Healthcare
How does a dual-licensed healthcare provider wear two hats and satisfy both professionals boards?
How do you wear two licensed hats at the same time – if, for example, you’re an medical doctor (MD) and a chiropractor (DC), or a chiropractor and an acupuncturist – or, a naturopathic physician and a shaman? Well, if you’re a naturopathic doctor (ND) who is licensed and a shaman, you have to ask yourself whether your state allows non-licensed providers to offer healthcare services, because you’re wearing the hat of a healthcare licensee ND and the hat of a non-licensed healthcare provider. Many healthcare providers have dual roles. I know an MD who is also a DC and an LAc (acupuncturist); a psychotherapist who is a licensed clinical psychologist who also does “Journey” work for groups on the side; a physician who only teaches meditation and Kabbalah; an integrative medicine doctor who prefers to instruct patients in lifestyle modification, nutrition, and yoga; and many other combinations. These days, with integrative medicine, telemedicine, concierge medicine, and much of health and wellness care being done by mobile medical apps or “doctor Google,” we are saying more cross-disciplinary collaboration, more reliance on self-care and lifestyle, and less narrow, silo care unless someone is in need of emergency care, urgent care, or acute care. When wearing two hats, here are a few basic ground-rules: Both licensing boards have a say in your conduct. You are bound to each licensing board’s rules and regulations, and the underlying statute. Each licensing board may have its own definition of professional misconduct. You may be held to both standards of care – or, in fact, to the higher standard of care. Let’s say, for example, that you’re an MD but only seeing the patient for acupuncture. In a negligence (malpractice) case, the court may impose the medical standard of care. What can you do? You can try to disclaim primary care, in your informed consent form. This is a strategy our integrative medicine legal team uses with physicians who want to focus only on modalities such as functional medicine, or, to provide specific therapeutic modalities in a complementary medicine fashion. You can clarify the patient’s expectations. For example, we’ve used this approach with an MD who provides only homeopathic medical care based on a constitutional analysis of the patient’s overall well-being, and not being on diagnostic categories of conventional care. Now let’s stretch the framework. Suppose you have a dual-licensed DC-PA (chiropractor/physician assistant). This is interesting because the PA is a conventional practice, dependent on the MD; the chiropractor is a CAM (complementary and alternative medicine) provider, independent of the MD. Must the DC-PA act as a PA, under medical supervision, and beholden to medical standards of care, or should the DC-PA act as an independent chiropractic professional, bound only to chiropractic standards of care (with a duty to refer to the MD where the condition is beyond the DC’s scope of practice)? Absent express prohibitions (and even in the presence of an express, general authorization for dual licensees), DC-PAs are carving out new regulatory (and practice) territory. In such case, the most legally sensible way to practice is to abide by existing restrictions on each license, and to pro-actively exercise caution in cases where one license might allow activities that the other either prohibits, or simply does not authorize. The bottom line is that the dual licensee is accountable to both professional licensing board, and in addition, remains accountable to patients (as well as consumer protection and other government agencies) to maintain clear practice boundaries in any given role or circumstance. Here are some quick do’s and don’ts — and these are generalizable to other professional combinations. The DC-PA should do the following: Respect the scope of practice of their respective license, when functioning within that license. If functioning as a PA, ensure that physician delegation complies with state law (for example, when required, is memorialized in a written agreement that conforms to state law). When functioning as a PA, mind physician compliance with applicable law. As noted, the physician must abide by specified rules, such as mandatory physician filings with the medical or other regulatory board (for example, of employment, discharge, or supervisor control of the PA), and limitations on the number of PAs the MD may supervise. The DC-PA should be aware of such rules and have an eye toward physician compliance. Wear an appropriate name badge. Inform the patient of the professional role in which the dual licensee is acting. When functioning as a DC, recognize when the duty to refer is triggered. Where the patient’s condition exceeds chiropractic skill and expertise, refer the patient to an MD, notwithstanding having the PA license as well. Document and chart appropriately. Follow all other legal requirements. For example, as noted there are billing restrictions applicable to PA’s. The DC-PA should not do the following: Misuse the title “doctor.” Engage in false, deceptive, or misleading advertising. Bill unlawfully. Mislead the patient. The above is not a comprehensive exhaustive list of do’s and don’ts, but rather, a sensible set of guidelines in this emerging area. The perils of violating the above boundaries include professional discipline by one or more regulatory boards, investigation and enforcement action by state prosecutorial authorities, and exposure to liability for negligent practice (malpractice) in a civil action by the patient. While the pressures contributing to shortage of primary care physicians come from federal law, it is state law that governs scope of practice. Therefore, irrespective of Obamacare or any related federal legislation, we must look to state laws for guidance on how the dual-credentialed practitioner can sensibly manage the two clinical hats. Because our law firm represents so many integrative medicine clinics and practitioners, we understand the holistic and biopsychosocial models of health, and the legal perils of innovative healthcare practice.
December 6, 2014
Healthcare
Key Points for Physicians and other Healthcare Licensees to Consider When Selling Dietary Supplements to Patients
Sales of dietary supplements by physicians, acupuncturists, chiropractors, and other licensed professionals raise thorny legal issues. This can be confusing, because on one hand, “everybody does it” — i.e., sales of dietary supplements by clinicians such as medical doctors is widespread in the industry; on the other hand, the American Medical Association actively discourages the practice through its ethics opinions, which explicitly prohibit such conflicts of interest between care for the patient, and the doctor’s financial self-interest. If you are a medical or osteopathic doctor, chiropractor, acupuncturist, or other licensed health care provider, and you believe it’s best for your patients (and practice) to sell dietary supplements within your practice (or to generate income by doing so through a third-party dietary supplement manufacturer, where you get a “cut” by referring patients to the website, here are the most important legal considerations: Yes, selling dietary supplements to your patients does pose a conflict of interest; and yes, the AMA, among other professional organizations, considers this an ethical violation. Technically, this might be considered a “kickback” or “fee-splitting” violation. Much depends on what your state law says–some state laws only address kickbacks and fee-splitting in the context of services and not goods. The way your compensation is structured also can make a difference. If, for example, patient funds flow first to the dietary supplement manufacturer, to whose site you have directed the patient, and then the dietary supplement manufacturer writes your a check, then this might be considered a “kickback” to you for “referring” the patient to the dietary supplement manufacturer. Beware of state laws prohibition patient “exploitation.” These legal rules could be used against you when you sell dietary supplements to your patients. One New York lower court has found that because a physician who used alternative medicine also sold a patient dietary supplements, the patient could sue the physician not only for negligence, but also for recklessness. Legally, recklessness carries a higher degree of culpability than medical malpractice–opening the door to punitive damages. This can be a whopper. Check with your state licensing board. The Board may have its own regulations, additional to statutes. For example, the Massachusetts Board of Registration in Medicine has a rule that expressly disfavors physician profit on in-office sales of health-related products (such as dietary supplements). The Massachusetts Board describes the practice as “exploitative.” See below Check any state law rules on in-office ancillary services (IOAS) to see whether there is any carve-out for the sale of dietary supplements. Check state law to see whether there is a legal (statutory) limit on the profit or markup you can make from the dietary supplement sales. This is, for example, the case in New Jersey (see Physician Sale of Dietary Supplements – Legal and Regulatory Restrictions). Check state law to see whether you must make any disclosure of your financial interest in the dietary supplement sale; and even if no disclosure is required, consider making such as disclosure as a risk management gesture. See below. These are general guidelines; they will not guarantee freedom from enforcement activity, but they will supplement (pardon the pun) good clinical sense and judgment with a beginning legal roadmap. It’s always best to contact an integrative medicine attorney to review the legal rules in your state that are relevant to your situation. Quoting the Massachusetts Board here: Physicians should not sell, lease or rent any product in a manner that has the potential to exploit patients, including but not limited to exclusive distributorships or personal branding. Physicians should not use their office or their professional relationship with patients to promote any business venture or solicit investors. In limited circumstances, when it is beneficial to the patient, it may be appropriate for physicians to sell durable medical goods essential to the patient’s care. Prior to any such sale physicians should disclose to patients any financial interest they may have in the transaction. Patients should be informed that they are under no obligation to purchase durable medical goods from the physician and should be informed of the availability of the product or other equivalent product elsewhere. This information shall be conveyed via an easily understood notice prominently posted in the office. One more guideline we offer is for the practitioner to provide the patient with a disclosure (whether or not required by law), such as the following: “My office sells dietary supplements to you at a % markup from cost. This still represents a discount to you of % from what you would pay for the same products as a retail customer. However, you are under no obligation to purchase these products from my office; you may purchase the same products elsewhere; and your quality of care in my office will not be affected by your decision to purchase or not purchase products from my office.” Here, the practitioner is informing the patient about the markup, that the patient is free to buy elsewhere, and that clinical decision-making remains unaffected by the purchase decision. Note that if you a non-licensed practitioner who wants to offer nutritional advice, different legal rules apply. See, for example, California Law for Non-Licensed Practitioners and Nutritional Advice. And, if you are a dietary supplement manufacturer, private labeler, or distributor who wants to make claims about the product’s benefits, you must comply with FDA legal rules — primarily those governing structure-function claims and prohibiting claims about the effect on disease. The slippery slope between permissible and impermissible claims can be tricky – for example, you can talk about “weight loss” but not about “obesity.” As well, there are limits on implicit claims that are made by hyperlinking to medical literature. And, beware of FTC prohibitions on deceptive and misleading advertising for health products. See, for instance, FTC Statement to Congress on Deceptive Marketing of Dietary Supplements. If you are part of a multi-level marketing company that sells dietary supplements, there are other legal pitfalls.
