third, mixed bag category includes the Laboratory-Developed Tests., which are used in the somewhat mysterious manner the title suggests. Companies can refer to the FDA’s guidance on direct-to-consumer (DTC) genetic testing to understand how the agency differentiates between medical and nonmedical devices. This guidance can be found online here. It’s important to note the 2013 FDA action against 23andMe. In this case, the FDA barred the company from marketing genetic health reports because of concerns over the unsubstantiated claims that the health reports made a person’s genetic makeup could impact their health. The company subsequently worked with the FDA to obtain market approval for some of its reports. You can find the FDA’s warning letter here. HIPAA and State Privacy Laws Governing Genetic Data Though numerous DTC genetic testing firms aren’t governed by HIPAA because they don’t qualify as covered entities, they’re still bound to comply with the stringent privacy laws that states have put in place. And in an ever-growing number of states, those laws include specific provisions that deal with the collection and use of genetic data—by both the entities that do the collecting and by the law enforcement agencies that might come a-callin’ after the fact. A principal piece of federal legislation is the Genetic Information Nondiscrimination Act (GINA). It bars the use of genetic information in making decisions about health insurance, or employment. For more information about GINA, please see: https://www.eeoc.gov/statutes/genetic-information-nondiscrimination-act-2008. California has established the Genetic Information Privacy Act (GIPA), which mandates that before any genetic information can be shared, companies must first obtain explicit written consent. To read the full text of this piece of legislation, go to Senate Bill No. 41, Chapter 596. Other states, like Vermont and New York, have enacted similar laws requiring detailed disclosures and consent before any testing can occur. To safeguard genetic information, firms must unfailingly secure elucidated consent from individuals before gathering any biosamples, employ robust encryption methods for the storage and transfer of delicate data, and follow the path of least resistance by ensuring robust transparency through privacy policies that the average layperson can decipher. A good place to view state-specific genetic privacy laws is the website of the International Association of Privacy Professionals. FTC Advertising Guidelines: Avoiding Misleading Genetic Test Claims The FTC closely watches the marketing of DTC genetic testing companies. They want to be sure consumers aren’t being sold a bill of goods. Genetic tests that purport to tell you something useful about your health are supposed to have rigorous and reliable science behind them. Claims of this nature must be backed by solid handfuls of even better science if a company making them want to be on the right side of the law. To remain compliant, companies need to ensure that all health outcome advertising claims are backed by credible data. Customer testimonials that imply unrealistic, too-good-to-be-true results must be avoided. And whenever a genetic test is used, the limitations of that test must be fully and plainly disclosed. In 2021, the FTC enforcement case against a DTC genomic testing company resulted in the company’s discontinuation of promotional practices that involved making dubious DTC genomic health risk claims. State Licensing Requirements for DNA Testing Laboratories An additional layer of compliance requires that the lab performing the genetic testing be licensed and certified to operate under both state and federal laws. Most laboratories must be certified under the Clinical Laboratory Improvement Amendments (CLIA), and numerous states—most notably California and New York—have laboratory licensing requirements that exceed those of CLIA. DTC genetic testing companies should either partner with laboratories certified under the Clinical Laboratory Improvement Amendments (CLIA) or obtain the necessary licenses if they operate their own laboratory. For medical device-type tests, it is likely that some level of physician oversight is also required. Even for non-medical tests such as those for ancestry or lifestyle, companies should very clearly state that the results are not to be used for making medical decisions. You can find the federal CLIA requirements online. Information regarding state-specific lab licensing—like that which is needed in New York—is located here. Best Practices to Avoid FDA, FTC, and Privacy Law Violations To limit legal liability, companies that offer direct-to-consumer genetic tests should first ascertain whether the tests are legally classified as medical devices and thus governed by the FDA. If so, the next step is to obtain the necessary clearances and/or approvals before commencing on any marketing efforts. Compliance with both federal and state privacy laws is very much in order, especially when the company in question is working with genetic information that is obviously very sensitive. These practices would seem to eliminate any potential for very likely troublesome FTC actions. In conclusion, businesses ought to get into the practice of examining and refreshing their privacy policies to keep pace with the new laws being enacted and the old ones undergoing reinterpretation. For instance, last July, the Federal Trade Commission and the Food and Drug Administration, both of which have significant authority to regulate the health marketplace, took a serious look at some of the emerging practices they feel are potentially harmful to consumers. Conclusion & Call to Action To work in the DTC genetic testing area requires careful advance planning in the law and active, ongoing compliance. This is a closely watched sector, with the FDA, FTC, and various state agencies taking a close interest. And with all that interest, you can be sure that violations are not going to be looked upon kindly—and they could prove quite costly. If you need help with matters like those we’ve listed here, you might want to give the Cohen Healthcare Law Group a call. Contact our healthcare law and FDA attorneys for legal advice relevant to your healthcare venture.
May 15, 2025
Healthcare
Legal and Compliance Strategies for Health Coaching Businesses
The health coaching industry is expanding. At this time, it is essential for coaches and wellness entrepreneurs to be aware of the legal landscape. The industry is expanding so quickly that in some states, laws governing health coaching don’t even exist yet. Because the laws are lagging, there’s no clear path to follow, and you know what that leads to—confusion. And operating under a cloud of confusion puts your business at risk. It opens you up to the possibility of being sued and even having to declare bankruptcy. Without a clear direction, this is where a lot of wellness entrepreneurs seem to be headed. This guide covers several of the major compliance problems that health coaches, wellness startups, and coaching platforms seem to have a hard time grasping. Some of the most important ones are outlined here. They are important because ignoring them could lead to serious legal and financial trouble. They are also important because they affect a lot of people, and dumb compliance problems can make you look untrustworthy or lead to the kind of appearance that makes you seem untrustworthy. Do Health Coaches Need a License? Understanding State Laws In the majority of states, you don’t need a license to work as a health coach. But depending on the kind of services you offer, especially if they are of a certain kind, you could be violating state laws that require professionals to be licensed. For instance, if you are offering detailed nutrition plans (more than just broad dietary guidelines) or any kind of medical advice, you could be interpreted as practicing without a license. Several states—including Florida and North Carolina—confine the provision of dietary counsel to licensed dietitians. The same applies to services that resemble psychotherapy; offering those could trigger mental health licensing rules. If you’re giving advice that could be considered medical—like diagnosing or treating health conditions—you could confront claims of practicing medicine without a license. Avoiding the Corporate Practice of Medicine (CPOM) Health coaching businesses that necessitate a partnership with a licensed professional must be particularly careful regarding the corporate practice of medicine. Why? Because in many states, entities providing medical services must be owned by a physician. If your business model requires the presence of a licensed practitioner, a careful structure is critical—because the alternative could put you in the path of regulatory enforcement. To investigate the functionality of CPOM and the nature of business structures that are compliant, see this page. Typical legal structures include the formation of a Management Services Organization (MSO) that oversees administrative functions while the licensed provider has clinical control. Another structure is to operate as a strictly wellness or life-coaching service, avoiding all regulated health services. Some businesses contract with licensed providers instead of hiring them directly. Marketing Health Coaching Services: FTC Rules and Red Flags Also, federal laws govern health coaching. The Federal Trade Commission has rules about advertising, and health coaches must follow those rules. The FTC requires that all marketing be truthful and not misleading. This means you can’t promise clients guaranteed results or make unsubstantiated health claims. See the complete guidance on health-related advertising from the FTC. You can state, “This program promotes wellness through lifestyle strategies,” but you must avoid saying things like, “This program cures diabetes naturally.” When it comes to making health claims of any sort, you best have them lined with credible scientific evidence. Using disclaimers such as “Results vary” or “Not intended as medical advice” can also help you keep legal risk to a minimum. Be especially careful with testimonials; they should not exaggerate or imply that the program can bring about any more than what it is expected to do. HIPAA Compliance and Client Health Information You might be subject to HIPAA regulations if your business collects or stores any sort of client health information. If you’re a small business, especially, don’t make the assumption that just because you’re not a health insurance company or a hospital, you don’t count. You might. Verify your HIPAA standing. If your business is regulated by HIPAA, you must use secure communication tools, such as encrypted video conferencing platforms, to talk with clients about anything but the least sensitive health information. You should collect only the information you need to do business—make it a habit to always ask for the client’s informed consent first—and you should almost never store any sensitive health information. More comprehensive security counsel can be obtained from this page. Protecting Your Business Through Legal Best Practices To protect your business from legal risk, always make it clear what your role is with proper disclaimers. A typical one is: “This program provides general wellness advice and is not a replacement for your doctor’s orders or prescriptions.” It is also prudent to obtain professional liability insurance, which can assist you if disagreements with clients occur. And prior to launching your services, think about collaborating with a healthcare attorney to verify that your contracts and business model comply with applicable laws. Operating a health coaching business entails meeting various compliance mandates. This can be a bit of a balancing act at times because health coaches are not legally licensed as health professionals. Fortunately, the following section clarifies the main compliance challenges health coaches are likely to face, including the following: Licensing and Advertising Issues Data Privacy and Security Concerns Require assistance of a legal nature for the establishment or evaluation of your health coaching business? Contact the professionals at Cohen Healthcare Law Group. Contact our healthcare law and FDA attorneys for legal advice relevant to your healthcare venture.
May 8, 2025
Healthcare
Advertising Compliance for Medical Devices: FTC and FDA Requirements
The Food and Drug Administration (FDA) and the Federal Trade Commission (FTC) finely regulate the promotion compliance of medical devices—both in terms of the claims made and in the manner of their making. The upshot is that promotional claims about medical devices, including advertising, must be truthful and not misleading. To achieve this, the FDA and the FTC have established a series of very clear guidelines, and they have also set forth some basic, mostly “common sense” rules that any entity promoting a medical device would be wise to follow. This document is your essential guide to, and entryway into, the world of promotional compliance for medical devices. Understanding FDA Regulations for Medical Device Labeling and Promotional Claims: The Food and Drug Administration supervises the medical device promotional world, ensuring that claims made therein are truthful and based on solid evidence. They cover a lot of ground. The world of medical devices is not a small one, with hundreds of thousands of individual items that need to be carefully and clearly labeled. “Labeling” is a gigantic umbrella that covers any and all materials used to explain or promote the device. That means everything from brochures to website content to instructions. For a look at their comprehensive requirement list, hit up their webpage. Scientific evidence must back medical claims. If a device manufacturer claims that the device can diagnose or treat a condition, there must be clinical data to back this up. Promoting a device for unapproved or off-label use is prohibited and can lead to enforcement actions. For example, a developer encountered FDA fines for offering unsupported therapeutic representations about a wearable device. Once the firm fixed its labeling to drop these representations, it was able to get back on track and avoid further action. Find additional information about device labeling from the FDA at https://www.fda.gov/medical-devices/overview-device-regulation/device-labeling. Adhering to FTC Truth-in-Advertising Standards for Medical Devices: Ensuring the truth in advertising is the main mission of the FTC, especially when it comes to advertising for medical devices. The statements made in the promotional purview must be clear, and more importantly, they must be substantiated. This means that when a device is being promoted, the claims that are made cannot be misleading or exaggerated in any way. Furthermore, there can be no deceptive language, and absolutely no omissions that might lead the consumer to think something different than what’s actually true. Claims related to health necessitate a great deal of proof—usually clinical trials or large-scale scientific studies. When it comes to using a person to represent a product (i.e., endorsements), the FTC requires that what is said be an accurate representation of the typical user’s experience. Also, if a person is being used to represent a product, and that person is being paid, the audience must be told so. A medical device company learned this lesson the hard way not too long ago. Visit https://www.ftc.gov/business-guidance/resources/advertising-faqs-guide-small-business for additional details. Navigating Social Media and Digital Advertising Compliance: When it comes to using digital platforms and social media to promote medical devices, there are defined compliance risks to consider. The FDA and FTC both have a hand in the regulation of these devices, but the FTC claims primary authority over the type of promotional speech (and the speakers) used in these venues. Mandatory disclosures that go along with related claims should not be hard to find. They should be right there in plain view. To see what the FTC requires, rule-wise, you should look up their endorsement guides. The same standards of truth and substantiation that apply to traditional advertising should also apply to social media posts. When influencers and affiliates promote medical devices on social media, they must ensure that their endorsements are in line with Federal Trade Commission (FTC) guidelines. This was not always the case, as evidenced by a recent revision of fitness device company social media influencer partnerships. The company in question now mandates that its partners include a clear and unmistakable disclosure of the kind of relationship they have with the company (in this case, that they are paid to promote the company’s devices). Detailed FTC disclosure requirements can be found at https://www.ftc.gov/business-guidance/resources/ftcs-endorsement-guides. Conducting Regular Compliance Audits and Staff Training: Regular audits of marketing materials and thorough training of marketing personnel are critical to ensure compliance with the FDA and FTC. Promotions of all kinds must meet the standards set by these two agencies. Audits should encompass all promotional content, including digital media and printed materials—to guarantee compliance. Regular training in labeling rules, claim substantiation, and the standards of honesty in advertising should be received by the marketing teams. When audits find compliance issues, companies must take immediate and corrective actions. A medical device manufacturer has successfully implemented an advertising audit and progressed to a level of compliance in their external communication. They are a case study in being better safe than sorry when it comes to the truth in advertising. Guidance on this topic can be found on the Federal Trade Commission’s website. Common Legal Risks and Penalties for Non-Compliance: The FDA and FTC mandate how advertising should be done in the supplement industry, and they make it very clear which ways are not acceptable. They require actual science to back up what is said in an advertisement. They do this to ensure that consumers are not being misled. They also want to make sure that defendants in lawsuits do not have “but the supplement told me to take it” as a defense. Compliance with FDA and FTC regulations is crucial for medical device manufacturers to avoid penalties and enhance consumer trust. Companies can achieve compliant advertising by substantiating claims, ensuring clear digital disclosures, and regularly auditing advertising practices. For expert guidance, contact Cohen Healthcare Law Group’s healthcare and FDA legal specialists. Contact our healthcare law and FDA attorneys for legal advice relevant to your healthcare venture.