December 2, 2014
Healthcare
Quick Summary of Federal “Stark” Self-Referral & Anti-Kickback Law and California Self-Referral and Fee-Splitting Prohibitions
Here is a quick summary of federal self-referral (“Stark law”) and anti-kickback law, and California self-referral and anti-kickback / fee-splitting rules. Each state has its own laws, of course. This is only a summary; if you have a Stark, anti-kickback, or fee-splitting issue, contact our attorneys. A. Federal Concerns 1. Federal Self-Referral (“Stark”) The federal self-referral statute (“Stark”)[1] provides that if a physician (or immediate family member)[2] has a financial relationship with an entity, then, unless the arrangement qualifies for a specific exception: The physician may not refer[3] patients to the entity for “designated health services” (“DHS”)[4] payable by federal health care programs (including Medicare, Medicaid or CHAMPUS, and in California, Medi-Cal), and Where DHS are involved and the referral is prohibited, the physician may not present a claim to any third-payer for the same.[5] Penalties for violation of Stark can be significant. In a recent case, a large health system agreed to pay more than $25 million to resolve self-disclosed allegations that it illegally paid bonuses to doctors based on how much the system earned from their patient referrals. According to an article in Modernhealthcare.com entitled, Intermountain to pay $25.5 million to settle Stark case, the health system reportedly “characterized the violations as ‘technical in nature’ and said they arose partly because of the 300 pages of federal regulations and commentary that govern financial relationships between hospitals and physicians. “ Note the following definitions under Stark: The financial relationship can be an ownership or investment interest in the entity, or a compensation arrangement between the physician (or immediate family member) and the entity.[6] A compensation arrangement is any arrangement involving remuneration between a physician (or an immediate family member) and an entity.[7] The Stark regulations define a physician as a doctor of medicine or osteopathy, a doctor of dental surgery or dental medicine, a doctor of podiatric medicine, a doctor of optometry, or a chiropractor.[8] In general, “remuneration” means “any payment or other benefit made directly or indirectly, overtly or covertly, in cash or in kind.”[9] A first step is to determine whether DHS is involved. DHS within Stark include:[10] clinical laboratory services; physical therapy services; occupational therapy services; outpatient speech-language pathology services; radiology services, including nuclear medicine, MRI, CAT scans, and ultrasound services; radiation therapy services and supplies; durable medical equipment and supplies; parenteral and enteral nutrients, equipment and supplies; prosthetics, orthotics, and prosthetic devices and supplies; home health services; outpatient prescription drugs; and inpatient and outpatient hospitalization services With regard to the first six categories of DHS, the Stark regulations identify the specific insurance billing codes in each category, which are considered to constitute DHS. These are updated annually by CMS. [11] The remaining six categories of DHS are defined in the Stark regulatory text. If DHS is involved, then proposed arrangements must be structured to fit an exception.[12] [At this juncture we have omitted discussion of exceptions.] 2. Federal Anti-Kickback The federal anti-kickback statute[13] prohibits the knowing and willful offer or receipt of remuneration[14] to induce the referral of business or services covered by a federal health care program, including Medicare. Even in the presence of other legitimate purposes, the courts have interpreted the statute to cover any arrangement where one purpose of the payment or offer of payment (albeit not the only purpose) was to obtain money for the referral of services or to induce further referrals.[15] Federal anti-kickback law can apply to all practitioners, not just physicians, where federal reimbursement monies are involved. Practitioners may benefit from cross-referrals and be induced by the financial benefit to cross-refer to Medicare-reimbursed practitioners, irrespective of medical benefit. Among other dangers, enforcement authorities can potentially view an arrangement as a disguised kickback scheme. One of the ways this could be expressed is an unlawful joint venture between the two entities. The Office of the Inspector General (“OIG”) has expressed concern about joint ventures violating federal anti-kickback law. In order to protect beneficial arrangements, the federal Centers for Medicare and Medicaid Services (“CMS”) has published certain statutory safe harbor regulations that define practices that are not subject to the anti-kickback statute. If the conditions in the safe harbors are met, neither party will be prosecuted or sanctioned for the arrangement. Fitting into an exception under Stark is mandatory, whereas under anti-kickback law, if an arrangement does not meet every element of a safe harbor, it is not necessarily unlawful, but rather, is at risk of scrutiny by the OIG. In the preamble to the 1991 final safe harbor rules, [16] the OIG explained that the anti-kickback statute “on its face prohibits offering or acceptance of remuneration, inter alia, for the purposes of ‘arranging for or recommending purchasing, leasing, or ordering any . . . service or item’ payable under Medicare or Medicaid.” The OIG has also observed that “many marketing and advertising activities may involve at least technical violations of the statute.”[17] As a result, it is critical to scrutinize payments for marketing activity involving physicians for the risk of falling within the anti-kickback prohibition. If a proposed arrangement fully complies with all the detailed requirements of the safe harbor, the arrangement is not subject to enforcement under the anti-kickback statute; but practices that do not fit within a safe harbor are not necessarily illegal. The arrangement must be carefully scrutinized. The OIG will “evaluate both the form and substance of arrangements,”[18] and take enforcement action against arrangements that are merely disguised kickbacks. Potential safe harbors[19] to many healthcare transactions include: Bona Fide Employees Personal services and management contracts These have to be analyzed individually. Although federal anti-kickback law only applies where federal reimbursement monies are involved, out of an abundance of precaution, a venture may wish to ensure that any contracts with practitioners comply with one or more available safe harbors. (a) Bona Fide Employee The bona fide employee safe harbor applies to “any amount paid by an employer to an employee (who has a bona fide employment relationship with such employer) for employment in the provision of covered items or services,” for which payment may be made under Medicare, Medicaid or another federal health care program. Compensation must be: Reasonable; Fair Market Value; Arm’s Length Negotiations; and Not based upon number or value of referrals. The individual must be an employee, not an independent contractor. All referrals must meet the above criteria. (b) Personal Services and Management Contracts This safe harbor applies only if all of the following standards are met: The agency agreement is set out in writing and signed by the parties. The agency agreement covers all of the services the agent provides to the principal for the term of the agreement and specifies the services to be provided by the agent. If the agency agreement is intended to provide for the services of the agent on a periodic, sporadic or part-time basis, rather than on a full-time basis for the term of the agreement, the agreement specifies exactly the schedule of such intervals, their precise length, and the exact charge for such intervals. The term of the agreement is for not less than one year. The aggregate compensation paid to the agent over the term of the agreement is set in advance, is consistent with fair market value in arms-length transactions and is not determined in a manner that takes into account the volume or value of any referrals or business otherwise generated between the parties for which payment may be made in whole or in part under Medicare, Medicaid or other Federal health care programs. The services performed under the agreement do not involve the counseling or promotion of a business arrangement or other activity that violates any State or Federal law. The aggregate services contracted for do not exceed those which are reasonably necessary to accomplish the commercially reasonable business purpose of the services. Note that unlike in the Stark exception, there is a reference to “aggregate compensation,” and that there is language regarding services to be provided on a part-time basis. In addition, note the language regarding what must be set forth if services are to be part-time. B. California Concerns 1. Self-Referral (“PORA”) California law contains prohibitions against self-referral in the Physician Ownership and Referral Act of 1993 (“PORA”),[20] as well as California Labor Code Section 139.3 (workers compensation). PORA applies to healthcare licensees. Under PORA: A “financial interest” includes “any … compensation,” whether direct or indirect.[21] In other words, a physician need not have a stock ownership in the entity to which the physician is referring, in order for PORA to apply. Spouses are considered an immediate family member under PORA.[22] Unlike the Stark law, PORA applies to designated health care services regardless of the source of payment, i.e. for private insurers and cash patients. California’s definition of “physician” is broader than that under federal law, and includes, for example, acupuncturists. For purposes of PORA, under section 650(b)(4), the term “licensee” means “a physician as defined in Section 3209.3 of the Labor Code.”[23] Under section 3209.3(2) of the Labor Code, the term “physician” “includes physicians and surgeons holding an M.D. or D.O. degree, psychologists, acupuncturists, optometrists, dentists, podiatrists, and chiropractic practitioners licensed by California state law and within the scope of their practice as defined by California state law.” The PORA prohibition on referrals only applies if the services provided are those designated as health services triggering the prohibition by PORA, Section 650.01(a) (laboratory, diagnostic nuclear medicine, radiation oncology, physical therapy, physical rehabilitation, psychometric testing, home infusion therapy, or diagnostic imaging goods or services). In connection with PORA, a physician must report to the California Medical Board of any “financial interest” in a “health-related facility.”