May 1, 2025
Healthcare
Nurse Practitioner Practice Authority
According to the American Medical Association (AMA), physician involvement of nurse practitioners is required for diagnosis and treatment. The AMA identifies the nurse practitioner practice authority for all 50 states and the District of Columbia. Cal. Bus. & Prof. Code §2835.7, according to the AMA, defines a nurse practitioner as an RN (registered nurse) “Who possesses additional preparation and skills in physical diagnosis, psychosocial assessment, and management of health-illness needs in primary health care, and who has been prepared in a program conforms to board standards as specified in Section 1484. (16 Code Cal. Rules 1480 (a)).” In addition to any other criteria, standardized procedures may be implemented that authorize an NP to do any of the following: (1) Order Durable Medical Equipment. (2) In collaboration with a physician and surgeon – and after the performance of a physical examination by the nurse practitioner – certify that a patient has a disability as defined by Section 2708 of the Unemployment Insurance Code. (3) “For individuals receiving home health services or personal care services, after consultation with the treating physician and surgeon; approve, sign, modify, or add to a plan of treatment or plan of care.” A “standardized procedure” is the legal mechanism for RNs and NPs to perform functions that would otherwise be considered the “practice of medicine.” To use standardized procedures, an organized healthcare system must collaboratively (by agreement) develop standardized procedures with the system’s nursing, medicine, and administration departments. Standardized procedure functions “are the diagnosing, prescribing, and severing or penetrating of tissue functions under the ‘MPA’.” The standardized agreement should clarify: When a nurse must obtain a second opinion What limitations on the standardized procedure apply What education the nurse must have to utilize the standardized procedure The settings where standardized procedures can be used How the standardized procedure will be evaluated California’s New Scope of Practice Law for Nurse Practitioners – Part Two California passed a new law, effective January 1, 2023, that permits nurse practitioners in specific settings to provide care (under certain conditions) that does not meet “standardized procedures.” What are collaborative agreements? A few of the key points that medical practitioners and practices should understand about “collaborative agreements” are the following: State requirements. Each state, such as California, determines the necessity and terms of nurse practitioner (NP) practice agreements (called collaborative agreements). Essentially, collaborative agreements “define the scope of medical care provided by NPs in collaboration with licensed physicians.” Medicare requirements. Medicare may also require collaborative agreements (even in states with “full practice” environments to obtain reimbursement. Hospitals may also mandate the use of collaborative agreements to control their liability and oversight requirements – especially where NPs can prescribe medications. According to The Intake, California (in part due to the COVID-19 pandemic) began to relax the “regulatory requirements on NPs, including temporarily waiving certain supervisory requirements.” As the country emerges from the pandemic, the opportunities for NPs to expand their medical care duties are still continuing due to an ongoing national physician shortage. In California, and most other states, collaborative agreements/practice agreements will continue to play a role in how NPs perform their duties. Additional California’s NP considerations California also has different NP categories with different restrictive practice obligations. According to the California Board of Registered Nursing, these two new nurse practitioner categories permit NPs to “function within a defined scope of practice without standardized procedures.” “103 NP – Works under the provisions outlined in Business and Profession Code Section 2837.103. This NP must work in a group setting with at least one physician and surgeon.” “104 NP – Works under the provisions outlined in Business and Professions Code Section 2837.104. This NP may work independently within the population focus of their National Certification.” California Assembly Bill (AB)-890 and Two New Nurse Practitioner Categories California AB-890 authorizes two categories of nurse practitioners who can practice without physician supervision if specific criteria are met. What doctors and NPs should know about collaborative agreements A collaborative agreement is a contract between the collaborating physicians and NPs to expand the medical services NPs can provide. Physicians and NPs should understand the different types of medical practices and their state’s collaborative agreement requirements for each type of practice. According to the American Association of Nurse Practitioners (AANP), NP medical care is regulated as follows: Full practice states. In these states (such as New York, New Mexico, Colorado, and Washington) all NPs can: “Evaluate patients; diagnose, order and interpret diagnostic tests; and initiate and manage treatments, including prescribing medications and controlled substances, under the exclusive licensure authority of the state board of nursing.” Restricted practice states. In these states (such as California, Michigan, Florida, and Texas), “State law requires a career-long regulated collaborative agreement with another health provider in order for the NP to provide patient care or state law limits the setting of one or more elements of NP practice.” Reduced practice states. In these states (such as Pennsylvania, Louisiana, Indiana, Ohio, and Illinois), the NP must have a regulated collaborative agreement with another health provider to provide patient care. “State law requires career-long supervision, delegation, or team management by another health provider in order for the NP to provide patient care.” Nurse Practitioner Telehealth Functional Medicine vs. Coaching (Laws & Legal) In today’s video, we are going to combine three different threads: a Nurse Practitioner wants to start a functional medicine practice, via telehealth, multi-state, and she wants to call it “coaching.” Practice agreements and Medicare requirements The Medicare Regulations state that: “Medicare Part B covers nurse practitioners’ services in all settings in both rural and urban areas, only if the services would be covered if furnished by a physician and the nurse practitioner … Performs them while working in collaboration with a physician. [Emphasis added]. Collaboration under Medicare is defined as ‘a process by which the nurse practitioner has a relationship with one or more physicians to deliver health care services’.” This means that even in full-practice states, an NP will need to execute a collaborative/practice agreement in order for the NP to receive reimbursement from Medicare. Hospitals, long-term care facilities, and other institutions may also require collaborative agreements for other reasons. Many states, like California, permit nurse practitioners to provide some patient care – provided that there is a collaborative agreement (also known as a practice agreement) between the NP and a medical practice or medical institution that sets forth the specific criteria for providing patient care. Physicians and nurse practitioners should contact Cohen Healthcare Law Group, PC to discuss their regulatory compliance requirements. Our experienced healthcare attorneys advise medical professionals about healthcare compliance laws and regulations. Contact our healthcare law and FDA attorneys for legal advice relevant to your healthcare venture.
April 5, 2025
Healthcare
Compliance in Value-Based Care: Legal Strategies for Healthcare Providers
Care that is reimbursed on a value basis is intended to do three things: improve the outcomes for patients, cut back on the costs associated with their healthcare, and link provider payment to the kind of care they give. High-quality care is what we should expect as a matter of course; low-cost, high-quality care is distinctively American and should be the unfailing goal of our system. But navigating the complex landscape of laws that govern our healthcare system without running off the road requires paying very close attention to a few guiding strategies. Those strategies can help keep you on the road, can keep your venture in good shape. Key Compliance Requirements for Value-Based Care Models When you are structuring care models that provide for their value, you absolutely must make sure you’re complying with both federal and state regulations. Otherwise, you’re courting disaster, as many of the recent healthcare enforcement actions show. Even the forthright federal prosecutors responsible for those actions would concede that knowing the law is half the battle. Healthcare stakeholders must adopt legal strategies that align with the multitude of federal and state regulations that apply to value-based care models. Structuring Value-Based Agreements to Meet Anti-Kickback Safe Harbors The Anti-Kickback Statute forbids any type of payment in return for patient referrals. Yet, recent updates to the regulations have carved out safe harbor protections for certain value-based care models. These safe harbors are meant for coordinated care arrangements involving shared financial risk and performance-based incentives. For compliance, payments to doctors in value-based agreements have to reflect fair market value. This ensures that the financial incentives in these contracts are based on actual performance—like how well your doctor manages your blood pressure—not on the number of patients referred to the hospital. The Office of the Inspector General (OIG) requires that you maintain documentation that details the arrangement’s structure, goals, and duration (in other words, “how it’s supposed to work” and “for how long”). Navigating Stark Law Exceptions for Value-Based Care Arrangements The Stark Law limits doctor’s self-referrals for designated health services (DHS). While this might seem like a bad thing for coordinated care, the truth is that the reforms that the Stark Law has undergone in recent years make it much more possible for healthcare providers to have the kinds of financial relationships that help them provide the better cohesive care that today’s healthcare models require. Most modern exceptions to the Stark Law are structured around full or partial risk arrangements, which are, for all intents and purposes, the healthcare insurance plans of the future. The following are necessary for these exceptions to apply and be deemed compliant: When performance-based, as opposed to referral volume-based, metrics determine the compensation; When all aspects of value-based agreements between DHS entities and potential referral sources are documented with clear articulation of the logic model that outlines how the mission of the agreement will be fulfilled; and When all aspects of the payment structure are adequately identified. A healthcare network did all of this and managed to document it in a way that made it comprehensible to auditors. Managing Patient Data Privacy Under HIPAA in Value-Based Care Models Value-based care necessitates that providers share data. Therefore, value-based care requires that those who practice it be HIPAA-compliant. Under HIPAA, as you may recall, providers must safeguard “protected health information” (PHI) even when they are sharing it for good and reasonable purposes—like for the shared treatment of a patient, say. See more information on HIPAA’s privacy rule. Electronic health records (EHRs) and data-sharing systems must be made to comply with HIPAA. Security standards established by HIPAA must be met. Those security standards require “covered entities” (like EHR vendors and healthcare organizations) to protect electronic health information (ePHI) in several ways: through encryption; through access controls; and by ensuring that information is transmitted securely. When shared data is managed by a third-party vendor, these compliance concerns are often handled by executing a Business Associate Agreement (BAA) with that vendor. Conducting Compliance Audits and Training for Value-Based Care Initiatives Value-based care models present legal risks that regular compliance audits and employee training can identify and reduce. Audits are necessary to establish that financial agreements comply with the Anti-Kickback Statute (AKS) and the Stark Law, which together prevent referral-based incentives that could undermine the integrity of the healthcare system. Regular audits serve as a principle check against the kinds of noncompliant arrangements that could exist if left unchecked. They help ensure that the organization is in good legal standing and allows value-based care to function as it should, without noncompliant arrangements acting as speed bumps in the way of necessary healthcare. Training programs for staff should center on policies governing the sharing of data under HIPAA, standards for fair market value, and the requirements set forth by the Anti-Kickback Statute (AKS) and Stark Law. If a healthcare facility finds that it is employing non-compliant practices in internal or external audits, those practices need to be stopped. Corrective actions must be taken. Agreements must be revised. Documents must be updated. Security protocols must be shored up. Common Legal Risks and Penalties for Non-Compliance in Value-Based Care Not adhering to the Anti-Kickback Statute, Stark Law, or HIPAA can lead to serious negative outcomes, such as being fined, getting kicked out of federal healthcare programs, and/or suffering damage to your reputation. Consequences of not complying with these laws can include: Financial penalties and exclusion from Medicare and Medicaid (for AKS violations). Legal actions, hefty fines, and demands for repayment of claims (for Stark Law violations). Penalties, along with tough scrutiny of your operations. Meeting federal regulations is a basic must for healthcare providers who wish to implement value-based care. The provider first must understand and set up their financial arrangements so that they are aligned with both the Anti-Kickback Statute (AKS) and the Stark Law. Then providers must safeguard the patient’s data and ensure regulatory compliance with HIPAA. To sort out all these essential elements and to gain regulatory peace of mind, many turn to the Cohen Healthcare Law Group. Contact our healthcare law and FDA attorneys for legal advice relevant to your healthcare venture.
March 22, 2025
Healthcare
Understanding the Stark Law: Compliance Essentials for Healthcare Practices
The Physician Self-Referral Law, more commonly known as the Stark Law, is very important in keeping our healthcare system as conflict-free as possible. It states that if you are a physician and you have a patient who is on Medicare, you cannot refer that patient to any entity for “designated health services” (DHS) if you have a financial interest in the entity to which you are referring. Prohibited Self-Referrals and Financial Relationships Doctors cannot refer patients covered by Medicare to places where they or their immediate family members have a financial interest. They sure can’t do it legally. And yet the Department of Justice (DOJ) and Department of Health and Human Services (HHS) continue to bring cases against doctors, alleging that they have done just this. Services to which doctors can’t refer under these conditions are called designated health services (DHS). They include inpatient and outpatient hospital care; imaging; lab tests; and services that involve physical therapy and durable medical equipment. The Stark Law covers financial relationships that include not just direct ownership but also compensation arrangements of various kinds, such as payment for services, office leasing, or other financial arrangements that tie together physicians and DHS providers. If a Stark Law violation is uncovered, the penalties can be steep, running as high as unfathomable fines and the kick to a medical practice that could easily put it out of business: being excluded from Medicare. And repayment of claims found to be in violation can also result in a hefty bill that might be called a fine but in effect is restitution to the taxpayer. A significant legal case involved a medical center that received penalties because its doctors were referring patients for imaging services to a business in which they had a financial interest. The center got into compliance by restructuring the financial relationship between the physicians and the imaging services business. Exceptions That Allow Compliant Financial Arrangements Stark Law has strict prohibitions, but it also has specific exceptions that allow certain financial relationships to exist under certain conditions. One crucial exception is the in-office ancillary services exception, which permits physicians to provide certain designated health services—like lab tests or imaging—within their practices if the services are supervised and billed properly. Another critical exception to consider is the Bona Fide Employment Exception. This exception allows physicians to receive compensation through employment agreements. To comply, however, the payments need to reflect fair market value, and they must not be linked to the volume of referrals that the physician might send to the residential care facility. For instance, one clinic effectively formed its in-office lab services under the In-Office Ancillary Services Exception to the Stark Law, which allows certain lab services to be performed in a physician’s office under specific conditions. This particular clinic set up its services in a way that allowed it to comply with the Stark Law and bill for those lab services without running afoul of the regulations. Proper Documentation for Stark Law Compliance Keeping meticulous records of all monetary dealings with doctors is crucial for ensuring that Stark Law is followed and that an audit could be passed without problems. Every financial arrangement—including leases, employment contracts, and service agreements—should be documented in writing. These arrangements must outline the services provided, specify payment terms, and ensure that compensation aligns with fair market value. When depending on a Stark Law exception, practices must maintain meticulous documentation that demonstrates compliance. This includes assessments of fair market value and a full accounting of all contract terms. Practices must not only keep these documents current; they should also review them regularly to ensure that they reflect any changes in compensation, services, or market conditions that are bound to occur over time. A healthcare organization steered clear of Stark Law penalties by keeping the most copious documentation on all its physician compensation arrangements. This allowed the organization not only to show, but also to demonstrate, that it followed fair market value requirements. Conducting Compliance Audits to Mitigate Risks Stark Law compliance risks can be identified and addressed through routine audits. Healthcare practices can avoid the expense of enforcement actions by reviewing their financial arrangements and ensuring that they comply with legal requirements. Non-compliant financial relationships can be found and corrected before they lead to penalties by conducting regular audits. These audits help find and fix problems in three concentration areas: ownership interests, compensation arrangements, and compliance with exceptions to Stark Law. A big part of risk management is ensuring that compliance policies are correct and up to date, and that staff members are properly trained. Programs should underscore the importance of not getting into conflicts of interest and knowing when the law allows certain actions that might otherwise appear unethical and would, if misunderstood, lead to a risk judgment. If the auditors find any problems, the first step is to take the obvious corrective action—fix the compliance problem. A hospital that engaged in consistent auditing of its physician pay arrangements was able to identify and fix compliance issues before they became significant problems, allowing the facility to avoid some hefty penalties and paybacks. Legal Risks and Potential Penalties for Non-Compliance Not following the Stark Law can lead to very serious financial and legal results, including being booted out of the Medicare program and facing some hefty fines. Here are some frequent violations and the associated risks: Self-Referral Is Prohibited: Physicians may not refer patients for designated health services (DHS) to entities in which they have a financial interest. If they do, and if they do it knowingly, they can get (1) a monetary penalty; (2) a several-times-the-amount-of-the-penalty civil fine; or (3) exclusion from the Medicare program. Meeting the Exception Criteria: If a financial arrangement satisfies fully the applicable Stark Law exception, then legal and financial penalties cannot be imposed. Insufficient Documentation: Poor record-keeping heightens the likelihood of audits and makes it difficult to demonstrate compliance. Unfair Market Value Arrangements: If financial relationships involve payments that are above or below fair market value, practices may be required to make certain repayments and could face additional fines. Ensuring Ongoing Compliance Healthcare practices that bill Medicare must comply with the Stark Law if they wish to avoid serious regulatory consequences. Eluding the Stark Law’s grasp typically demands a three-part strategy. First, attempts to stay within the law’s confines should lead to the structuring of financial arrangements in accordance with the Stark Law’s many exceptions. Second, the law’s compliance should be documented in detail, with the documentation designed clearly not to mislead. Third, the arrangement’s actual compliance should be audited routinely. If you want an expert on Stark Law compliance, you should reach out to the legal team at Cohen Healthcare Law Group. Contact our healthcare law and FDA attorneys for legal advice relevant to your healthcare venture.