[24] The term “financial interest” is broadly defined to include, among other things:[25] Any type of ownership interest, debt, loan, lease, compensation, remuneration, discount, rebate, refund, dividend, distribution, subsidy, or other form of direct or indirect payment, whether in money or otherwise, to a licensee or the licensee’s immediate family from a health-related facility. The term “health-related facility:”[26] shall include a facility for clinical laboratory services, radiation oncology, physical therapy, physical rehabilitation, psychometric testing, home infusion therapy, diagnostic imaging, and outpatient surgery centers. “Diagnostic imaging” shall include, but is not limited to, all X-ray, computed axial tomography, magnetic resonance imaging, nuclear medicine, positron emission tomography, mammography, and ultrasound goods and services. (emphasis added). If any of designated health services in PORA apply, then we must look to a PORA exception, such as the following:[27] The prohibition of Section 650.01 shall not apply to any service for a specific patient that is performed within, or goods that are supplied by, a licensee’s office, or the office of a group practice. Further, the provisions of Section 650.01 shall not alter, limit, or expand a licensee’s ability to deliver, or to direct or supervise the delivery of, in-office goods or services according to the laws, rules, and regulations governing his or her scope of practice. PORA defines “licensee’s office,” and also has a more extensive definition of “office of a group practice” which would need to be analyzed to the extent PORA indeed applies.[28] More notably, there is also a personal services arrangement exception in 650.02(b)(6): (6) A personal services arrangement between a licensee or an immediate family member of the licensee and the recipient of the referral if the arrangement meets all of the following requirements: (A) It is set out in writing and is signed by the parties. (B) It specifies all of the services to be provided by the licensee or an immediate family member of the licensee. (C) The aggregate services contracted for do not exceed those that are reasonable and necessary for the legitimate business purposes of the arrangement. (D) A person who is referred by a licensee or an immediate family member of the licensee is informed in writing of the personal services arrangement that includes information on where a person may go to file a complaint against the licensee or the immediate family member of the licensee. (E) The term of the arrangement is for at least one year. (F) The compensation to be paid over the term of the arrangement is set in advance, does not exceed fair market value, and is not determined in a manner that takes into account the volume or value of any referrals or other business generated between the parties. (G) The services to be performed under the arrangement do not involve the counseling or promotion of a business arrangement or other activity that violates any state or federal law. Disclosure of Financial Interest If none of the designated health services in the statute are being provided, then the prohibition is in applicable; however, a disclosure of the financial interest must be provided to patients at the time of the referral.[29] Thus a disclosure of financial interest by the principals to the patients is advised. California Business & Professions Code Section 650.02(d) provides: (c) (1) A licensee may refer a person to a health facility, as defined in Section 1250 of the Health and Safety Code, or to any facility owned or leased by a health facility, if the recipient of the referral does not compensate the licensee for the patient referral, and any equipment lease arrangement between the licensee and the referral recipient complies with the requirements of paragraph (2) of subdivision (b). (2) Nothing shall preclude this subdivision from applying to a licensee solely because the licensee has an ownership or leasehold interest in an entire health facility or an entity that owns or leases an entire health facility. (3) A licensee may refer a person to a health facility for any service classified as an emergency under subdivision (a) or (b) of Section 1317.1 of the Health and Safety Code. (4) A licensee may refer a person to any organization that owns or leases a health facility licensed pursuant to subdivision (a), (b), or (f) of Section 1250 of the Health and Safety Code if the licensee is not compensated for the patient referral, the licensee does not receive any payment from the recipient of the referral that is based or determined on the number or value of any patient referrals, and any equipment lease arrangement between the licensee and the referral recipient complies with the requirements of paragraph (2) of subdivision (b). For purposes of this paragraph, the ownership may be through stock or membership, and may be represented by a parent holding company that solely owns or controls both the health facility organization and the affiliated organization. 2. California Law – Anti-Kickback With respect to potential kickbacks, California Business & Professions 650 provides:[30] (a) …. the offer, delivery, receipt, or acceptance by any person licensed under this division or the Chiropractic Initiative Act of any rebate, refund, commission, preference, patronage dividend, discount, or other consideration, whether in the form of money or otherwise, as compensation or inducement for referring patients, clients, or customers to any person, irrespective of any membership, proprietary interest, or coownership in or with any person to whom these patients, clients, or customers are referred is unlawful. (b) The payment or receipt of consideration for services other than the referral of patients which is based on a percentage of gross revenue or similar type of contractual arrangement shall not be unlawful if the consideration is commensurate with the value of the services furnished or with the fair rental value of any premises or equipment leased or provided by the recipient to the payer. Section 650(b) is often used to justify payment of the management fee based on a percentage of gross revenues at fair market value. The California Attorney General (“AG”) has interpreted the term “referral” very broadly; for example, according to the AG, “in selecting a particular medical device for use by his or her patient, a physician is ‘referring’ the patient to the company that supplies the device.”[31] In addition, California Health & Safety Code, Section (“H&S”) 445, prohibits any person from profiting from referring patients to a physician or clinic for care; California Business & Professions Code, Section 2273(a) prohibits “the employment of runners, cappers, steerers, or other persons to procure patients.” The California Attorney General opinions sometimes reference H&S 445 in connection with B&P 650(a) opinions. And, as suggested, Section 13408.5 of the California Corporations Code prohibits the formation of a professional corporation to cause any violation of law, including prohibitions against fee-splitting and kickbacks. Kickbacks and fee-splitting are closely related, in that a “kickback” involves the payment to or from a physician in exchange for a referral, while fee-splitting involves splitting the physician’s fee to the patient between the physician and a third-party. B&P 650 prohibits both.[32] Fee-splitting often implicates CPM concerns. Thus, whether the financial arrangements constitute excessive involvement and effective “control” over the physicians would also be scrutinized by the medical board in investigating a possible B&P 650 violation. As noted, state regulators are often influenced by opinions and publications of the OIG. In addition to flagging statutory prohibitions on kickbacks, the OIG states that “many marketing and advertising activities may involve at least technical violations of the statute.”[33] As a result, it is critical to scrutinize payments for marketing activity involving physicians for the risk of falling within the anti-kickback prohibition. California Attorney General Opinions (Business & Professions Code Section 650) Several opinions California Attorney General interpret the notion of “referral” very broadly, and prohibit various arrangements that have some similarity to your proposed arrangement. Among these: Cal. Atty. Gen. Op. No. 00-1002 (February 1, 2001)[34]: The AG opined that B&P 650 prohibits chiropractors from participating in an Internet marketing plan in which they agree to promote the naturopathic products of an Internet company and to refer their patients to the company’s website in exchange for fees equaling 20 percent of the price of the products purchased by their patients from the company. Cal. Atty. Gen. Op. No. 99-611 (December 16, 1999)[35]: The AG opined that a physician may not enter into an agreement with a group of licensed and certified professionals to perform working hardening and rehabilitation services for patients, where the physician would control the scope of the services by prescription, obtain payment from a workers’ compensation insurance carrier for the services, and retain a portion of the fee after compensating the group. The AG determined that the physician would be receiving a “discount” from the group, and would be keeping a “rebate” in retaining a portion of the fee after compensating the group. Cal. Atty. Gen. Op. No. 98-611 (January 20, 1999)[36]: The AG opined that a corporate entity licensed as a health care service plan may not enter into an agreement with a network of providers of cosmetic medical services, a specialty not covered by any of the entity’s health benefit plans, according to the terms of which the entity would: (1) refer its enrollees to a participating provider, or to a provider selected by the enrollee from a directory of participating providers, for medical services at a discounted rate, and (2) collect and forward to the provider the fees for such services after deducting an “administrative fee.” The AG rejected the argument