March 15, 2025
Healthcare
Anti-Kickback Statute Compliance for Healthcare Providers and Facilities
The federal Anti-Kickback Statute (AKS) is a vital regulation that healthcare service providers and facilities must follow to maintain ethical financial relationships and steer clear of really bad legal outcomes. This statute makes it crystal clear that you can’t offer, pay, solicit, or receive anything of value in exchange for referrals that involve federal healthcare programs. You can imagine why folks in the healthcare business would be concerned about this law (and about violating it, of course). Understanding the Anti-Kickback Statute and Its Scope The AKS casts a wide net over all kinds of remuneration that might be given or received in exchange for healthcare referrals. They cover cash, gifts, and a whole range of other benefits that might serve as bait. The law obviously targets bad behavior—hospitals buying up doctors to ensure a steady supply of patients, for instance—but risk-averse healthcare providers might take the absence of specific legal safe harbors to mean that they ought to avoid almost any kind of profitable interaction with a referral source. Not complying with the rules can get you into a lot of trouble. If the law is broken, the violators can serve up to five years in jail, pay eye-popping fines, and be banned from all sorts of federal programs. But it’s crucial to understand what the rules do and don’t allow, and to get clear on the difference between the AKS and the Stark Law. The latter isn’t in our purview, but a case study associated with it makes the relevant point. A hospital offers a lot of services (of the “designated health service” variety), and it was in the hospital’s best interest if doctors referred to those services. The offer to make it happen, however, was borderline illegal. The case was risk-laden, and the hospital won the suit but lost money in the process. More details on AKS compliance are at the OIG’s website. Leveraging Safe Harbor Provisions for Compliance The AKS includes safe harbor provisions that protect particular financial arrangements from enforcement actions if they satisfy established criteria. These provisions pertain to typical business arrangements, such as leasing space for offices, service contracts, and managed care arrangements. To qualify for safe harbor protections, such arrangements must adhere to three basic requirements: 1) they have to be at fair market value, 2) they have to serve a legitimate business purpose, and 3) they have to be independent of any referrals for services or items that would be covered by Medicare or Medicaid. More details on safe harbor provisions are available at the OIG site. A compliant arrangement in a clinic that serves as a lease agreement can be seen as a “safe harbor.” This is when a healthcare provider is upheld as not violating the Anti-Kickback Statute. A lease agreement can also serve as a format that allows a provider to stay above board and not be seen as paying for patient referrals. A safe harbor way to carry out a lease agreement is for it to be carried out as a clinic serves an arrangement. A clinic’s lease can be seen as a way that keeps the clinic and the working arrangements of its healthcare providers in a non-violation mode. A clinic and its providers are seen as working in compliance with the Anti-Kickback Statute because a lease serves as a safe harbor. Structuring Employment and Compensation Agreements for Compliance Healthcare entities must guarantee that their employment and compensation arrangements are compliant with the standards set by the AKS. One of the main high-risk areas is payments that are linked to referrals. Compensations must reflect fair market value and be based strictly on actual services that were rendered, and not on the number of referrals given or the amount of generated revenue from federal healthcare programs. Suppliers should steer clear of compensation models that are productivity-based and that link payments directly to the number of referrals. Agreements should spell out the nature of services, the terms of the arrangement, and the payment to be made to illustrate a business purpose that is not “primarily to induce referrals.” A once-accused-compliance-under-the-AKS healthcare organization found itself in trouble because it used unscrupulously designed compensation contracts to pay “too much” to referring physicians—around 115% of “fair market value.” After a redesign in 2007, with help from the OIG, Ingenix, and other experts, the group achieved compliance with the AKS and now works “under the radar.” Conducting Compliance Audits and Employee Training It is crucial to conduct compliance audits and staff training regularly to avoid Anti-Kickback violations. These routine audits help to uncover financial arrangements that pose a high risk of not complying with the law. That risk is generally associated with these kinds of arrangements: incentive payments, or payments made to individuals with the intent to induce or reward referrals. People who conduct these high-risk financial arrangements must do so under the watchful eyes of regular compliance audits. The key to compliance is a well-trained workforce. Employees must understand the overall picture—why we have laws like the AKS and what could happen if we don’t comply. They also need to know the specifics—what counts as a violation and what doesn’t; what is a permissible financial arrangement, and what is a “risky” one that could get us into hot water with the OIG, the Department of Justice, or both. Audits are a big part of the federal enforcement picture these days. Understanding the Legal Risks and Penalties of Non-Compliance Failing to comply with the AKS can lead to serious outcomes like fines, exclusion from federal healthcare programs, and damage to one’s reputation. Some of the violations that happen most frequently are: Paying or receiving prohibited financial incentives to induce or reward referrals. Not observing the provisions that are supposed to create safe harbors Inadequately documenting financial arrangements with potential referral sources For instance, paying people to be your friends can result in fines, prison time, and being kicked out of federal health care programs. Not complying with safe harbor protections can also lead to increased regulatory scrutiny and harm to your reputation. And paying for referrals without a sufficient basis in fair market value can invite legal action and loss of those oh-so-important Medicare dollars. Similarly, having inadequate documentation can raise your audit risk, make proving compliance much harder, and push some poor soul in your organization toward the edge of the Sarbanes-Oxley compliance cliff. To gain more knowledge about AKS compliance, healthcare providers can look to: Office of Inspector General (OIG) Provider Compliance Training on the Anti-Kickback Statute (AKS) The Anti-Kickback Statute (AKS) is a key law for establishing and maintaining ethical financial relationships in the healthcare sector. It is a criminal law that prohibits payment of anything of value to induce or reward referrals for services reimbursed by federal healthcare programs. Healthcare providers can avoid the risks associated with the AKS by using the safe harbor provisions, structuring their financial relationships at fair market value, and conducting regular compliance audits. For authoritative advice on compliance with the Anti-Kickback Statute, healthcare providers can consult the legal experts at Cohen Healthcare Law Group. Contact our healthcare law and FDA attorneys for legal advice relevant to your healthcare venture.
March 8, 2025
Healthcare
What Is Emergency Use Authorization?
The Federal Drug Administration uses “Emergency Use Authorization (EUA)” to “help strengthen the nation’s public health protections against chemical, biological, radiological, and nuclear (CBRN) threats including infectious diseases.” The FDA uses medical countermeasures (MCMs) when public health emergencies require more aggressive procedures to protect the public from harm – such as during the COVID-19 pandemic. COVID-19 Vaccination Requirements and Laws The US Centers for Disease Control and Prevention has clinical care guidelines for the three vaccines that have been approved – the two mRNA vaccines and the Jansen vaccine. How does the EAU authority process work? According to the FDA, “A determination under section 319 of the Public Health Service Act that a public health emergency exists does not enable FDA to issue Emergency Use Authorizations. A separate determination and declaration are needed under section 564 of the Federal Food, Drug, and Cosmetic Act to enable FDA to issue Emergency Use Authorizations, provided other statutory criteria are met.” The FDA cannot issue an EUA under section 564 of the FD&C Act unless one of the four following determinations occurs “The Department of Defense (DoD) Secretary issues a determination of military emergency or significant potential for military emergency. The Department of Homeland Security (DHS) Secretary issues a determination of domestic emergency or significant potential for domestic emergency. The Department of Health and Human Services (HHS) Secretary issues a determination of a public health emergency or significant potential for a public health emergency. The DHS Secretary issues a material threat determination.” If the above criteria are met, the HHS Secretary can issue a declaration that circumstances exist to justify issuing the EUA. The FDA Commissioner or delegate can, in consultation with the HHS Assistant Secretary for Preparedness and Response (ASPR), the CDC, and the NIH, then issue the EUA, if other statutory conditions are met. What is the difference between emergency use authorization and full FDA approval? According to Yale Medicine, an emergency use authorization (EUA) is a useful tool during a public health emergency that the FDA can use to expedite the availability of drugs, vaccines, and other medical products. An EUA can only be granted during the time the public health emergency exists: “When no adequate, approved, available alternatives exist,” and “When the known and potential benefits outweigh the potential risks.” Generally, the FDA has the duty to ensure that the medical products FDA grants “full approval” to comply with “rigorous safety and efficacy standards.” Normally, this process can take years. There are still strict compliance standards for EAU approvals – but the timeline for approval is generally much shorter. Since the COVID-19 pandemic was officially recognized in 2020, the FDA has granted many different COVID-19 EUAs including: Two vaccines (Pfizer-BioNTech, for ages 16 and up, and Moderna, for 18 and up) One treatment (Gilead Science’s remdesivir). The history of EUAs The authority of the FDA to grant EUAs dates back to 2004 when EUAs were used for “threats of bioterrorist attacks, including anthrax.” Since 2004, other EUAs have been granted for: H1N1 (swine flu) Ebola Avian flu Middle Eastern Respiratory Syndrome (MERS) Other public health threats. The FDA has the authority to revise or revoke an EUA during a public health emergency as the FDA evaluates current needs and data. “For example, the FDA issued an EUA for hydroxychloroquine during the first phase of the COVID-19 pandemic. Later, when it became clear that the treatment posed a risk but did not offer significant benefit, the FDA retracted the EUA.” Key differences between an EUA and a full approval The two main differences between an FDA EUA and an FDA “full approval” are: An EUA (such as for a COVID-19 vaccine) requires that “at least half of the clinical trial participants be followed for at least two months after vaccination.” The time limit for a full FDA approval is at least six months. Full approval of a medical product “requires more data about the vaccine maker’s processes and facilities, including inspections of manufacturing plants.” How does the normal full FDA approval process work? The FDA full approval process differs depending on the type of product. Vaccines, drugs, and other treatments and therapies are evaluated differently than medical devices and other medical products. The full approval process For vaccines and therapeutics (drugs, treatments, and therapies) the companies seeking full approval file a “biologics license application” (a BLA). For a vaccine BLA, the applicant must comply with the following steps: Research and discovery stage. In this phase, scientists test their vaccines in laboratory settings – usually testing animals. Pre-clinical stage. Here, researchers conduct additional tests on animals to test how well the vaccine works and whether humans can safely benefit from the vaccine. Clinical development stage. Before testing humans, the companies seeking FDA approval compile the results of their prior test and the applicable manufacturing technology. Manufacturers submit this information to the FDA which determines whether to approve the clinical trials which consist of four phases. Phase I. In this phase, about 20-100 volunteers receive the trial vaccine. Phase II. If Phase I is successful, several hundred people will receive the vaccine- based on “varying health statuses and from different demographic groups.” Phase III. In this phase, thousands of people receive the vaccine. The company tests these people for efficacy (the percentage reduction of disease in people who received the trial vaccine versus those who received a placebo), safety, and immune response. Phase IV. This phase includes “monitoring trials.” Assessment of the manufacturing stage. During the clinical trials, FDA reviews the manufacturing process by visiting the company’s facility to ensure the process meets FDA regulations. Seeking approval stage. On completion of the clinical trials and acceptance of the manufacturing process, the company submits its BLA – with all the necessary documentation confirming the steps above. Full approval granted stage. “If the vaccine is approved (or licensed, as it is also known), the company can market it for use in the population for which it was approved.” FDA may seek input from its Vaccines and Related Biological Products Advisory Committee (VRBPAC)—a group of outside, independent experts from scientific and public health fields. After FDA’s full approval, the FDA continues to monitor the safety and production of the vaccine – which includes inspection of the facilities. FDA may also require the Phase IV trials listed above to monitor the vaccine’s effectiveness and to identify “uncommon adverse events and long-term complications.” The Vaccine Adverse Event Reporting System (VAERS) may also participate in reviewing any reports of possible health problems after vaccination. Stem Cell Therapies and Clinical Trials Developers and manufacturers of stem cell therapies need to understand how to conduct clinical trials in order to process FDA investigational new drug (IND) applications. Red Flags that Leads to FDA Warning Letters The FDA issues warning letters for numerous products including dietary supplements. FDA violations include findings that the supplement is a new drug, product adulteration, misbranding, and […] The EUA approval process? Many of the steps to obtain an EUA approval are similar to obtaining a full FDA approval. Applicants must conduct laboratory research and animal testing, and submit an application. The Phase I, II, and III clinical trial runs examine the same safety and efficacy issues. The FDA conducts an assessment of manufacturing practices. A few of the differences are the following: Safety boards. “An independent data safety monitoring board (DSMB) evaluates data from the Phase III trials and tells the manufacturer whether or not they have met criteria for a clinical endpoint (showing how well a vaccine prevents COVID-19, for example) that had been pre-established by the FDA.” The manufacturer makes the decision “whether and when to submit an EUA request.”Unlike a VRBPAC, the vaccine manufacturer establishes safety boards: “As part of a trial and have access to unblinded trial data that they review while the trial is ongoing to see if there are any safety or efficacy signals that warrant action being taken before the trial is scheduled to conclude.”For the EUA COVID vaccines, a DSMB determined that “the vaccines were highly effective and prompted submission to the FDA—where VRBPAC then met and reviewed the formal submission.” FDA review. When the manufacturer submits an EUA, scientists and physicians from the FDA’s Center for Biologics Evaluation and Research (CBER) evaluate the application. The formally oversees the review of vaccines for both the EUA and BLA applications. Public meeting. “The FDA convenes a public meeting of its VRBPAC to go over the data from the clinical trials.” Public meetings are generally used for both EUA and BLA applications. “Although the FDA is not required to consult their advisory committees, FDA typically do for major decisions, such as authorization of COVID-19 vaccines.” EUA decision. The next step is for the CBER to review the input from the public meeting and continue their evaluation. If the EUA criteria are met, the FDA can approve the EUA – approving the vaccine for emergency use. Continued monitoring. The FDA expects that manufacturers will monitor their vaccines for “safety, including deaths, hospitalizations, and other serious adverse events among those who receive the vaccine under an EUA.” The FDA also expects that the manufacturers of the EUA vaccines will continue their clinical trials and pursue full FDA approval of their vaccine. How long do full approval and EUA approvals of medical products take? According to Yale Medicine, the median clinical development period (meaning from a Phase I trial to approval) for 21 approved vaccines over the past 10 years was just over 8 years, including a median FDA review period of about a year. The COVID-19 vaccine from Pfizer-BioNTech (the first to receive an EUA), was under clinical development for six months before Pfizer submitted its EUA. The FDA granted the EUA less than one month later – and full approval eight months later. The Yale Medicine report is dated March 7, 2022, and does not reflect any updates. Additional FDA guidance For more information on the EUA approval process, please review the following: Public Readiness and Emergency Preparedness (PREP) Act Emergency Use Authorization of Medical Products and Related Authorities FDA questions and answer document, dated January 2014, about EUA authority What happens to EUAs when a public health emergency ends Pfizer-BioNTech COVID-19 Vaccine Emergency Use Authorizations for Drugs and Non-Vaccine Biological Products Emergency Use Authorization helps to ensure that America has the drugs, vaccines, and other medical products the country needs during chemical, biological, radiological, and nuclear threats. While there are similarities to the FDA full approval process, the timeline for approval is generally much shorter and there are key differences in the formal approval process. Healthcare providers should understand when EAU applies to the vaccines and other medical products they prescribe – and when full approval is necessary. Generally, when the emergency ends, the EAU ends unless the drug, vaccine, or medical product receives full approval. Pharmaceutical companies, healthcare providers, and pharmacies should contact Cohen Healthcare Law Group, PC to discuss the EAU approval process. Our experienced healthcare attorneys advise medical companies and practitioners about healthcare compliance laws and regulations. Contact our healthcare law and FDA attorneys for legal advice relevant to your healthcare venture.