that B&P 650 would be inapplicable simply because the proposed arrangement would allow the enrollee to select from a list of professionals. Cal. Atty. Gen. Op. No. 93-807 (June 30, 1994)[37]: The AG opined that a podiatry referral service for profit may not direct callers on the following basis: (1) to a service subscriber who pays $500 monthly for a nonexclusive listing according to geographic proximity; (2) to a service subscriber who pays $750 monthly for a semi- exclusive listing within a five-mile radius; and (3) to a service subscriber who pays $1000 monthly for an exclusive listing within a five-mile radius, where the caller may, during the call, request and select an alternative referral. The AG concluded that the proposed referral plan for podiatrists “comes squarely under our 1982 dental referral opinion,” and that the legislative enactment of express authorization for dental referral services (B&P 650.2) and chiropractic referral services (B&P 650.3) is subject to “strict limitations,” and supports the conclusion that a referral plan for podiatrists violates B&P 650. The AG emphasized that the proposed plan would constitute “consideration … as compensation or inducement for referring patients” to the podiatrist. Cal. Atty. Gen. Op. No. 90-304 (October 25, 1990):[38] The AG opined that where a group of radiologists contracts with physicians to provide imaging services for the patients of the physicians, and the agreement provides that (1) the group will charge each patient a fee for the services, (2) the fees collected will be transmitted to the physicians, (3) the physicians will pay stipulated amounts to the group for the services, and (4) the total amounts paid by the physicians will be independent of but increase proportionately less than the total fees collected from the patients, performance of the agreement would violate B&P 650. The AG broke down B&P 650 into five elements: (1) An offer, delivery, receipt or acceptance (2) by any person licensed under this division (the healing arts provisions) (3) of consideration to any person (4) as compensation or inducement for (5) referral of patients, clients or customers. The AG also noted that: “With each referral, the referring physician will receive an economic benefit that is not based solely upon the imaging services rendered the patient. An increment of the consideration will be tied exclusively to the referral itself in that the physician will receive a proportionately greater share of the payments by increasing the number of referrals. Cases Some of the key California cases on kickbacks and fee-splitting include the following: Defendant paid for “referrals,” in violation of B&P 650, in hiring marketers to hand out cards offering defendant’s services and drive patients to defendant’s office, and paying the marketers $20 for each referred patient who was qualified to enroll, and who did enroll, in the Family Planning Access Care and Treatment (Family PACT) or Child Health and Disability Prevention Program (CHDP), even though defendant did not pay for patients who were not qualified to enroll in those programs.[39] Contract between medical doctor and lay hospital administrator whereby the administrator was to contact fellow hospital administrators on behalf of the medical doctor in an effort to persuade them to contract for their emergency room services with the medical doctor and under which the administrator was to receive $250 per month for each hospital client successfully referred by administrator was void in that it violated B&P 650, inasmuch as the referred hospitals became the “clients” or “customers” of the medical doctor and, in turn, the emergency room patients of the hospitals contracted with became referred “patients.”[40] Clinical laboratory’s practice of offering discounted payments to certain patients was not illegal; payment of sales commissions to independent contractor who marketed laboratory’s services to physicians (not patients) did not violate B&P 650, but it did violate the Medi-Cal statute’s prohibition on kickbacks, which is broader and includes referrals of “individuals” to “persons” for the furnishing of “services” which may be paid for by Medi-Cal.[41] The bona fide employee exception to the anti-kickback prohibition regarding Medi-Cal, subsumes the common law definition of “employee,” and excludes independent contractors.[42] The bottom line is that California is a state that takes anti-kickback and fee-splitting prohibitions, very seriously. The term “referral” is interpreted broadly, and there are cases and Attorney General opinions that provide grounds for legal caution when entering into a healthcare venture that may trigger these rules. If you have any questions, contact an attorney experienced in self-referral, anti-kickback, and fee-splitting legal issues. Footnotes [1] 42 USC §1395nn(a)(1); Section 1128B(b) of the Social Security Act. The Centers for Medicare and Medicaid (“CMS”) has issued a series of regulations interpreting the federal self-referral prohibition and the exceptions. See 42 CFR Sections 411.350-411.361. [2] The term “immediate family member” is defined broadly to mean a husband or wife; birth or adoptive parent, child or sibling; stepparent, stepchild, stepbrother, or stepsister; father-in-law, mother-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law; grandparent or grandchild; and spouse of a grandparent or grandchild. [3] The request by a physician for an item or service, including the request by a physician for a consultation with another physician (and any test or procedure ordered by, or to be performed by (or under the supervision of) that other physician), constitutes a “referral” by a “referring physician.” 42 USC §1395nn(h)(5). [4] See below for discussion of DHS. [5]The penalties for violating the Stark law include denial of payment, refunding of payments received, and imposition of significant civil monetary penalties ranging from $15,000 to $100,000, and exclusion from participation in federal health care programs, including Medicare. [6]42 USC §1395nn(a)(2); 42 CFR §354(a). [7] 42 USC §1395nn(h)(1)(A); 42 CFR §411.354(c). [8] 42 CFR §411.351. [9] 42 USC §1395nn(h)(1)(B); 42 CFR §411.351. There are various exceptions under Stark, some of which are relevant to the MSO model. [10] See the summary at Centers for Medicare & Medicaid Services (“CMS”), Physician Self-Referral: Overview. The physician self-referral law can be found in section 1877 of the Social Security Act (42 U.S.C. 1395nn). The regulations are located in Title 42 of the Code of Federal Regulations §411.350 – §411.389. [11] See CMS, Physician Self-Referral: Code List for Certain Designated Health Services; 42 CFR §411.351 (defining DHS categories without reference to the Code List). The code list includes x-rays, ultrasound, CT, MRI, nuclear medicine, and other imaging services. [12] See 42 CFR Part 411. [13] 42 U.S.C. §1320a-7b(b); Section 1128B(b) of the Social Security Act. Violation of this statute is a felony punishable by a fine, imprisonment, automatic exclusion from Medicare and Medi- Cal, and civil monetary penalties. [14] For purposes of the anti-kickback statute, “remuneration” includes the transfer of anything of value, directly or indirectly, overtly or covertly, in cash or in kind. [15] United States v. Kats, 871 F.2d 105 (9th Cir. 1989); United States v. Greber, 760 F.2d 68 (3d Cir.), cert. denied, 474 U.S. 988 (1985). The statute ascribes liability to both sides of an impermissible “kickback” transaction. [16] 56 Fed. Reg. 35952 (July 29, 1991). [17] See 56 Fed. Reg. 35974. [18] 64 Fed. Reg. 63518, 63530 (Nov. 19, 1999). [19]42 C.F.R. §1001.952. With respect to the discount safe harbor, according to the OIG Special Advisory Bulletin on Contractual joint Ventures: “Simply put, the discount safe harbor does not protect—and has never protected—prices offered by a seller to a buyer in connection with a common enterprise. To be protected under the discount safe harbor, a price reduction must be based on an arms length transaction.” [20] Cal. Bus. & Prof. Code §650.01. [21] Calif. Bus. & Prof. Code §650.01(b)(2). [22]Calif. Bus. & Prof. Code §650.01(a)(3). [23] Calif. Bus. & Prof. Code §650.01(b)(4). [24] Calif. Bus. & Prof. Code §2426(a). See also the California Medical Board’s webpage on Financial Interest Statement. [25] Cal. Bus. & Prof. Code, §2426(b)(1). [26] Cal. Bus. & Prof. Code §2426(b)(6). [27] Cal. Bus. & Prof. Code §650.02. [28] Cal. Bus. & Prof. Code §650.01(b)(5)-(6). [29] Cal. Bus. Prof. Code §650.01(f). See also AG Opin. No. 05-614 (Feb. 27, 2006) (physician may refer a patient “to a company in which he or she has an ownership interest as long as the referral is for a medical device that is not covered by section 6501.01, subdivision (a).” [30] In addition, California Health & Safety Code, Section 445, prohibits any person from profiting from referring patients to a physician or clinic for care; California Business & Professions Code, Section 2273(a) prohibits “the employment of runners, cappers, steerers, or other persons to procure patients.” And Section 13408.5 of the California Corporations Code prohibits the formation of a professional corporation to cause any violation of law, including prohibitions against fee-splitting and kickbacks. [31] Cal. Atty. Gen. Op. No. 05-614 (February 27, 2006) (citing People v. Duz-Mor Diagnostic Laboratory Inc. (1998) 68 Cal.App.4th 654, 664). See also Major California Attorney General Opinions Involving Business & Professions Code Section 650. [32] As well, the OIG Special Fraud Alert on Joint Ventures cautions against arrangements where the joint venture is a “shell” intended to induce referrals. [33] See 56 Fed. Reg. 35974. [34] 84 Ops. Cal. Atty. Gen. 25 (Cal.A.G.), 2001 WL 117913. [35]82 Ops. Cal. Atty. Gen. 225 (Cal.A.G.), 1999 WL 1213591. [36] 82 Ops. Cal. Atty. Gen. 1 (Cal.A.G.), 1999 WL 26906. [37] 77 Ops. Cal. Atty. Gen. 143 (Cal.A.G.), 1994 WL 287652. [38] 73 Ops. Cal. Atty. Gen. 321 (Cal.A.G.), 1990 WL 484782. [39] People v. Guiamelon (App. 2 Dist. 2012) 140 Cal.Rptr.3d 584, 205 Cal.App.4th 383, review denied, certiorari denied 133 S.Ct. 547, 184 L.Ed.2d 343/ [40] Mason v. Hosta (App. 2 Dist. 1984) 199 Cal.Rptr. 859, 152 Cal.App.3d 980. [41] People v. Duz-Mor Diagnostic Laboratory, Inc. (App. 2 Dist. 1998) 80 Cal.Rptr.2d 419, 68 Cal.App.4th 654, as modified, review denied. [42] People v. Palma, 40 Cal. App. 4th 1559 (1995). tate.