March 5, 2025
Healthcare
Legal Guidelines for Functional Medicine Practices: Navigating Regulations and Compliance
As more individuals pursue personalized, holistic healthcare, the functional medicine field is gaining traction. Yet providing care in this evolving space can come with legal complexities. This is primarily because the laws that govern healthcare in the U.S. are made at both the federal and state levels. While federally set standards, such as those found in the Affordable Care Act, apply to all states, much of the functional medicine legal landscape is painted with the brush of state law. And here the picture can vary widely. Both the laws in different states and the informed consent decisions that different groups of practitioners make can—and do—lead to different legal outcomes. Understanding Scope of Practice Regulations Every state has individual laws that define what services healthcare providers can offer based on their credentials. These scope-of-practice laws tell us what kind of procedures and treatments professionals like naturopathic doctors, nurse practitioners, and physicians are allowed to perform. It’s essential to work within the legal confines of your license. Practicing outside your authorized scope—like a prescriptive authority, for example—can land you in serious trouble: fines, for one thing; and suspension or even revocation of your license, for another. Even if you’re trying to do the right thing by documenting your qualifications to practice in a “specialty” area, you could still end up with a black mark on your record—like a naturopathic doctor in limited-prescriptive-authority state recently did, when he was found to have prescribed a controlled substance—if you haven’t really got the legal “go ahead” to be doing what you’re doing. Managing Informed Consent in Functional Medicine The fundamental legal protection is informed consent, especially in functional medicine, where the treatments may involve therapies that are not traditional. Forms for consent should explain in detail the kinds of treatments that are being proposed. Consent forms should be clear and should help make the patient the primary decision-maker. To that end, AMA’s website nicely summarizes and gives several practical examples of the kinds of things that might be covered in “consent” in this functional medicine space. When treatments involve experimental or off-label therapies, it’s necessary to tell the patient about these particulars and to obtain consent. Furthermore, because consent is an “up-front” process, it shouldn’t be considered something that’s done once and then forgotten. Patients should be kept in the loop and made aware of any significant changes to their treatment plans. Experimental (and off-label) therapies taken together can amount to what could be seen legally as a large red flag, but if consent is obtained and the reasons (along with the risks) for going this route are well-documented, then the provider in this case has a much better chance of emerging legally unscathed. Licensing and Multistate Practice Considerations Numerous functional medicine practitioners provide telemedicine services or treat patients who reside in different states, making it crucial for them to comply with the myriad of state licensing requirements. Some states allow out-of-state telemedicine services, while others require the provider to be in possession of an in-state license before treating any patient remotely. For a detailed rundown of which states require what, check out “Telemedicine Licensure Policies by State,” located on the Federation of State Medical Boards website. The streamlined process of the Interstate Medical Licensure Compact (IMLC) allows physicians to practice in multiple states. Non-physician providers could have a more strenuous climb to set up a diverse interstate practice. Why? Because ensuring compliance isn’t just a best practice; it’s a necessity as demanding and obdurate as the interstate highway system itself. And the path to compliance—federal, state, and sector-specific guidelines for licensure and more—that’s where the real work lies. Pave that path successfully, and you can widen your patient base with almost as much accessibility as the telecommunication towers that make FDA-compliant telehealth possible. Compliance with Dietary Supplement and Off-Label Therapy Regulations Dietary supplements and off-label therapies are often recommended by functional medicine providers. Both of these categories of health products are regulated by the federal government and by most state governments. However, the regulatory path to the marketplace is very different for supplements and for off-label therapies. Supplements are deemed foods by the federal government. Off-label therapies are deemed drugs. Both are recommended and used by functional medicine providers. So, let’s take a look at the two and their respective regulatory guises in a little more detail. Practitioners should tell patients when they are recommending therapies that are not used in the way intended—off-label. Patients should know they are using therapies and supplements that are not the usual or typical treatments. The types of information practitioners should tell patients include the following: If a supplement has not been shown in studies to work for the condition the patient has. Whether the supplement has any shown safety concerns. If the clinician has used this supplement with other patients and what happened. Common Legal Risks and Consequences Failure to comply with state licensing, scope-of-practice laws, or informed consent standards can lead to disciplinary actions, fines, and complaints from patients. Among the most prevalent legal risks are: Violations of the Scope of Practice can result in fines, suspension of licenses, and other disciplinary measures. Insufficient Informed Consent: If patients are not adequately informed about their treatment choices, they may lodge complaints or take legal action against their healthcare providers. Licensing Problems: Not getting the right licenses can lead to losing licenses or being limited in accessing telemedicine. Violating FDA supplement regulations occurs when health claims about dietary supplements are made without verification. This problem can result in warning letters and harm to the company’s reputation. For functional medicine providers to sidestep potential legal trouble and provide top-notch care, they must comply with licensing, scope-of-practice regulations, and informed consent guidelines. These legal frameworks exist not to bind practitioners but to ensure that patients are cared for safely, effectively, and ethically. To be absolutely certain that your practice is operating in compliance and to understand the many nuanced aspects of this area, consult experts in the legal issues that pertain to your practice—like the healthcare and FDA attorneys at Cohen Healthcare Law Group. Contact our healthcare law and FDA attorneys for legal advice relevant to your healthcare venture.
March 1, 2025
Healthcare
Compliance Tips for Nutritional Supplement Companies: Navigating FDA and FTC Regulations
Nutritional supplements are becoming big business, but sellers of these products must follow the law if they wish to operate without interference. The Food and Drug Administration (FDA) and the Federal Trade Commission (FTC) regulate the marketing of nutritional supplements. The two agencies have a set of rules, laws, and guidelines that they expect those in the business of selling supplements to follow. This article is an overview of what those rules are and what happens if you don’t follow them. Key Compliance Requirements for Nutritional Supplement Companies The dietary supplement industry has unique regulatory issues because of the stringent FDA and FTC standards it must meet. This document outlines essential steps necessary for maintaining compliance in this complex, paper-based realm. 1. Adhering to FDA Labeling and Ingredient Disclosure Requirements All labels on dietary supplements must be accurate and complete, according to the FDA. This ensures that consumers know what is in a product and how it is supposed to function. Accurate Ingredient Labeling: The FDA requires that all ingredient lists on supplement labels be in descending order by weight. For clarity, each ingredient must be identified with its common name. Supplement Facts Panel: Every product that is a supplement must contain a Supplement Facts panel. This panel tells you the serving size for the product, the amount per serving, and the % Daily Value for each nutrient, if they have established a value. The panel’s presence is about more than just following rules; it’s about helping consumers make choices. Caution Statements: Some ingredients found in dietary supplements, such as iron, carry health risks and require that warnings be placed on the product label. Ensure that any necessary warning statements are visible and legible to the consumer. An FDA action was faced by a supplement company for an inaccurate label that failed to include certain ingredients. The company avoided problems in the future by updating its label to meet the FDA’s requirements. Key Action: Verify that all supplementary materials contain precise ingredient lists; a complete and informative Supplement Facts panel; and any and all precautionary statements that are required to keep consumers safe. 2. Making Compliant Health Claims in Supplement Advertising Prompted by public complaints, the FTC investigates potentially deceptive advertising. When the FTC seeks an injunction against an advertiser, it must prove that the advertising is misleading. The advertisers can then defend their claims. If the FTC wins, substantial penalties can follow. Differentiating Structure-Function Claims from Disease Claims: How a nutrient supports normal body functions is what the nutrient claim is all about. For example, many of the dietary supplements on the market today make claims like “supports healthy immune function.” These days, you won’t find many dietary supplements on the market making the good old-fashioned “cure”-related claims of the past. And that’s just as well, since most “cure” claims that were made in the past, such as the “cure” for “rheumatism,” in the 1960s, or the “cure” for “bad nerves,” in the 1950s, were not supported by solid scientific evidence. Substantiating Claims with Scientific Evidence: Reliable scientific evidence must support all health claims, and in most instances, this means clinical studies. The FTC does not look kindly on health claims that are propped up by anecdotal evidence or that consist of no evidence at all. Avoiding Misleading Testimonials: Consumer experiences must be used as the basis for writing testimonials. Those written on the basis of experiences of atypical results must carry a disclaimer to clarify that results can and do vary from person to person. Indeed, the use of the word “guaranteed” in any testimonial is a definite no-no. Case Study: A nutritional supplement firm was warned by the FTC for using testimonials that suggested unreal results. The company sidestepped any further trouble by rewriting the testimonials to reflect “typical” experiences. For more on the FTC’s guidelines concerning health claims, visit. Key Action: Only use health claims that are substantiated by science and make sure that any testimonials you use meet the guidelines set by the Federal Trade Commission. 3. Ensuring Ingredient Safety and Compliance with FDA’s cGMP Standards Manufacturers of nutritional supplements must comply with the FDA’s Current Good Manufacturing Practice (cGMP) standards to ensure that the products they make are safe and of high quality. cGMP Requirements for Supplement Manufacturing: The cGMP quality standards cover all aspects of the life of a dietary supplement from the very beginning—when the ingredients are being sourced—to the very end—when the supplement is ready for people to take. At each stage from sourcing to production, there is quality control. And with cGMPs, nothing is taken for granted. Manufacturers are required to document and to verify that what is supposed to happen at each step does indeed happen. If you want to know more about cGMPs, a good place to start is the FDA’s own explanation at the link given. Testing for Ingredient Purity and Potency: Regular testing of raw materials and finished products is a must for manufacturers to verify ingredient purity and potency. Testing is necessary to make sure that what goes into products and the products themselves are free from any and all harmful contaminants. Testing is also necessary to verify that manufacturers are making only the label claims that they are allowed to make. Quality Assurance and Record-Keeping: Keeping cGMP compliance is all about documentation. Maintain detailed records of every batch—production dates, ingredient sources, quality tests—that support traceability from finished product back to individual raw materials. A dietary supplement manufacturer was penalized for not conforming to the FDA’s current good manufacturing practices (cGMPs), which led to the recall of its products. The company bore the brunt of this cGMP penalty, and we presume it did what most of us would do when recovering from a penalty: It built a quality assurance (QA) system. Regardless of the state of its QA system before the penalty, the company today complies with the cGMPs and is now presumably maintaining a state of control in its quality department. Key Action: Adhere to cGMP standards for all manufacturing processes. This includes testing of all ingredients and ensuring quality control throughout the entire system. 4. Complying with FDA and FTC Requirements for Supplement Marketing The marketing of supplements is regulated by both the FDA and the FTC. Their shared concerns? Truthful representation. Transparent labeling. Accurate information for consumers. Avoiding Disease Claims in Marketing: Unless they are FDA-approved as drugs, supplements cannot make disease claims. You should be making structure-function claims that tell the audience what the supplement is doing in normal, healthy people—that is, in the kind of people who would be taking your supplements. If you want to know what the FDA thinks a supplement can claim, go to the website of the FDA. Using Qualified Health Claims Carefully: Health claims that are qualified need a disclaimer that describes the level of scientific support for the claim. Be careful with these, as they require evaluation by the FDA (and sometimes the FTC) and can be complex to implement correctly. Disclosing Material Connections: The FTC mandates that companies reveal any significant connections—like payments or complimentary products—when they utilize endorsements or testimonials in their marketing. Clear and upfront disclosure preserves the vital element of consumer trust. A warning from the FTC was issued to a supplement company for making health claims on its website that were not approved. The company still operates and now complies with the FTC’s guidance on making health claims. According to the FTC, when making health-related claims, the standard for the supplements is that they not only have to work but also be safe. If the company makes a structure claim, the way it works should be in line with what science has shown. If the company makes a health claim, the supplement should not have serious side effects or any effects that outweigh the benefits. Key Action: Do not make disease claims, use health claims that are not misleading and that qualify your statements, and disclose any material connections you have in endorsements. Common Legal Risks and Penalties for Supplement Non-Compliance Failing to comply with FDA and FTC standards can result in penalties, product recalls, and damage to one’s reputation. For more information on FDA and FTC compliance for nutritional supplements, see: FDA Dietary Supplement Labeling Guide FDA cGMP Requirements FTC Health Claims Guidance Compliance with FDA and FTC regulations is necessary for brands in the nutritional supplement sector to safeguard their identity and prevent regulatory scrutiny. Adhering to the standards set for labeling and advertising, as well as following the good manufacturing practices laid out by the FDA, allows supplement companies to compete with confidence and without legal threat in a largely unregulated marketplace. For counsel on navigating this largely unregulated space, contact the supplement industry lawyers at Cohen Healthcare Law Group. Contact our healthcare law and FDA attorneys for legal advice relevant to your healthcare venture.
February 15, 2025
Healthcare
Marketing Cosmetics Safely: FDA Compliance Tips for Cosmetic Companies
The cosmetics industry is highly competitive, with new products constantly entering the market. However, cosmetics companies must comply with FDA regulations to avoid enforcement actions related to misbranding, unsafe ingredients, and misleading claims. This guide covers essential FDA compliance tips to help cosmetic companies market their products safely and legally. Key FDA Compliance Requirements for Cosmetic Companies FDA compliance in cosmetics focuses on proper labeling, avoiding drug claims, and ensuring ingredient safety. Below are essential steps for staying compliant and protecting your brand. 1. Proper Labeling for Cosmetic Products Accurate labeling is a critical compliance area for cosmetics companies. Improper labeling can result in products being classified as “misbranded,” leading to enforcement actions from the FDA. Statement of Identity: Every cosmetic product label must include a statement of identity that clearly describes the nature of the product. This helps consumers understand what they are purchasing. See FDA’s full labeling guidelines. Ingredient List: Cosmetics labels must list all ingredients in descending order of predominance. Ingredients must be listed by their common names to ensure transparency for consumers and avoid misbranding. Warning Labels: Certain cosmetic products, like those containing alpha hydroxy acids (AHAs), may require warning labels about potential risks. Label warnings help educate consumers on safe use. Case Study: A cosmetics company received a warning letter for failing to include an ingredient list on its product packaging. By updating labels to meet FDA guidelines, the company avoided further enforcement actions. See a guide on cosmetics labeling. Key Action: Ensure all cosmetic product labels include a statement of identity, complete ingredient list, and warnings where necessary. 2. Avoiding Drug Claims in Cosmetic Marketing The FDA defines cosmetics as products intended to beautify or cleanse, whereas drugs are products intended to treat or prevent disease. Making drug claims in cosmetic marketing can result in the product being classified as a drug, subject to additional regulations. Understanding Drug vs. Cosmetic Claims: Claims that a product “reduces wrinkles” or “heals acne” are considered drug claims, as they imply treatment or prevention of a condition. For example, saying a product “promotes healthy skin” is generally acceptable, while “treats eczema” is not. For guidance on cosmetic claims, visit this page. Using Structure-Function Claims: Structure-function claims describe how a product supports the structure or function of the body without implying treatment. For instance, “moisturizes skin” is a structure-function claim that does not cross into drug territory. Reviewing Marketing Language: Regularly review product descriptions, advertisements, and social media posts to ensure that claims do not imply drug functions. This minimizes the risk of FDA enforcement. Example: A skincare brand avoided FDA scrutiny by carefully reviewing marketing language to eliminate drug claims, instead focusing on benefits like “promotes radiant skin.” See more cosmetic claims. Key Action: Avoid drug claims in cosmetic marketing, and focus on structure-function claims to stay within FDA regulations. 3. Ensuring Ingredient Safety and FDA Compliance Cosmetic companies are responsible for ensuring the safety of their products and ingredients. The FDA does not pre-approve cosmetics, so companies must verify ingredient safety before marketing. FDA’s Voluntary Cosmetic Registration Program (VCRP): Although not mandatory, companies can participate in the VCRP to provide the FDA with information on products and ingredients used. The VCRP helps companies demonstrate commitment to safety. Prohibited and Restricted Ingredients: The FDA restricts certain ingredients, like mercury compounds, in cosmetic products due to safety concerns. Review the FDA’s list of prohibited and restricted ingredients to ensure compliance. Safety Testing and Documentation: Conduct safety testing on new products, particularly if they contain novel ingredients. Document all safety assessments and testing results to demonstrate compliance in case of FDA inquiries. Case Study: A cosmetics company conducted safety testing on a new product containing botanical extracts, documenting results to ensure compliance. See the list of prohibited ingredients. Key Action: Verify that all ingredients comply with FDA restrictions and consider participating in the VCRP to support product safety. 4. Compliant Advertising and Social Media Claims Marketing for cosmetics must comply with both FDA and FTC standards to avoid misleading claims and consumer complaints. Be cautious with claims on websites, social media, and other promotional materials. FTC Requirements for Truthful Advertising: The FTC requires that all advertisements be truthful, non-deceptive, and substantiated. Avoid exaggerated claims and ensure that all product benefits are backed by evidence. Social Media Disclosures: Influencers and endorsers must disclose any material connections to the brand, such as sponsorship or free products. Failure to disclose can result in FTC action. Use of Before-and-After Photos: Ensure that any before-and-after photos accurately represent typical results. Misleading or altered photos can attract both FDA and FTC scrutiny. Example: A cosmetics brand used social media influencers to promote a new product, ensuring that all posts included clear sponsorship disclosures. See FTC guidelines on advertising. Key Action: Ensure all advertising and social media claims are truthful, supported by evidence, and meet FTC requirements. Common Legal Risks and Penalties for Cosmetic Non-Compliance Non-compliance with FDA or FTC standards can lead to significant penalties, product recalls, and reputational damage. Here’s a breakdown of common risks and potential consequences: Example Penalty Breakdown for Cosmetic Non-Compliance Violation Type Potential Consequences Misbranding (Improper Labeling) Warning letters, product recalls Drug Claims in Marketing Reclassification as a drug, FDA enforcement Unsafe Ingredients Product bans, recalls, liability risks Misleading Advertising FTC fines, mandatory corrective advertising For additional information on FDA and FTC compliance in cosmetics, see these resources: FDA Cosmetics Labeling Guide FDA Cosmetic Claims Guidelines Voluntary Cosmetic Registration Program (VCRP) FDA List of Prohibited Ingredients FTC Advertising FAQs Guide FDA and FTC compliance are essential for cosmetic companies to avoid enforcement risks and protect brand reputation. By meeting labeling, marketing, and ingredient safety requirements, your cosmetic business can thrive in a competitive market. Contact the healthcare and FDA lawyers at Cohen Healthcare Law Group for expert legal guidance on marketing cosmetics safely and legally. Contact our healthcare law and FDA attorneys for legal advice relevant to your healthcare venture.
February 1, 2025
Healthcare
Coaching and Counseling Across State Lines: Legal Compliance for Multistate Wellness Businesses
As coaching and wellness counseling become more popular, many wellness professionals are offering their services across state lines, often through telehealth or virtual sessions. However, providing services across state borders introduces complex legal and regulatory considerations, including licensing, scope of practice, and patient privacy laws. This guide provides essential legal tips for compliance in multistate coaching and counseling services. Key Compliance Considerations for Multistate Coaching and Counseling When offering coaching and counseling services in multiple states, it is crucial to understand state-specific regulations, particularly licensing and scope of practice limitations. Below are important compliance steps for managing a multistate wellness practice. 1. Determining Licensing Requirements for Cross-State Coaching and Counseling Licensing laws vary significantly by state and often depend on the type of service provided. Licensed counseling or therapy requires a state-specific license, while coaching is generally less regulated but still subject to state laws. Licensing for Mental Health Professionals: Mental health counselors, therapists, and psychologists typically must be licensed in the state where the client resides. Exemptions for Coaching: Coaching services that focus on personal development rather than mental health may not require a license in most states. However, some states may regulate certain coaching activities if they overlap with licensed therapy practices. Interstate Licensure Compacts: Certain professions, like counseling and psychology, are exploring licensure compacts that facilitate cross-state practice. The Psychology Interjurisdictional Compact (PSYPACT) allows psychologists to provide telepsychology services across participating states. Example: A psychologist used PSYPACT to offer telepsychology services in multiple states, ensuring compliance without obtaining individual state licenses. See more on PSYPACT. Key Action: Review licensing requirements in each state where clients are located, and consider compacts like PSYPACT for expanded practice options. 2. Staying Within Scope of Practice for Coaching vs. Counseling Coaching and counseling have distinct scopes of practice, and staying within these boundaries is essential to avoid legal risks. Counseling or therapy involves mental health treatment, while coaching generally focuses on goal-setting and personal growth. Defining Scope of Practice: Coaching services must avoid diagnostic or therapeutic language associated with mental health treatment to avoid violating licensing laws. For example, using terms like “depression” or “anxiety” may cross into therapy. Avoiding Dual Roles: If a licensed counselor also offers coaching, they should clearly separate the two services to avoid confusion or licensing issues. Mixing coaching with licensed therapy can blur the lines and lead to regulatory concerns. Documenting Service Types: Maintain separate documentation and contracts for coaching and counseling services. Use disclaimers in coaching agreements to clarify that coaching does not substitute for therapy or mental health care. Case Study: A licensed counselor who also offered life coaching created separate service agreements for each to clarify roles and maintain compliance. Key Action: Define the scope of your coaching services carefully and avoid crossing into counseling or therapy without appropriate licensure. 3. Protecting Client Privacy and HIPAA Compliance Client privacy is essential in coaching and counseling, especially when using virtual platforms. While HIPAA applies to mental health counseling, it may not apply to coaching, depending on the service type. HIPAA for Licensed Counseling: Licensed mental health professionals must comply with HIPAA when handling Protected Health Information (PHI). Use HIPAA-compliant telehealth platforms to protect client data. Client Consent for Virtual Coaching: While coaching may not require HIPAA compliance, it’s still important to secure client consent for using virtual platforms. Include privacy disclaimers in your coaching agreements, especially if sensitive information is discussed. Data Security for Coaching Platforms: Even if not HIPAA-regulated, consider using secure platforms with encryption to protect client data. This helps build trust and ensures data security across all client interactions. Case Study: A wellness coach offering virtual sessions used a HIPAA-compliant platform, building client trust and ensuring secure communication. See HIPAA privacy resource. Key Action: Use HIPAA-compliant platforms for counseling and secure virtual tools for coaching to protect client privacy. 4. Compliant Advertising and Marketing for Coaching and Counseling Services Marketing coaching and counseling services across state lines requires adherence to advertising standards set by the FTC and state laws. Ensure that all claims are accurate and supported by evidence. Avoiding Misleading Claims: Avoid claims that suggest coaching or counseling services can “cure” or “treat” mental health conditions. Use general language that highlights personal growth and self-improvement rather than therapeutic outcomes. See FTC advertising guidelines. Using Testimonials Responsibly: The FTC requires that testimonials represent typical client experiences. Avoid exaggerated claims in testimonials, and disclose any material connections with endorsers or affiliates. Clear Service Descriptions: Describe coaching and counseling services clearly on your website and marketing materials. Avoid using terms that imply mental health treatment unless licensed to provide it. Example: A life coach received an FTC warning for advertising services as a “cure for anxiety.” By revising marketing language to focus on “personal growth,” the coach complied with advertising standards. See FTC’s guidance on advertising claims. Key Action: Avoid making therapeutic claims in coaching marketing materials, and ensure that all testimonials and descriptions are truthful. Common Legal Risks and Penalties for Multistate Coaching and Counseling Non-Compliance Non-compliance in multistate coaching and counseling can lead to regulatory penalties, licensing issues, and client trust issues. Here’s a breakdown of common risks and potential consequences: Example Penalty Breakdown for Multistate Coaching and Counseling Non-Compliance Violation Type Potential Consequences Licensing Violations Fines, cease-and-desist orders, disciplinary action Scope of Practice Violations Regulatory scrutiny, licensing penalties HIPAA and Privacy Violations OCR fines, reputational damage Misleading Marketing Claims FTC fines, required advertising corrections From Cohen Healthcare Law Group: For additional resources on compliance in coaching and counseling, explore these links: ASPPB State Licensing Information Psychology Interjurisdictional Compact (PSYPACT) HIPAA Privacy Rule Overview NBCC Code of Ethics FTC Advertising Guide Operating a coaching or counseling practice across state lines involves navigating complex regulations to ensure compliance. By meeting licensing, scope of practice, privacy, and advertising standards, your wellness business can grow while avoiding legal pitfalls. Contact the healthcare and FDA lawyers at Cohen Healthcare Law Group for strategic guidance on managing multistate compliance in coaching and counseling. Contact our healthcare law and FDA attorneys for legal advice relevant to your healthcare venture.