July 23, 2014
Healthcare
Neurofeedback Laws & Licensing: Unlock Brains’ Potential But Be Legally Safe–Part 1: Unlicensed Practice
Who can legally practice neurofeedback—only licensed professionals—and what laws govern neurofeedback practice? Neurofeedback Law Case Studies—Sneak Preview 1. Paul the Psychologist writes: “I had begun to mentor an individual with a Ph.D. in psychology, but someone who was/is not licensed in any mental health or health profession. They maintain their own office and had been operating a private practice solely doing educational evaluations. They have begun to do neurofeedback with children and adults with a wide variety of issues (ADHD, anger, oppositional behavior, sleep issues, anxiety, RAD). I became concerned that I had liability exposure for their activities and discontinued the consultation. Were my concerns well founded? How is liability for mentoring or consultation determined?” 2. Phyllis the Psychiatrist writes: “Thanks for this opportunity. As a psychiatrist, I wonder if my offering neurofeedback (NF) to clients increases the risk of being sued. For example, if someone comes in with an anxiety disorder, and I suggest a trial of NF instead of medication, then what is my risk? If the patient does not respond well, and in fact his condition deteriorates, I’m left very exposed — this is outside standard psychiatric guidelines. In fact most psychiatrists have never heard of NF. So my question is, how can I best protect myself?” 3. Chris the Chiropractor has studied neurofeedback and wants to advertise on his website a spectrum of conditions that he can treat through neurofeedback, including not only stress, reduction and peak performance, but also: chronic pain, headaches, insomnia, mental fogginess, ADD/ADHD, autism, bruxism, chronic fatigue, cerebral palsy, fibromyalgia, IBS, Parkinson’s, PMS, TBI- Traumatic Brain Injury, stroke, tics, Tourette Syndrome, addictions, anxiety, anger, depression, irritability, mood swings, fear, phobias, PTSD, mental disorders. What legal issues does Chris face? The $64,000 Question There is a lot of Internet chat about neurofeedback being used by various practitioners, licensed and unlicensed, with questions rolling back and forth about what’s permissible or not. One comment asks: Would someone please state the actual law in regards to using neurofeedback and licensing??? This is the proverbial “$64,000 question.” I often liken healthcare regulation to a Rubik’s Cube. Just when you line up a row of colors, something else pops out of place, and you have to reconfigure the cube. Or, it’s like going to a casino where all the horizontal and vertical lines have to line up. A diagonal “bingo” is not sufficient. In lawyer terms: big caveat and disclaimer. You have an emerging area of healthcare practice where the legal rules can be ambiguous, archaic, or simply anarchic. Controversy surrounds the practice, and different professional societies and groups each have different answers. Any time anyone puts forth information on the Web, a hundred comments spring up ready to attack, and defend an antithetical position. Caution: this discussion may create unusual and interesting brainwave patterns. The Ideal Future and the Likely Reality Let’s frame the discussion of licensure with this quote: There are two fundamental issues that need to be discussed. One is the ideal future toward which we should strive. The other is the likely reality to which we must accommodate. Neurofeedback cannot succeed as a fringe discipline, or even as a subset of alternative and complementary medicine. Feedback and stimulation techniques will inevitably move to become the central organizing principle of psychology, of psychiatry, and of neurology. The core of these disciplines will be the increasing understanding of network relations within the cerebrum, and that will quite simply become the headline story for the decades to come. I will even acknowledge that up to now we have not been able to hasten the day of mainstream acceptance. One can make just as good a case that we have induced mainstream professionals to take an adverse position prematurely, so that now there is a degree of hostility to neurofeedback that is unmatched among the related technologies such as deep brain stimulation, repetitive transcranial magnetic stimulation, vagal stimulators, etc. But who could have foreseen such mindless opposition by intelligent people? Siegfried Othmer, The Unlicensed Practitioner Again Introduction to Licensing Issues: “Unlicensed Practice of Neurofeedback” A recent article online mentioned the “unlicensed practice of neurofeedback.” This is actually a misnomer. There is no unlicensed practice of neurofeedback, which is a modality. States license practitioners—physicians, chiropractors, acupuncturists, dentists, nurses, psychologists, social workers, physician assistants, physical therapists, and others. Unlicensed practice of one of these professional practices (for example, the unlicensed practice of medicine or of psychology) is prohibited by law. There are really two fundamental legal questions: • Is the practice of neurofeedback by a given individual who does not have any professional healthcare license, the unlicensed practice of medicine, psychology, or another licensed profession? • Is the practice of neurofeedback by a licensed healthcare provider, such as a psychologist, within the legally authorized scope of practice for that licensed profession, according to state law? These questions are related, in that a practitioner (say, a physical therapist where state law would not authorize the PT to practice neurofeedback) who goes beyond the authorized scope of practice, can be said to be practicing a licensed practice (for example, medicine or psychology). What Is Neurofeedback ISNR states: Like other forms of biofeedback, NFT uses monitoring devices to provide moment-to-moment information to an individual on the state of their physiological functioning. The characteristic that distinguishes NFT from other biofeedback is a focus on the central nervous system and the brain. Neurofeedback training (NFT) has its foundations in basic and applied neuroscience as well as data-based clinical practice. It takes into account behavioral, cognitive, and subjective aspects as well as brain activity. NFT is preceded by an objective assessment of brain activity and psychological status. During training, sensors are placed on the scalp and then connected to sensitive electronics and computer software that detect, amplify, and record specific brain activity. Resulting information is fed back to the trainee virtually instantaneously with the conceptual understanding that changes in the feedback signal indicate whether or not the trainee’s brain activity is within the designated range. Based on this feedback, various principles of learning, and practitioner guidance, changes in brain patterns occur and are associated with positive changes in physical, emotional, and cognitive states. Often the trainee is not consciously aware of the mechanisms by which such changes are accomplished although people routinely acquire a “felt sense” of these positive changes and often are able to access these states outside the feedback session. NFT does not involve either surgery or medication and is neither painful nor embarrassing. When provided by a licensed professional with appropriate training, generally trainees do not experience negative side-effects. Typically trainees find NFT to be an interesting experience. Neurofeedback operates at a brain functional level and transcends the need to classify using existing diagnostic categories. It modulates the brain activity at the level of the neuronal dynamics of excitation and inhibition which underlie the characteristic effects that are reported. Research demonstrates that neurofeedback is an effective intervention for ADHD and Epilepsy. Ongoing research is investigating the effectiveness of neurofeedback for other disorders such as Autism, headaches, insomnia, anxiety, substance abuse, TBI and other pain disorders, and is promising. (emphasis added) In general, when a practitioner makes claims that a given modality (e.g., neurofeedback) treats disease—or a mental health condition—then that practice is considered practice of medicine (or possibly psychology). So to the extent neurofeedback is used as “an effective intervention” for conditions, of ADHD, then neurofeedback is within the province of physicians (including psychiatrists) or clinical psychologist, or other mental healthcare practitioners (depending on their scope of practice. Unlicensed Medical Practice All states require a license to practice “medicine” and make it a crime to violate this requirement. State licensing laws typically define medicine in terms of diagnosis, operation, prescription, and treatment for any illness, disease or injury. Corporations cannot practice medicine and hence medical licensing laws are also said to prohibit the “corporate practice of medicine.” Here is a typical statutory definition of medical practice: ‘Practice of Medicine,’ which shall include the practice of medicine alone, the practice of surgery alone, or both, means the diagnosis, treatment or correction of, or the attempt to, or the holding of oneself out as being able to diagnose, treat or correct any and all human diseases, injuries, ailments or infirmities, whether physical or mental, organic or emotional, by any means, methods, devices or instrumentalities, except as the same may be among the acts or persons not affected by this chapter. This one is from Florida: “Practice of medicine:” the “diagnosis, treatment, operation, or prescription for any human disease, pain, injury, deformity, or other physical or mental condition.” Where did this come from? As I’ve written elsewhere (see also the AMA Virtual Mentor piece): For over 120 years, the Supreme Court has upheld the principle that states may regulate the practice of medicine and determine what is and is not lawful [1]. In Dent v. West Virginia, the State of West Virginia refused a license to Frank Dent, a member of the “eclectic” sect of physicians who incorporated botanical remedies into medicine. Dent had graduated from the American Medical Eclectic College of Cincinnati, but could not establish that he had attended a medical college recognized by West Virginia, passed a designated examination, or practiced in West Virginia for 10 years. Dent argued that, by refusing him a license, West Virginia deprived him of due process of law. The Supreme Court disagreed, holding that “the power of the State to provide for the general welfare of its people authorizes it to prescribe all such regulations as in its judgment will secure or tend to secure them against the consequences of ignorance and incapacity, as well as of deception and fraud” [2]. Around the time of Dent, the states began enacting medical licensing statutes. Today, all states define the “practice of medicine,” in part, by using such words as diagnosis, treatment, prevention, cure, and prescribe, in connection with disease, injury, and mental or physical condition [3]. State law came to designate the practice of medicine without a license as a crime. Subsequent cases relied on the Dent holding to interpret the medical licensing statutes and uphold prosecutions against a variety of complementary and alternative medicine (“CAM”) practitioners. For example, in People v. Amber, an acupuncturist argued that the statutory prohibition on unlicensed “practice of medicine” referred only to “Western allopathic medicine” and did not encompass systems such as Chinese acupuncture, which differs in its “philosophy, practice and technique” [4]. The court disagreed, holding that any “‘sizing up’ or a comprehending of the physical or mental status of a patient” constitutes diagnosis, which is part of the practice of medicine [5]. Similarly, other cases involved prosecutions of practitioners of modalities such as hands-on healing [6], iridology [7], and homeopathy [8]. In each case, courts interpreted statutory terms such as “diagnosis” and “treatment” broadly. Courts have also resisted constitutional challenges to health care licensure on a variety of fronts, including challenges based on free exercise and due process limitations [3]. [Citations omitted.] The courts, and state