January 22, 2025
Healthcare
Functional and Integrative Medicine: Compliance Essentials for Your Practice
Functional and integrative medicine practices offer holistic care and personalized treatment plans, focusing on patient-centered approaches. However, compliance is crucial, particularly because these practices operate at the intersection of traditional and alternative medicine. From licensing to scope of practice, this guide explores compliance essentials that integrative and functional medicine practitioners need to know to avoid regulatory risks and operate legally. Key Compliance Considerations for Functional and Integrative Medicine Practices Functional and integrative medicine practices face unique regulatory requirements, including licensing, patient privacy, and advertising standards. Below are essential compliance steps to help these practices operate within legal boundaries. 1. Ensuring Proper Licensing for Functional and Integrative Medicine Providers Licensing for functional and integrative medicine providers varies by state and may require additional or specific credentials, depending on the types of treatments offered. State Licensing Requirements: Each state has unique licensing requirements that vary based on the practitioner’s background, whether they are MDs, DOs, NDs, or other healthcare professionals. See the list of state-specific licensing boards. Additional Certifications for Alternative Therapies: Practitioners offering alternative therapies, such as acupuncture or naturopathy, may need additional certifications. Some states require separate licenses for non-traditional treatments. Research your state’s licensing requirements carefully. Interstate Practice Considerations: Functional and integrative medicine practitioners looking to provide telemedicine or cross-border care should verify licensing requirements for each state they plan to serve. Certain states may require practitioners to hold an in-state license for telemedicine services. For more on telemedicine licensing, see the IMLC website. Example: A naturopathic doctor offering telehealth services across multiple states verified licensing requirements through the Interstate Medical Licensure Compact to ensure compliance. For more information on the compact, see the IMLC website. Key Action: Verify licensing requirements for each state in which you practice and obtain any additional certifications required for alternative therapies. 2. Adhering to Scope of Practice Laws Scope of practice laws dictate what treatments and services a healthcare provider can offer based on their professional license. Integrative and functional medicine practitioners must comply with these laws to avoid penalties. State-Specific Scope of Practice: Each state defines what medical professionals can and cannot do based on their license type. Functional and integrative medicine practitioners should understand the boundaries of their scope to avoid disciplinary actions. See the scope of practice guidelines. Limits on Prescription Authority: In many states, non-MD/DO practitioners, such as naturopaths, may have limited or no prescription authority. Practitioners must comply with state-specific rules on prescribing medications or recommending supplements. Delegation and Supervision: Some states allow healthcare providers to delegate certain tasks to support staff under supervision, while others restrict these activities. Ensure that delegated tasks fall within legal boundaries, especially when involving alternative treatments. Case Study: An integrative medicine practitioner exceeded their scope of practice by administering IV therapy without proper credentials, resulting in fines. After aligning their services with scope of practice regulations, the practitioner operated compliantly. See more on scope of practice. Key Action: Review your state’s scope of practice laws to ensure that each service offered aligns with your professional license. 3. Protecting Patient Privacy Under HIPAA and State Laws HIPAA and state privacy laws protect patient health information and apply to all healthcare practices, including integrative and functional medicine. Complying with these laws is essential to avoid penalties and maintain patient trust. HIPAA Compliance for Patient Data: HIPAA requires all healthcare providers to secure Protected Health Information (PHI) through administrative, physical, and technical safeguards. For HIPAA guidelines. Patient Consent for Alternative Treatments: Many states require informed consent for alternative treatments, where patients must understand the risks and benefits of non-traditional therapies. Consent forms should be stored securely. Telemedicine Privacy Compliance: Integrative and functional medicine practitioners offering telemedicine services must ensure their technology meets HIPAA standards for data protection, including encryption and secure login measures. Case Study: An integrative medicine provider offering telemedicine consultations implemented a HIPAA-compliant video platform and informed consent forms for alternative treatments, avoiding privacy-related fines. See HIPAA compliance resources. Key Action: Use HIPAA-compliant platforms and implement informed consent protocols to protect patient privacy and comply with legal requirements. 4. Advertising and Marketing Compliance for Functional Medicine Practices The FDA and FTC enforce rules on advertising and marketing for healthcare practices, including functional and integrative medicine. All claims must be truthful and substantiated to avoid regulatory action. Avoiding Misleading Health Claims: Functional medicine practices should avoid making claims that imply treatment or cure for diseases, as these can attract FDA scrutiny. Instead, focus on general wellness benefits and be transparent about services offered. See FDA’s guidance on advertising. Using Structure-Function Claims: Structure-function claims describe how a supplement or therapy supports body function without implying treatment. For example, “supports immune health” is permissible, while “prevents colds” is not. Complying with FTC Guidelines: The FTC requires that all health-related claims be substantiated by scientific evidence. Practices should ensure that any testimonials or endorsements accurately reflect typical patient outcomes. Example: A functional medicine clinic received an FTC warning for advertising a supplement as a “cure for chronic fatigue.” By revising their language to focus on general health benefits, the clinic met compliance standards. F Key Action: Avoid disease claims and ensure all marketing materials are truthful, supported by scientific evidence, and compliant with FDA and FTC regulations. Common Legal Risks and Penalties for Functional and Integrative Medicine Non-Compliance Functional and integrative medicine practices that fail to comply with regulations risk fines, disciplinary actions, and reputational damage. Here’s a breakdown of common risks and potential consequences: Example Penalty Breakdown for Non-Compliance in Functional and Integrative Medicine Violation Type Potential Consequences Licensing and Scope of Practice Violations Fines, license suspension, disciplinary actions HIPAA and Privacy Violations OCR penalties, patient trust issues Misleading Advertising Claims FTC fines, required advertising corrections Non-Compliant Telemedicine Practices Regulatory fines, increased scrutiny For more guidance on compliance for functional and integrative medicine, explore these resources: FSMB State Licensure Information Interstate Medical Licensure Compact (IMLC) HIPAA Privacy Rule Overview FDA Health Fraud and Scam Information FTC Advertising Health Claims Guide Functional and integrative medicine practitioners must navigate complex regulations to deliver holistic care legally. By complying with licensing, scope of practice, HIPAA, and advertising guidelines, your practice can operate safely and effectively. Contact the healthcare and FDA lawyers at Cohen Healthcare Law Group for expert legal guidance on compliance in functional and integrative medicine. Contact our healthcare law and FDA attorneys for legal advice relevant to your healthcare venture.
January 15, 2025
Healthcare
The Complete Guide to Healthcare Provider and Facility Licensing and Accreditation
Healthcare providers and facilities are subject to a wide array of licensing and accreditation requirements that vary by state and specialty. Licensing ensures that providers and facilities meet minimum standards for safety and quality, while accreditation often represents a higher level of excellence. Understanding these requirements is essential to avoid costly penalties and ensure high-quality patient care. This guide provides a comprehensive overview of licensing and accreditation essentials for healthcare providers and facilities. Key Licensing and Accreditation Requirements Licensing and accreditation requirements cover different aspects of healthcare practice. Licensing is mandatory, whereas accreditation is often voluntary but can enhance credibility. Here are the primary areas to consider for healthcare providers and facilities. 1. Licensing Healthcare Providers: Ensuring Compliance with State Regulations Healthcare providers, including physicians, nurses, and therapists, must be licensed to practice in each state where they operate. Licensing boards ensure that professionals meet the standards necessary for patient safety and quality care. State Licensing Boards: Each state has specific licensing boards responsible for credentialing healthcare providers, including medical, nursing, and allied health boards. Continuing Education and Renewals: Most states require providers to complete continuing education credits to maintain their licenses. Renewal periods and continuing education requirements vary by profession and state. Interstate Licensing Compacts: Certain professions, like medicine and nursing, participate in interstate compacts allowing providers to practice in multiple states. For more information on the Nurse Licensure Compact, visit this site. Example: A nurse practitioner used the Nurse Licensure Compact (NLC) to practice in several states without needing separate licenses, streamlining her ability to provide telehealth services across state lines. Key Action: Verify state licensing requirements for your healthcare profession, and ensure licenses are current and compliant with state regulations. 2. Facility Licensing for Healthcare Operations Healthcare facilities, including hospitals, clinics, and laboratories, must be licensed to operate legally. Facility licensing requirements vary by state and facility type and are essential for ensuring patient safety and quality care. State Health Departments: Most state health departments regulate healthcare facility licensing, covering safety standards, staff qualifications, and infection control. For facility licensing standards, visit this page. Certificate of Need (CON) Requirements: Some states require a Certificate of Need (CON) for establishing new healthcare facilities or expanding existing ones. This aims to prevent oversupply of healthcare services in certain areas. For more on CON regulations, visit this page. Specialty Facility Licenses: Certain healthcare facilities, such as ambulatory surgery centers or long-term care facilities, may require specialty licenses based on the services provided. Case Study: A new hospital in a state with a Certificate of Need law faced delays due to the CON process. By meeting state requirements, the hospital gained the necessary approval to open its facility. Key Action: Ensure your facility meets state licensing standards and check for any CON requirements if expanding or establishing a new facility. 3. Accreditation for Healthcare Providers and Facilities: Voluntary but Valuable Accreditation by recognized bodies, such as The Joint Commission or CARF, is often voluntary but adds value by demonstrating high standards in healthcare quality and patient safety. The Joint Commission: This organization accredits a wide range of healthcare facilities, including hospitals and surgery centers, based on rigorous quality and safety standards. Accredited facilities often meet or exceed licensing requirements. CARF International: CARF accredits rehabilitation and behavioral health facilities, focusing on patient-centered care and evidence-based practices. CARF accreditation enhances reputation and operational effectiveness. Benefits of Accreditation: Accreditation can improve patient trust, streamline processes, and in some cases, enable reimbursement from insurers. It provides an objective review of quality and operational standards that go beyond state licensing requirements. Example: A behavioral health facility achieved CARF accreditation, which boosted patient trust and facilitated reimbursement from insurers. Key Action: Consider voluntary accreditation to enhance facility credibility, improve quality standards, and potentially secure higher reimbursement rates. 4. Differences Between Licensing and Accreditation Licensing and accreditation serve different but complementary roles in healthcare. Licensing is a legal requirement for operating, while accreditation is often pursued to demonstrate excellence beyond the minimum standards. Mandatory Nature of Licensing: Licensing is legally required and focuses on meeting baseline standards for safety, professionalism, and quality. Failure to maintain licensing can result in fines, closures, or revocation of permission to operate. For more on licensing requirements, see this page. Accreditation as a Voluntary Quality Indicator: Accreditation is not mandatory, but it signals a commitment to high-quality care and often aligns with industry best practices. Accredited facilities are reviewed regularly to ensure they meet rigorous standards. Reimbursement and Patient Trust: While licensing is essential for basic operation, accreditation can help build patient trust and may be required by certain payers for reimbursement. Facilities may find that accreditation leads to better patient outcomes and improved operational efficiency. Example: A hospital maintained both state licensure and Joint Commission accreditation, which reassured patients of its commitment to high standards and facilitated insurance reimbursements. Key Action: Maintain required licensing for legal operation and consider accreditation to enhance credibility and attract patients and payers. Common Legal Risks and Penalties for Non-Compliance in Licensing and Accreditation Failure to comply with licensing or accreditation standards can lead to penalties, reputational damage, and operational disruptions. Here’s a breakdown of common risks and potential consequences: Example Penalty Breakdown for Licensing and Accreditation Non-Compliance Violation Type Potential Consequences Licensing Violations Fines, facility closure, loss of operating license Accreditation Failures Loss of payer contracts, reputational harm CON Requirements Non-Compliance Delays, legal penalties, inability to expand Failure to Meet Safety Standards Increased scrutiny, mandatory corrective actions For additional information on licensing and accreditation requirements, explore these resources: FSMB State Licensure Information Nurse Licensure Compact Information CDC State Health Department Directory Certificate of Need (CON) State Laws The Joint Commission CARF International Accreditation Licensing and accreditation are foundational for healthcare providers and facilities, ensuring compliance with state laws and quality standards. By meeting licensing requirements and pursuing accreditation, your practice or facility can operate legally while demonstrating a commitment to quality and patient safety. Contact the healthcare and FDA lawyers at Cohen Healthcare Law Group for expert guidance on navigating licensing and accreditation requirements. Contact our healthcare law and FDA attorneys for legal advice relevant to your healthcare venture.
January 8, 2025
Healthcare
How to Structure Your Medical Spa with Professional Medical Corporations and MSOs
The rapid growth of the medical spa industry has led to an increase in regulatory scrutiny. Structuring a medical spa within compliant ownership models—such as Professional Medical Corporations (PMCs) and Management Services Organizations (MSOs)—is essential for legal operation. This guide explains how to legally structure a medical spa, including key considerations for ownership, control, and state-specific regulations. Key Components of Structuring a Medical Spa Structuring a compliant medical spa involves understanding scope-of-practice laws, corporate structure options, and management agreements. Below are practical strategies to ensure your medical spa aligns with state laws and operates within a legal framework. 1. Understanding the Corporate Practice of Medicine (CPOM) Doctrine The Corporate Practice of Medicine (CPOM) doctrine restricts non-licensed individuals and entities from owning or controlling medical practices in many states. For medical spas, this means only licensed professionals can own and operate medical services. CPOM Restrictions and State Variations: Each state has specific CPOM rules dictating who can own and control a medical spa. California, for example, enforces strict CPOM laws requiring licensed medical professionals to hold majority ownership. See California’s CPOM laws. Physician Ownership and Oversight: Medical procedures offered at medical spas, such as injectables and IV hydration, are considered medical services in many states. This means a physician or similarly licensed professional must oversee and potentially own the medical aspect of the spa to comply with CPOM rules. Avoiding CPOM Violations: Non-licensed business owners can face penalties if they control or influence medical decisions in a CPOM-regulated state. It’s essential to understand state-specific rules to avoid fines or forced restructuring. Case Study: A medical spa in California, owned by a non-physician, faced regulatory penalties for CPOM violations. The business restructured by establishing a physician-owned PMC to comply with California’s CPOM laws. See CPOM regulations. Key Action: Verify CPOM requirements in your state and structure ownership to ensure that only licensed professionals control the medical aspects of the spa. 2. Establishing a Professional Medical Corporation (PMC) for Medical Services A Professional Medical Corporation (PMC) is a corporation owned by licensed medical professionals that can legally deliver medical services. Structuring the medical component of a spa as a PMC helps ensure compliance with state laws. PMC Ownership Requirements: In states with CPOM laws, PMCs must be owned primarily by physicians or other licensed healthcare providers. Some states, like California, allow physicians to hold a minimum of 51% ownership in a PMC while permitting certain other licensed professionals to own the remaining 49%. Role of Physicians in PMCs: Physicians in PMCs must maintain control over clinical decisions, while administrative and non-medical functions may be handled by other entities, such as MSOs. This ensures that medical decisions remain under licensed supervision. Compliance with State Corporate Requirements: States like California have specific requirements regarding PMC ownership and operations. These requirements often prohibit non-medical professionals from having any control over patient care or clinical protocols. Case Study: A medical spa in California structured its operations as a PMC with a physician holding the majority share. This model complied with state CPOM laws, allowing the spa to offer medical services legally. See guidance on California PMC structures. Key Action: If your medical spa provides medical services, establish a PMC owned by licensed professionals to comply with CPOM laws. 3. Implementing a Management Services Organization (MSO) Model The Management Services Organization (MSO) model allows non-physicians to manage non-clinical aspects of a medical spa, such as administration, marketing, and billing, while the PMC handles medical services. How the MSO Model Works: An MSO handles the business side of the spa, while the PMC, owned by licensed medical professionals, delivers medical treatments. This model enables non-physicians to invest in the business without violating CPOM laws. Drafting a Comprehensive MSO Agreement: MSO agreements should clearly define the division of responsibilities between the PMC and the MSO. The MSO can handle all non-medical services, including human resources, facilities, and general operations, without interfering in clinical decision-making. Benefits of the MSO Model: The MSO model provides flexibility for non-physicians to invest in the medical spa and manage business operations, while ensuring that licensed professionals retain control over medical care. Proper MSO structuring helps avoid CPOM violations. Example: A medical spa in Texas used an MSO to handle administration and marketing while a physician-owned PMC managed clinical services. This structure allowed non-medical investors to participate without compromising legal compliance. See more on MSO models. Key Action: Create an MSO agreement to manage non-clinical operations and separate medical decision-making from administrative functions. 4. Addressing Regulatory Compliance for Medical Spa Operations Operating a medical spa requires adherence to a range of regulatory standards, from scope-of-practice rules to patient safety protocols. Ensuring Scope of Practice Compliance: Each treatment offered at a medical spa, such as Botox or IV therapy, falls within a specific scope of practice, which can only be performed by appropriately licensed professionals. Patient Safety and Informed Consent: Medical spas must implement patient safety protocols and provide informed consent forms for all treatments. These forms should outline the potential risks, benefits, and limitations of each treatment. Advertising and Marketing Standards: Medical spas must comply with FTC guidelines on advertising to avoid making misleading claims about results. Be cautious with language, and ensure that all claims are substantiated and accurately represent the services provided. Example: A medical spa faced scrutiny for offering services beyond its licensed scope. By revising protocols and ensuring that licensed professionals performed each procedure, the spa avoided penalties and achieved compliance. Key Action: Adhere to scope-of-practice, informed consent, and advertising standards to ensure regulatory compliance and patient safety. Common Legal Risks and Penalties for Non-Compliance in Medical Spa Structuring Improper structuring and non-compliance in medical spas can lead to severe legal consequences. Here’s a breakdown of common risks and potential penalties: Example Penalty Breakdown for Medical Spa Structuring Non-Compliance Violation Type Potential Consequences CPOM Violations Fines, restructuring mandates, cease-and-desist orders Scope of Practice Violations Licensing board sanctions, penalties Inadequate MSO Agreements Legal disputes, regulatory scrutiny Misleading Marketing Claims FTC fines, corrective advertising requirements For more information on structuring a compliant medical spa, explore these resources: California Corporate Practice of Medicine Laws MSO Structuring Tips: FSMB State Licensure Information AMA Informed Consent Guidelines FTC Advertising Guide Structuring a medical spa using PMCs and MSOs is essential for compliance, ensuring that licensed professionals control medical services while allowing non-physicians to manage business operations. By aligning your structure with CPOM laws, scope-of-practice rules, and MSO agreements, your medical spa can operate legally and profitably. Contact the healthcare and FDA lawyers at Cohen Healthcare Law Group for strategic legal guidance on structuring your medical spa. Contact our healthcare law and FDA attorneys for legal advice relevant to your healthcare venture.
December 22, 2024
Healthcare
Medical Spas and Aesthetic Clinics: Key Legal Insights for Safe and Compliant Operations
The popularity of medical spas has soared, offering clients advanced treatments like IV hydration, injectables, and aesthetic enhancements. However, medical spas operate within a highly regulated landscape. Compliance with scope-of-practice laws, corporate structure regulations, and advertising standards is essential to avoid enforcement actions. This guide provides key legal insights to help medical spas operate safely and legally, balancing innovation with compliance. Key Legal Considerations for Medical Spa Compliance Medical spas face distinct regulatory requirements, especially when it comes to ownership, licensing, and patient safety. Below are practical tips to help your medical spa remain compliant and thrive in this competitive industry. 1. Understanding Scope of Practice for Medical Spa Treatments The scope of practice for services like IV hydration and injectables varies by state, with strict regulations regarding who can administer certain treatments. Compliance with these rules is essential for safe, legal operations. Licensed Medical Professionals: Most states require that medical procedures like injectables and IV hydration be performed or supervised by licensed medical professionals, such as physicians, nurse practitioners, or physician assistants. Check your state’s specific scope-of-practice laws to ensure compliance. Delegation and Supervision: In states where delegation is allowed, ensure that appropriate supervision is provided and that staff are trained for each service offered. Some treatments may require direct physician oversight, especially when IV therapy or prescription-based injectables are involved. Liability Considerations: Medical spas should carry liability insurance that covers treatments offered. Non-compliance with scope of practice can lead to disciplinary actions, fines, or potential malpractice claims. Example: A medical spa in California faced penalties for allowing unlicensed staff to administer injectables without physician supervision. After adjusting their protocols to ensure licensed staff performed these services, the spa achieved compliance. See California-specific scope of practice rules. Key Action: Verify that only licensed professionals perform medical treatments and that necessary supervision is in place. 2. Structuring Your Medical Spa with Professional Medical Corporations and MSOs Structuring your medical spa within legal ownership models is essential to remain compliant. Professional Medical Corporations (PMCs) and Management Services Organizations (MSOs) offer models for operating legally while allowing non-physicians to invest in the business. Professional Medical Corporations (PMCs): Many states, including California, mandate that only licensed medical professionals own medical corporations. In these states, a physician must own a majority stake in the PMC. See California’s specific rules, refer to the Moscone-Knox Act. Management Services Organizations (MSOs): MSOs allow non-physicians to manage non-clinical aspects, including marketing, administration, and billing. This model is often used by med spas to separate the clinical and business sides of the practice. Compliance with State Corporate Practice of Medicine (CPOM) Laws: States with CPOM laws prohibit non-licensed individuals or companies from owning or controlling medical practices. Ensure your spa’s ownership model aligns with your state’s CPOM rules. Case Study: A California-based med spa operated as an MSO, with a physician-owned PMC delivering all medical services. This structure aligned with California’s CPOM laws, allowing the business to legally offer IV hydration and aesthetic treatments. See a summary of CPOM laws. Key Action: Structure your medical spa as a PMC and/or MSO based on state CPOM requirements. 3. Patient Safety Protocols and Standard Operating Procedures (SOPs) To provide high-quality care, medical spas must implement SOPs that focus on patient safety and risk management, especially for invasive procedures. Informed Consent: Patients should receive a clear informed consent form for each treatment, outlining potential risks and expected outcomes. Consent forms should be signed before any procedure, particularly for treatments like injectables or IV hydration. Sterilization and Infection Control: All equipment should be sterilized according to healthcare standards, and infection control procedures should be followed meticulously. Failure to maintain a sterile environment can lead to health department inspections and penalties. Emergency Preparedness: Staff should be trained in emergency response protocols, including recognizing and managing adverse reactions to treatments. Emergency equipment, such as oxygen tanks and epinephrine, should be readily available. Example: A medical spa faced a client complaint due to an adverse reaction from an injectable treatment. By updating emergency protocols and enhancing staff training, the spa improved patient safety and maintained compliance. See patient safety standards. Key Action: Develop SOPs that emphasize patient safety, infection control, and emergency preparedness. 4. Compliant Marketing and Advertising for Medical Spas Marketing for medical spas must comply with FTC and state advertising standards to avoid misleading claims. Clear, accurate marketing promotes patient trust and reduces regulatory risk. Truthful Advertising and Avoiding Guarantees: Avoid claims that guarantee results or suggest the ability to cure medical conditions. Focus on describing wellness benefits in general terms, such as “supports hydration” or “promotes wellness.” Visit FTC advertising guidance. Use of Testimonials and Social Media: Be cautious with testimonials and social media promotions. The FTC requires that all testimonials reflect typical outcomes, and influencers must disclose any material connections with the spa. Disclaimers in Digital Marketing: Use disclaimers on websites and ads to clarify that your services are wellness-focused and do not replace medical treatment. Disclaimers help manage client expectations and protect the spa legally. Case Study: A medical spa received an FTC warning for advertising guaranteed results. After revising its language and including disclaimers, the spa met compliance standards and minimized future regulatory risk. Visit FTC’s advertising rules. Key Action: Ensure all marketing claims are accurate, substantiated, and include disclaimers to avoid FTC scrutiny. Common Legal Risks and Penalties for Medical Spa Non-Compliance Non-compliance with medical spa regulations can lead to severe penalties. Here’s a breakdown of common risks and potential consequences: Example Penalty Breakdown for Medical Spa Non-Compliance Violation Type Potential Consequences Scope of Practice Violations Fines, license suspension, cease-and-desist orders Misleading Marketing Claims FTC penalties, required advertising corrections Inadequate Patient Safety Protocols Health department inspections, client complaints CPOM Law Violations Regulatory penalties, restructuring requirements For more guidance on operating a compliant medical spa, see the following resources: Moscone-Knox Act: California Corporate Practice of Medicine Laws FTC Health Claims Advertising Guide OSHA’s Guidelines for Infection Control Medical spas must comply with a range of legal requirements to offer safe, professional treatments. By structuring your business correctly, training staff, adhering to scope-of-practice rules, and marketing accurately, your spa can thrive while avoiding regulatory pitfalls. Contact the healthcare and FDA lawyers at Cohen Healthcare Law Group for strategic guidance on running a legally compliant medical spa. Contact our healthcare law and FDA attorneys for legal advice relevant to your healthcare venture.