attorneys general, interpret the practice of “medicine” very broadly. Even the “Caveman Blogger” has gotten in trouble with the state medical board for making nutritional and dietary recommendations to his followers in North Carolina. See also, Legal lines blur between coaching, hypnotherapy, and psychology (unlicensed practice). California Law for Non-Licensed Practitioners In California, SB 577 (codified into the Business & Professions Code) allows non-licensed practitioners of the healing arts to engage in certain practices, so long as they provider a disclosure document and meet other statutory criteria. This statute gives non-licensed healers and other practitioners a legal foothold. However, one of the criteria is that the practitioner must not practice medicine. And, medical and psychological licensing laws exist side by side with the statute allowing non-licensed practice. Other states, such as Minnesota, have similar statutes for non-licensed practice—again, coexisting with medical and psychological licensing statutes. (If you need help structuring a non-licensed healthcare practice, contact our law firm.) Neurofeedback, Life Coaches, Nutritionists: Enforcement Priorities & Discretion Many “life coaches” skirt the legal and regulatory edges of the practice of psychology, and attempt to carve out a space in which they focus on setting and achieving goals. The practice of psychology is defined so broadly in most states that it sweeps in a great deal of activity. In part, life coaches exist at the legal periphery because enforcement priorities vary by state and by agency and prosecutor. Broad statutory and administrative definitions of professional practice, however, leave life coaches at legal risk. Witness again, for example, the case of the Caveman Blogger—whose area of coverage, nutrition, was slightly different, but who found himself embroiled in an investigatory process for unlicensed practice, for counseling clients about the Paleolithic diet. Boards of nutrition, like boards of psychology and medicine, have investigatory discretion to pursue unlicensed activity. Many of our clients have found themselves targets of investigation and enforcement, and contacted our firm to deal with unexpected and unwanted regulatory attention for activities the clients’ previously considered not only legally safe, but beneficial for their own clients. Does Working Under Physician Supervision Mitigate Unlicensed Practice Issues Some people believe that working “under the supervision” (or “under the license”) of a doctor or psychologist, mitigates unlicensed professional practice issues. This is a myth. There is no such thing as physician or psychologist supervision of an unlicensed person. We have licensed physician assistants, psychological assistants, nursing assistants, chiropractic assistants, medical assistants, and other licensed adjunctive providers. And we have providers that practice dependently under the supervision of another provider (for example, an RN under an MD). These categories are all defined by law, and their legal parameters must be met for practice. But you could not walk into my law office, for example, and ask me to adjust your spine “under the supervision” or “under the license” of a chiropractor. A lawyer doesn’t have the legal authority to perform spinal manipulation. Nor does your grocer, even under the chiropractor’s supervision. Here’s what New York State says about working “under” a psychologist: May psychologists use unlicensed individuals to perform any practices defined as the “practice of psychology” in Article 153? No. The use of unlicensed persons, persons without a limited permit, or persons who do not meet the exemption requirements, by licensed psychologists to perform any services or activities that fall within the statutory definition of psychology could result in professional misconduct charges or in the criminal charge of aiding and abetting illegal practice. The same principle applies with respect to what may be considered medical practice. Now, it may be that there is a role for technicians with respect to biofeedback—but this would exclude anything considered diagnosis and treatment. Here is a statement to contemplate from the ISNR Standards of Practice: Those providing neurofeedback services to individuals with diagnostic conditions as defined in ICD or DSM manuals and who are not licensed to work with such conditions should be evaluated and supervised by a professional who is licensed to treat such condition(s) and is on-site providing full time face-to-face supervision with the person providing the direct service. They should provide supervised services only after the licensed professional has evaluated the patient and set a treatment plan. The tasks assigned to such unlicensed individuals should be in keeping with their demonstrated level of competence and training and with applicable state law governing the health professions and the statute under which the supervisor is licensed. It is recognized that the level of supervision may vary depending on the complexity of the condition and individual being treated. The ultimate ethical responsibility and accountability for services performed by unlicensed persons to persons with diagnostic conditions rests with the licensed supervisor who reviews the assessment, treatment plans, course of treatment, and outcomes. Thus the nature of the supervisory relationship should be explicitly communicated in writing and written agreements with the unlicensed technician. Such a document should detail their duties, range of responsibilities, types of services, limits of independent actions, and responsibilities for reporting side effects or adverse reactions to their supervisor. This is one attempt to delineate what the licensed vs. unlicensed person does, although it does not provide any detail on what tasks are contemplated for the non-licensed person. Unlicensed Medical Practice: A Continuing Saga There are many older cases of iridologists, energy healers, hypnotherapists, and others hoisted on the petard of unlicensed medical practice. Before chiropractic was licensed, the profession’s slogan was, “go to jail for chiropractic!” Unlicensed practice of medicine investigations and prosecutions continue. In more recent times, an acupuncturist dispensed pills and advertised curing cancer. In appeal from a Department of Health determination, the court stated: As to the severity of the penalty, the Court finds that the DOH had overwhelming evidence to conclude that the Appellant preyed upon vulnerable individuals in times of personal crisis. He made numerous empty promises to extort disproportionate sums of money for the services he provided. To add insult to injury, he published advertisements that contained reproductions of his State-issued license to practice acupuncture to lend credence to this disgusting operation. As such the record evidence demonstrates the necessity of the penalty to protect the public from potential harm at the hands of Dr. Mai. Therefore, the Court not only refuses to disturb the decisions and orders of the DOH but, rather, wholly endorses the penalty imposed on Dr. Mai. See Unlicensed health care provider statute interpreted in RI. In Colorado, a hypnotherapist received a cease and desist for practicing hypnotherapy. Medical and psychological licensing statutes define the scope of their licensed professions very broadly, so that unlicensed practitioners can easily run afoul of regulatory tripwires.
July 5, 2014
Healthcare
What anti-kickback and fee-splitting legal issues arise when physicians or other healthcare providers lease space?
Many physicians, chiropractors, acupuncturists, and other healthcare practitioners want to know whether they are fee-splitting when they rent a room hourly from a medical practice or other healthcare facility or practitioner. The answer, of course, depends on the arrangement, including whether other aspects of it raise fee-splitting, Stark, or anti-kickback considerations. Let’s focus for now just on the hourly rental. The problem with this is that the payment for the space varies by volume or value of patients seen. On its face, that raises anti-kickback enforcement red flags. We have to think through these potential anti-kickback and fee-splitting legal issues when drafting a sublease for the healthcare practitioner. Note that there are pros and cons to having a separate sublease with the LLC/Management Company as lessor and practitioners as lessees. In part, this depends on whether your landlord for the overall space requires that the practitioners sign a separate sublease (which typically has space for landlord consent), or, can simply sign a consent to sublease arrangements that are agreed to by practitioners in the management agreement. As to the terms of the sublease, OIG addressed rental arrangements in its Special Fraud Alert on Rental of Space in Physician Offices by Persons or Entities to Which Physicians Refer. States such as California, New York, Massachusetts, Texas, Arizona, and so on, often look to federal law as guidance when interpreting or applying their own fee-splitting and anti-kickback law. In this case, the anti-kickback Fraud Alert restates the space rental safe harbor to federal anti-kickback law (42 CFR §1001.952(b)).In this safe harbor, all of the following criteria must be met: The agreement is set out in writing and signed by the parties. The agreement covers all of the premises rented by the parties for the term of the agreement and specifies the premises covered by the agreement. If the agreement is intended to provide the lessee with access to the premises for periodic intervals of time rather than on a full-time basis for the term of the rental agreement, the rental agreement specifies exactly the schedule of such intervals, their precise length, and the exact rent for such intervals. The term of the rental agreement is for not less than one year. The aggregate rental charge is set in advance, is consistent with fair market value in arms-length transactions, and is not determined in a manner that takes into account the volume or value of any referrals or business otherwise generated between the parties for which payment may be made in whole or in part under Medicare or a State health care program. The aggregate space rented does not exceed that which is reasonably necessary to accomplish the commercially reasonable business purpose of the rental. Elaborating on the space rental safe harbor, in its Fraud Alert, the OIG expressed concern that rental payments may be disguised kickbacks to induce referrals. The OIG pointed to three “questionable features” of rental arrangements: The appropriateness of rental arrangements. The rental amounts. Time and space considerations. With respect to rental amounts, OIG states that rent should be: At FMV. This means that among other things: The rent should not exceed the amount paid for comparable property. Moreover, where a physician rents space, the rate paid by the supplier should not exceed the rate paid by the physicians in the primary lease for their office space, except in rare circumstances. Fixed in advance. Not take into account, directly or indirectly, the volume or value of referrals or other business generated between the parties. Thus, an hourly rental arrangement would raise enforcement concerns, as it would not be “fixed in advance” (i.e., as compared with an annual lease), and, the overall rent would vary based on the volume of patients, unless the total number of leased hours over the 12-month period is set forth in the sublease and is treated on a “use it or lose it” basis. To give an example of “use it or lose it:” the sublease could specify that that the sublessee practitioner is leasing 10 hours per month, with a schedule mutually agreed-upon in advance of each month; if the parties cannot agree on a schedule for a particular month, the prior month’s schedule would remain in place; if, during a given month, the sublessee needs the space for only 5 hours, the sublessee would still need to pay for the full 10 hours (i.e., still pay for 5 unused hours); conversely, if during a given month, the sublessee needs the space for more than 10 hours, the sublessee would not be able to use the space for any excess time beyond 10 hours during that month. The sublease can