December 15, 2024
Healthcare
3 Legal Keys to know when Starting an IV Hydration Clinic or Medical Spa
Hi there, are you wanting to start an IV Hydration clinic or a Medical Spa, maybe you wanted to be multi-state or let’s just take one state to showcase, let’s just say, Florida. What are the legal basics that you would need to know? Well, here’s first one. At the moment, there is no single Florida agency that directly and unambiguously regulates IV hydration clinics. The legislature just hasn’t gotten that far. But, that doesn’t mean that an IV hydration clinic is not subject to a host of other existing legal rules. So, for example, think about who’s providing the therapy? Let’s just say it’s a nurse practitioner. Let’s just say the client use a nurse practitioner. So, can you start this IV hydration clinic autonomously? This is actually two different questions. In Florida, the scope of autonomous nursing practice is limited to primary care areas like internal medicine, family practice, pediatrics, geriatrics. The board of nursing has not really further defined the scope of nursing practice to include (or not include) IV hydration clinics. So, our recommendation right now if you’re going to use a nurse practitioner, then the nurse practitioner should have a relationship with a supervising physician in Florida. Now, in some states, this is a collaborative physician, the scope of practice varies by state. And the next question is whether you need what’s called a good faith exam. Currently, Florida does not have this requirement of initial evaluations. But we recommend it because it’s best practice, it can be protective, a regulator might say that you should have one even if it’s not explicitly written into the law. It really sets the foundation for the clinical relationship with the patient which can be protective against potential malpractice as well. The follow-ups can be done via telehealth but if you do the first exam by telehealth, it might violate the standard of care or there might be any number of reasons that regulators could take offense to that kind of procedure. And the only way you are going to know that is by having a bird’s eye view of lots and lots of situations and seeing where people get in trouble, and the rule aren’t always perfectly well delineated. Third, do you need a license? So, Florida has rules about “home infusion therapy.” When you do that, you need a home health agency license. Home infusion therapy is defined as providing IV therapy in a person’s home or residence. So, if you do it in a hotel (unless that’s your home or residence) typically that doesn’t fall within those parameters. What you’re seeing is that a lot of times the law is just silent – it doesn’t say anything so you’re left in-between this gray zone and that means you need legal interpretation from somebody who both knows the law, knows the gaps in the law, and is a veteran, they’ve seen a lot situations and they have practice experience to know what’s going to fly, what’s high-risk, what’s medium-risk. So, those are some cornerstones of IV clinical practice in Florida, again, it varies by state. We just use Florida to give you an example. If you’re going to do something across states, then you really need to understand what the rules of the road are in different places. Testimonials
December 8, 2024
Healthcare
4 Things to Know When Naming a California Professional Medical Corporation
Hi, I’m Michael H Cohen, founding attorney of Cohen Healthcare Law Group. In today’s video, we’ll talk about what you need to put in a name in a California Professional Medical Corporation., affectionally known as a “PMC.” The rules in California are very specific: You need this Professional Designation that is a professional corporation. Words like “Professional Corporation,” “P.C.,” or “Prof. Corp.” So, for example, our law firm “Cohen Healthcare Law Group, PC” There are certain permitted words, and the words really should indicate the specific profession or type of services. For example, “Dermatological Practice” or “IV Hydration Clinic” or “Medical Spa.” The name have to be distinct from other names of similar entities in California, so that the consumer is not confused. Typically, you want to include the physician’s name. For one, it’s common practice. And secondly, it helps with the branding and the recognition especially if it’s a well-known doc. There might be other very specific medical board or department of public health regulations depending on the exact type of practice, or company, or clinic. So, you will want to check with us but these are the general rules. Another point is that if you got a corporation that say has a 51% MD owner, a 49% Nurse, you might want to put the physician’s name in the title so that nobody gets confused about the ownership of the corporation. Now, a lot of these rules are common sense, and you have to be careful because even if you do follow these rules, there can be what I call a collateral line of attack. So, for example, you could have the medical board, or some other agencies come in for another reason. They might just say that the name is not good enough, it’s false and misleading, it’s deceptive advertising. So, you’re going to want a healthcare lawyer’s eyes on this simple, even though precisely defined persnickety little point of California law, which is how you name your professional medical corporation. Now, one exception: Let’s say you’re not the physician, but you’re the MSO, you’re the driving business that’s going to brand this medical spa across states. Then, you have to kind of work with these rules to make sure you accommodate them, but you also want to brand the MSO. So, you could come in to create arrangements, like, for example, licensing a name. So, how do you deal with that? We have some more resources on our blog, and also we’d love to work with you. We’ve helped hundreds and hundreds of clients every year. So, if you’re interested, please give us a call and we’d love to get you started. Testimonials
November 15, 2024
Healthcare
How do healthcare certification, accreditation, and licensing differ?
Doctors, nurses, and all healthcare professionals need to understand the professional requirements that must be met in order to practice their profession and treat their patients. Medical practices should employ staff members who understand these requirements for the doctors who work in their state and type of medical practice. In this article, we focus primarily on the licenses and certifications for physicians. In our next article, we will focus on the other healthcare professions including nurses and EMTs. What is the purpose of licensure? A medical license is the way for other medical practitioners and patients to understand that a healthcare professional has the necessary prerequisite knowledge to perform the duties of their profession. The licensing requirements differ from state to state because each state has its own medical view of what skill set and experience a practitioner should have. Medical licensing for physicians According to the American Medical Association, doctors are licensed on a state-by-state basis. The requirements for each state differ. California’s license requirements are different than New York, Texas, and Iowa. Generally, applicants for a physician’s license must pass a licensing examination – either the United States Medical Licensing Examination (USMLE) or the Comprehensive Osteopathic Medical Licensing Examination of the United States (COMLEX-USA). Some states limit the number of times and the time window for passing the exam. Both types of examinations consist of three parts – with the third part being completed during residency training. During a medical student’s residency, the resident is “licensed through a training certificate which is a form ‘issued to physicians who are in accredited residency programs that permits them to practice under supervision until fully licensed.’” Some residents may seek to become licensed so they can “moonlight” perform medical duties during the resident’s residency. “Some graduate medical education (GME) institutions may require a physician to be licensed at a certain point in their training.” In California, the medical licenses of physicians and surgeons are governed by the Medical Board of California. “The Board licenses and regulates Physicians and Surgeons, Postgraduate Training Licenses, and Licensed Midwives. In addition, the Board registers Polysomnographic Trainees, Technicians, and Technologists; Research Psychoanalysts and Student Research Psychoanalysts; and issues Special Faculty Permits and Special Program permits.” “A licensed physician may diagnose, prescribe, and administer treatment to individuals suffering from injury or disease. Physicians are authorized to administer and prescribe medication, use devices to sever or penetrate tissues, and to use all methods in the treatment of diseases, injuries, deformities, and other physical and mental conditions.” Osteopathic physicians and surgeons are licensed and regulated by the Osteopathic Medical Board of California. Medical licenses aren’t confined to doctors. The following medical professionals must obtain a medical license: Nurses Emergency medical technicians (EMTs) Paramedics Physical therapists Occupational therapists Radiologists Many other healthcare professions Physician license limitations All medical licenses may have conditions in order to maintain the license including continuing education requirements and being free from certain types of medical misconduct or ethical violations. For example, a medical license may be affected if a doctor is found to be in violation of certain laws such as the federal False Claims Act, the Anti-Kickback Statute, Stark Law, or corporate practice of medicine laws. Our healthcare lawyers advise medical practices and doctors about their legal requirements, what actions can jeopardize their license or certification, and how to respond if the healthcare provider receives an official notice that their license or certification is at risk. Our healthcare lawyers also advise medical practices about how managed service organizations (MSOs) can review which licenses and certifications are current. We’ll explain the role of both the MSO and the physicians in the practice in helping a medical practice meet its licensing and certification requirements. Generally, a license only permits a doctor or other medical licensee to practice in one state – unless the doctor/healthcare provider has other licenses in other states. Some medical professionals (such as psychology) may permit licensees to practice in other states. Why the False Claims Act Affects Your Medical Practice Violations of the AKS and Stark Law are usually violations of the False Claims Act. Penalties can include treble damages and exclusion from Medicaid and Medicare Payments The New Stark and AKS Laws Physicians and medical practices should review their MSO and referral arrangements to help comply with the new Stark Law and AKS changes. The First Steps to Understanding Stark Law In today’s video, we will be introducing you to Stark Law. Medical certifications for healthcare providers A medical certification is generally used for physicians who want to show that the physician has the qualifications to practice in specific specialties or subspecialties. Unlike medical licensure which is mandatory, obtaining a medical board certification is voluntary. A medical license shows that the physician has passed the “minimum competency requirements to diagnose and treat patients” but the licensure is not specific to any specialty. “Board certification, however, demonstrates a physician’s ‘exceptional expertise in a particular specialty and/or subspecialty of medical practice,’ according to the American Board of Medical Specialties.” The initial requirement for obtaining board certification is that the physician has their medical license and has completed an accredited residency program. Applicants and medical practices should be aware of the cost of obtaining their license and the cost of any board certifications. An experienced healthcare lawyer can help physicians and practices determine who pays for the cost of obtaining any board certifications. Another difference between a medical license and a board certification is that the medical license examination is usually a written test while the board certification is an oral examination. Certifications can affect a non-healthcare provider in other ways than confirming their unique qualifications in a specific area of medicine. In some states, certification can mean the right to practice without having a supervisor approve everything the healthcare provider does. While many healthcare certifications fulfill requirements, others highlight excellence in a specific field or skill. For example, a nurse can obtain certification in Pediatric Advanced Life Support, demonstrating the ability to resuscitate children in critical situations. What is a health science certification? According to ICEV, accreditation generally refers to an association, institution, or an entire company – as opposed to an individual professional. Usually, accreditation refers to “safety, efficiency, and validity.” “High-risk workplaces like distribution centers or manufacturers can get safety accreditations from OSHA. Non-profits can earn accreditation from third-party organizations that set ethical, financial, and representational standards.” According to Southern Careers: The primary goal of accreditation is to gauge a healthcare facility’s ability to live up to predetermined industry standards set by veritable bodies within their field. This inspires confidence and trust in a facility with the patients the facility serves. Accreditation gives healthcare providers the ability to do the following: Show their commitment to quality Separate themselves from their competition Encourage continuous improvement Accreditation helps patients feel that patients are receiving competent care and gives employees confidence that they are working for a respected organization or facility. The differences between licensure and accreditation are that: Licensing is awarded by a government body such as the federal government or a state government while accreditation is awarded by non-governmental entities. Licenses apply to individuals such as physicians, registered nurses (RN), nursing assistants, medical technicians, or another individual healthcare professionals. Accreditation applies to facilities including “hospitals, nursing homes, urgent care centers, or any other kind of healthcare facility that provides care.” Generally, each state has its own licensing, certification, and accreditation requirements. These requirements generally include having the appropriate degrees, passing approved courses, having sufficient experience, and/or passing state examinations. A medical license is necessary to practice your medical profession. A certificate may be a prerequisite to obtaining a license or evidence that a medical practitioner meets specific specialization requirements for their type of medical practice. Doctors, health organizations, and other medical practitioners should contact Cohen Healthcare Law Group, PC to review their legal and healthcare compliance requirements. Our experienced healthcare lawyers advise medical practices and medical practitioners about licensure, certification, accreditation, and other compliance laws and regulations issues. Contact our healthcare law and FDA attorneys for legal advice relevant to your healthcare venture.
November 7, 2024
Healthcare
Does a Professional Medical Corporation Prevent Liability?
In today’s video, we’re going to talk about whether owning and operating a professional medical corporation actually protects the physician or other clinician against liability. So, the same question could be asked of a professional nursing corporation, professional physician assistant corporation, professional Chiropractic acupuncture corporation, and so on. Hi everyone. I am still Michael H. Cohen, founding attorney of Cohen Healthcare Law Group. We help healthcare industry clients like you navigate the complex terrain of healthcare and FDA law so you can launch, grow, and scale your healthcare business. Generally, one of the purposes of any corporation is to limit professional liability and transfer that risk to the entity. So, in broad terms, when the professional medical corporation gets sued, that liability is supposed to accrue to the corporation, not the individual. Now, there’s one really significant exception that’s known as piercing the corporate veil. Ouch. If corporation is really a sham, if it doesn’t follow corporate formalities like having a board of directors and regular meetings minutes, or is seriously undercapitalized, then yes, it’s possible that the limited liability protection can be pierced, punctured. The other important caveat is that if there is a malpractice lawsuit against the physician who’s head of the professional medical corporation, or against any clinical staff that the physician is responsible for supervising, or for example, there might even be a claim of malpractice based on negligent supervision by the physician. Then, staff or the physician could be held personally liable, and the corporation then would not shield them against the liability. So, for that reason, it’s important to get good malpractice policy with standard coverage amounts and that include the clinician or clinicians and including the physician owner as well as the corporation. Thanks for watching. Please contact us with any questions. We’ve helped lots of healthcare industry clients build their dream and we look forward to talking to you and we wish you every business success. Testimonials
November 2, 2024
Healthcare
Can an MSO Switch Medical Directors?
In today’s video, we’ll talk about the role of the medical director in a med spa, or an IV hydration clinic, or integrative medicine center wellness clinic. What happens when a healthcare venture tries to swap out one medical director and swap in another? So, in our hypothetical today, Mary sue, managing member of an LLC that operates an MSO for medical spa, presents us with an oddball situation. And these oddball situations come up all the time with twists and turns. So, Mary sue had created a so called friendly professional medical corporation. Friendly, meaning that the MSO controls the hiring and firing of a medical doctor in charge of the professional medical corporation. Now, some state enforce a strong Corporate Practice of Medicine prohibition. This is a no. The medical board is not friendly. And they say that the MSO can’t control the hiring and firing of medical doctors. No way, no how. But Mary sue was in a presumably weak corporate practice medicine state or no corporate practice of medicine state. So, she simply hired a new medical director and transferred to this new MD the shares of the old medical director. And having made this move, Mary sue came to us after the fact for legal advice. Well, this took a bit of unwinding. So, as mentioned, the very first question is whether the so-called friendly PC model or the MSO calls the shots of who controls the professional medical corporation will even pass muster in a state where corporate practice medicine is supposedly weakly enforced, or not enforced at all. Now, you can get a chart off the Internet and it’s going to tell you, no CPM, no CPOM. I don’t know why they call it CPOM. It’s a funny name, but whatever. It’s what the regulators say when they read and interpret the law. And, you know, also, there are different roles. Like the physician can be a director of the professional medical corporation, they can be an officer, they can be a shareholder or an employee anywhere, any combination. And Mary sue would have to be sure that each role is addressed. So simply swapping out shares is not enough. Hi, everyone. I’m Michael H. Cohen, founding attorney of Cohen Healthcare Law Group. And we help healthcare industry clients like you navigate the complex terrain of healthcare and FDA law so you can launch, grow, scale your healthcare business. Now, in addition to ensuring that all the relevant roles are being handled: director, officer, shareholder, employee, or contractor, they’re all different. Mary sue would need a meeting by the board of directors authorizing the transfer of shares. Now, often the corporation. In the shareholders agreement, the corporation has the right of first refusal, which means that they get first dibs on buying back the shares. Now, they may not want to, but the shares have to be appraised, typically, and sold at fair market value. There are these different mechanisms. And, for example, the new physician has to enter into the shareholders agreement. The old one has to exit that agreement. There might also be some corporate filing, for example, filing a statement of information with the state Department of corporations or some kind of filing with, say, medical board. And the incoming physician then has to be appointed the officer as an officer, the president as president, el presidente of the professional medical corporation. So, there are lots of loose ends. Got a lot of loose ends and it shouldn’t be done with a single document, like a one page supposed shareholder transfer form that they got off the Internet, as I used to say years ago, like, don’t roll the dice. Get legal advice. So, thanks for watching. Please contact us with any questions. We’ve helped lots of healthcare agency clients and your situation navigate these byzantine waters. We look forward to talking with you, and we wish you well on your journey to success. Testimonials
October 22, 2024