specify that the number of hours can be adjusted by mutual agreement prospectively (and not retroactively to account for any “unused hours”) but only on an annual basis (i.e., every 12 months). “Use it or lose it” arrangements can reduce the risk of scrutiny regarding hourly arrangements. OIG notes that suspect arrangements include, among others: rental amounts in excess of amounts paid for comparable property rented in arms-length transactions between persons not in a position to refer business; rental amounts for subleases that exceed the rental amounts per square foot in the primary lease; rental amounts that are subject to modification more often than annually; rental amounts that vary with the number of patients or referrals; rental arrangements that set a fixed rental fee per hour, but do not fix the number of hours or the schedule of usage in advance (i.e., “as needed” arrangements); rental amounts that are only paid if there are a certain number of Federal health care program beneficiaries referred each month; and rental amounts that are conditioned upon the supplier’s receipt of payments from a federal health care program. (We have added the bold for emphasis). With respect to time and space considerations, OIG notes that: Suppliers should only rent premises of a size and for a time that is reasonable and necessary for a commercially reasonable business purpose of the supplier. Rental of space that is in excess of suppliers’ needs creates a presumption that the payments may be a pretext for giving money to physicians for their referrals. Examples of suspect arrangements include: rental amounts for space that is unnecessary or not used… rental amounts for time when the rented space is not in use by the supplier… non-exclusive occupancy of the rented portion of space. For example, a physical therapist does not rent space in a physician’s office, but rather moves from examination room to examination room treating patients after they have been seen by the physician. Since no particular space is rented, we will closely scrutinize the proration of time and space used to calculate the therapist’s “rent.” Thus, having different practitioners with non-exclusive occupancy of various rooms, is problematic. OIG goes on to note that: In addition, rental amount calculations should prorate rent based on the amount of space and duration of time the premises are used. The basis for any proration should be documented and updated as necessary. Depending on the circumstances, the supplier’s rent can consist of three components: (1) exclusive office space; (2) interior office common space; and (3) building common space. OIG details these three components as follows: 1. Apportionment of exclusive office space – The supplier’s rent should be calculated based on the ratio of the time the space is in use by the supplier to the total amount of time the physician’s office is in use. In addition, the rent should be calculated based on the ratio of the amount of space that is used exclusively by the supplier to the total amount of space in the physician’s office. For example, where a supplier rents an examination room for four hours one afternoon per week in a physician’s office that has four examination rooms of equal size and is open eight hours a day, five days per week, the supplier’s prorated annual rent would be calculated as follows: Physician Office Rent Per Day % of Physician Office Space Rented by Supplier % of Each Day Rented by Supplier No. of Days Rented by Supplier Per Year annual rent of primary lease no. of work days per year X sq. ft. exclusively occupied by supplier total office sq. ft. X 4 hours 8 hours X 52 days (i.e., 1 day per week) = Supplier’s annual rent for exclusive space 2. Apportionment of interior office common space – When permitted by applicable regulations, rental payments may also cover the interior office common space in physicians’ offices that are shared by the physicians and any subtenants, such as waiting rooms. If suppliers use such common areas for their patients, it may be appropriate for the suppliers to pay a prorated portion of the charge for such space. The charge for the common space must be apportioned among all physicians and subtenants that use the interior office common space based on the amount of non-common space they occupy and the duration of such occupation. Payment for the use of office common space should not exceed the supplier’s pro rata share of the charge for such space based upon the ratio of the space used exclusively by the supplier to the total amount of space (other than common space) occupied by all persons using such common space. 3. Apportionment of building common space – Where the physician pays a separate charge for areas of a building that are shared by all tenants, such as building lobbies, it may be appropriate for the supplier to pay a prorated portion of such charge. As with interior office common space, the cost of the building common space must be apportioned among all physicians and subtenants based on the amount of non-common space they occupy and the duration of such occupation. For instance, in the example in number one above, the supplier’s share of the additional levy for building common space could not be split 50/50. Note that the OIG will have enforcement authority over those practitioners billing under Medicare/Medicaid, although the OIG alert will be influential to state authorities as well. We recommend using the OIG formula and criteria to guide your renting arrangements with practitioners, as a risk management strategy with regard to potential anti-kickback enforcement by state authorities, even where practitioners are not billing Medicare/Medicaid and therefore not subject to federal anti-kickback law. Whether you are a physician, physician assistant, physical therapist, nurse, chiropractor, acupuncturist or massage therapist; or whether you operate a medical practice, medical spa, or other kind of healthcare practice, it’s good to know the law.
July 2, 2014
Healthcare
How to avoid legal pitfalls of physician (MD) collaboration with chiropractors (DC)
How can integrative medicine physicians collaborate with chiropractors, without triggering unnecessary patient liability, medical board discipline, or other legal exposure for fee-splitting, anti-kickback violations and other legal pitfalls? Many medical doctors and chiropractors create collaborative clinical practices that work in terms of patient care, but run afoul of key laws and regulations in ways that jeopardize both the MD and the DC. These legal rules include: laws governing professional corporations (such as the Moscone-Knox Professional Corporations Act in California); statutory and regulatory prohibitions against corporate practice of medicine; federal anti-kickback laws and state laws prohibiting kickbacks and fee-splitting (such as, California Business & Profession Code Section 650); laws governing professional scope of practice (such as medical licensing laws, psychological licensing laws, and chiropractic licensing laws); laws governing medical, chiropractic, psychological, or other professional discipline; formal and informal professional standards of care, which become important when considering whether medical malpractice has occurred; other laws and regulations. Corporate practice of medicine concerns in medical doctor / chiropractor collaboration The place to begin is with the understanding that all licensed healthcare professionals are not created equal. In the Beginning (late 19th century, as explained in Complementary & Alternative Medicine: Legal Boundaries & Regulatory Perspectives), licensing statutes were created for medical doctors. MDs were granted so-called “unlimited licensure” to diagnose and treat disease. Decades later, chiropractors got licensure–a more “limited” licensure with an assigned scope of practice. Licensing laws prohibit unlicensed practice of medicine (or psychology, chiropractic, and other professions); and consequently, corporate practice of medicine–the practice of medicine by a corporation other than a professional medical corporation–is illegal. In many states (including New York and California), this means that if a chiropractor hires a physician, the employment arrangement is likely to be seen as corporate practice of medicine and therefore illegal. Curiously, in California, the Moscone-Knox Professional Corporation Act does allow an MD to be employed by a chiropractic corporation: 13401.5. Notwithstanding subdivision (d) of Section 13401 and any other provision of law, the following licensed persons may be shareholders, officers, directors, or professional employees of the professional corporations designated in this section so long as the sum of all shares owned by those licensed persons does not exceed 49 percent of the total number of shares of the professional corporation so designated herein, and so long as the number of those licensed persons owning shares in the professional corporation so designated herein does not exceed the number of persons licensed by the governmental agency regulating the designated professional corporation. This section does not limit employment by a professional corporation designated in this section of only those licensed professionals listed under each subdivision. Any person duly licensed under Division 2 (commencing with Section 500) of the Business and Professions Code, the Chiropractic Act, or the Osteopathic Act may be employed to render professional services by a professional corporation designated in this section…. (k) Chiropractic corporation. (1) Licensed physicians and surgeons. Note that employment must be by a chiropractic professional corporation, and not by a chiropractor or DBA for a chiropractor or general corporation. Despite this seeming legal permissiveness, the corporate practice of medicine doctrine, as well as other areas of law, mean that the MD who becomes an employee to a chiropractic corporation is in legal peril. Among other things, the California Medical Board’s web page on corporate practice of medicine articulates medical board concerns about: Selection, hiring/firing (as it relates to clinical competency or proficiency) of physicians, allied health staff and medical assistants. Approving of the selection of medical equipment and medical supplies for the medical practice. Management service organizations arranging for, advertising, or providing medical services rather than only providing administrative staff and services for a physician’s medical practice. An employment arrangement grants the chiropractic professional corporation a lot of control over the physician as an employee. It is inconsistent with the medical board’s view on corporate practice of medicine, quoted above. Although one option is for the chiropractor to serve as manager for the medical practice (we discuss the MSO model in other blog posts),the California medical board also warns on its corporate practice of medicine page: The following types of medical practice ownership and operating structures also are prohibited…: A physician acting as “medical director” when the physician does not own the practice. For example, a business offering spa treatments that include medical procedures such as Botox injections, laser hair removal, and medical microdermabrasion, that contracts with or hires a physician as its “medical director.” Standard of care and scope of practice concerns in the MD – DC clinical practice A significant question when MDs and DCs collaborate is, are the patients the MD is seeing those of the medical practice, or those of the chiropractic practice? There is less of a concern if the professional medical corporation is hiring the chiropractor. This is allowed by Moscone-Knox and often by other professional corporation statutes in other states. However, the scenario where a chiropractic professional corporation hires the MD raises standard of care issues. The MD must follow a medical standard of care, and not the chiropractic standard of care. If the chiropractor is the employer, then the chiropractor is calling the clinical shots. Among other things, it is important to ask, whose patients are being seen by the physician? If the MD is seeing the chiropractor’s patients, this is problematic. Typically, this means that MD is likely serving as a remote (i.e., token) physician who signs off on procedures the chiropractor has recommended (such as laser therapy, vitamin B12 injections, or other functional medicine, anti-aging medicine, hormone therapies, weight loss, or other therapies at the borderland of chiropractic scope of practice). If these are not medically indicated by the patient’s condition–as diagnosed by the physician–there can be an issue as to whether the medical doctor is practicing standard of care. Scope of practice is also of concern if the chiropractor is treating outside his or her legislatively authorized scope of practice. This can happen by, for example, the chiropractor hiring a nurse practitioner and essentially trying to “rent” the medical doctor’s license and force the illusion of supervision, to create a cover for practice outside chiropractic ken. Any physician in this type of arrangement must take care to get legal counsel to assess whether the chiropractor’s offer was an illegal one. Fee-splitting concerns in the medical doctor – chiropractor practice Most state laws, including California Business & Professions Code section 650, prohibit fee-splitting, and prohibit receiving or giving anything of value in exchange for a patient referral. Federal laws prohibit the same whenever a claim for the patient’s care is submitted to Medicare or Medicaid. One of the danger zones here opens up when the chiropractor offers to pay the medical doctor a fixed amount per patient that the MD sees within the chiropractic office. Per-patient splits are always problematic. (See, for example, our post on fee-splitting issues in the integrative care setting). The chiropractor cannot take, for example, $100 from the patient and split this on a percentage basis with the physician. Models of Physician – Chiropractor Integrative Practice Some of the ways a chiropractic practice can bring a medical doctor into clinical decision-making with a greater success of legal compliance include: Lease at fair market value: leasing space to the medical doctor; the lease must be at fair market value, to help withstand anti-kickback and fee-splitting scrutiny; also, the lease should comply with federal and state safe harbor provisions; Employment by professional medical corporation: the chiropractor can be an employee of the professional medical corporation, and, depending on state law (such as Moscone-Knox), potentially also a shareholder (up to 49% in California); Management (MSO) model: the chiropractic professional corporation can serve as a manager to the professional medical corporation under a management services organization agreement (or management agreement), with the fee at fair market value for services rendered; Marketing services by chiropractor: the chiropractic professional corporation can provide marketing services to the professional medical corporation, with a flat marketing fee at fair market value. Billing & Coding In any arrangement in which the chiropractor is an employee of the professional medical corporation, the physician must take care that appropriate billing and coding rules are being followed when the chiropractor bills under the EIN of the professional medical corporation. Physician Supervision Further, the MD must properly supervise registered nurses (RNs), physician assistants (PAs), and medical assistants. In California, the MD must have a delegation of services agreement in place for physician assistants, and, a collaborative practice agreement with the registered nurses as well as standardized protocols. Dependent practitioners must be properly supervised. Additional rules, such as those governing physical therapists, chiropractic assistants, and others, must be respected. The physician must supervise all medical procedures (for example, whenever the laser is being used for medical purposes). Medical Director title is legally dangerous Physicians, beware the chiropractor’s offer to become “medical director.” Medical boards aggressively enforce their rules where they perceive a violation. Many physicians enter into arrangements with chiropractors or other healthcare practitioners, hoping to ‘get rich quick’ while unwittingly jeopardizing their license. (See our post, If someone asks you to be medical director, run). Conclusion: The Collaborative Practice Healthcare laws and regulations are arcane and esoteric. When you are developing a telemedicine, online health, m-health, or electronic medical platform, or a multi-disciplinary clinic or clinical collobration, contact our healthcare legal team for appropriate healthcare & FDA legal and regulatory advice.
May 26, 2014
Healthcare
Physician Sale of Dietary Supplements – Legal and Regulatory Restrictions
Note that rules are always changing and these particular limits may have been modified. Some states restrict the markup a physician can have on sales of dietary supplements. For example, New Jersey law has some relevant law. Very generally, New Jersey law provides for restrictions on referrals of patients where the practitioner has a financial interest. Specifically:[1] a. A practitioner shall not refer a patient or direct an employee of the practitioner to refer a patient to a health care service in which the practitioner, or the practitioner’s immediate family, or the practitioner in combination with the practitioner’s immediate family has a significant beneficial interest…. (emphasis added) b. If a practitioner is permitted to refer a patient to a health care service pursuant to this section, the practitioner shall provide the patient with a written disclosure form, prepared pursuant to section 3 of P.L.1989, c. 19 (C.45:9-22.6), and post a copy of this disclosure form in a conspicuous public place in the practitioner’s office. c. The restrictions on referral of patients established in this section shall not apply to: (1) medical treatment or a procedure that is provided at the practitioner’s medical office and for which a bill is issued directly in the name of the practitioner or the practitioner’s medical office…. Relevant definitions are as follows:[2] “Health care service” means a business entity which provides on an inpatient or outpatient basis: testing for or diagnosis or treatment of human disease or dysfunction; or dispensing of drugs or medical devices for the treatment of human disease or dysfunction. Health care service includes, but is not limited to, a bioanalytical laboratory, pharmacy, home health care agency, rehabilitation facility, nursing home, hospital, or a facility which provides radiological or other diagnostic imagery services, physical therapy, ambulatory surgery, or ophthalmic services. (emphasis added) “Immediate family” means the practitioner’s spouse and children, the practitioner’s siblings and parents, the practitioner’s spouse’s siblings and parents, and the spouses of the practitioner’s children. “Practitioner” means a physician, chiropractor or podiatrist licensed pursuant to Title 45 of the Revised Statutes. “Significant beneficial interest” means any financial interest; but does not include ownership of a building wherein the space is leased to a person at the prevailing rate under a straight lease agreement, or any interest held in publicly traded securities. The written disclosure form:[3] shall be prescribed by regulation of the State Board of Medical Examiners. In addition to such other information as the board determines necessary, the disclosure shall inform the patient whether any services or facility fees associated with the referral will be considered to be, and reimbursed at, an “out-of-network” level by the patient’s insurance carrier or other third party payer. Regulations of the New Jersey State Board of Medical Examiners, published in the New Jersey Administrative Code, further elaborate on these requirements, in NJCA §13:35-6.17 Professional fees and investments, prohibition of kickbacks:[4] (a) For the purposes of this rule, the following words and terms shall have the following meanings: 1. “Health care service” means a business entity which provides on an in-patient or out-patient basis: testing for or diagnosis or treatment of human disease or dysfunction or dispensing of drugs or medical devices for the treatment of human disease or dysfunction. Health care service includes, but is not limited to, a bioanalytical laboratory, pharmacy, home health care agency, home infusion therapy company, rehabilitation facility, nursing home, hospital, or a facility which provides radiologic or other diagnostic imaging services, physical therapy, ambulatory surgery, or ophthalmic services. 2. “Financial interest” means a monetary interest of any amount held by a practitioner personally or through immediate family, as defined herein, in a health care service to which the practitioner’s patients are referred. It includes the offer or receipt, directly or indirectly, by the practitioner or immediate family of anything of more than negligible value as a result of a patient’s purchase of a prescribed service, goods or device from the person or entity providing this. Except as set forth in (a)2i through vii below, “financial interest” includes a licensee’s financial interest in a contractual arrangement with a licensed health care facility (such as a hospital, nursing home or clinic, etc.), whereby the licensee agrees to provide health care services on referral, for example, cardiac or radiologic diagnostic testing, to patients including those receiving Emergency Room care or inpatients or outpatients of the health care facility…. 3. “Immediate family” means the practitioner’s spouse and children, the practitioner’s siblings and parents, the practitioner’s spouse’s siblings and parents, and the spouses of the practitioner’s children. 4. “Practitioner” means a physician, podiatrist, bioanalytical laboratory director or specialty laboratory director, acupuncturist, midwife, certified nurse midwife, physician assistant and all other categories of licensee now or henceforth under the jurisdiction of the State Board of Medical Examiners. 5. “Significant beneficial interest” means any financial interest including an equity or ownership interest in a practice or in a commercial entity holding itself out as offering health care service as defined in (a)1 above. This interest does not, however, include ownership of a building or component thereof wherein the space is leased, in writing, to a person or entity at the prevailing rate under a straight lease agreement (that is, a fixed fee for a fixed term), or any interest held in publicly traded securities…. (b) A practitioner shall not refer a patient or direct an employee of the practitioner to refer a patient to a health care service in which the practitioner or the practitioner’s immediate family, or the practitioner in combination with the practitioner’s immediate family, has a significant beneficial interest…. Disclosure shall be made by the practitioner in ways appropriate to the professional circumstances including conspicuous posting of a written disclosure form prepared as set forth below, at least 8 1/2 by 11 inches in size, in the practitioner’s waiting room in all office locations. The patient shall also be provided with a personal copy of the notice. The notice format shall be as follows: Public law/rule of the State of New Jersey/Board of Medical Examiners mandates that a physician, podiatrist and all other licensees of the Board of Medical Examiners inform patients of any significant financial interest held in a health care service. Accordingly, take notice that practitioners in this office do have a financial interest in the following health care service(s) to which patients are referred: (LIST APPLICABLE HEALTH CARE SERVICES) You may, of course, seek treatment at a health care service provider of your own choice. A listing of alternative health care service providers can be found in the classified section of your telephone directory under the appropriate heading. 1. In any inquiry regarding the applicability of the financial disclosure provisions of this rule, including the holding of a significant beneficial interest or exemption therefrom, the Board may require a Board licensee to submit financial and familial information sufficient to determine the financial interest in an investment…. 4. The restrictions on referral of patients established in this subsection shall not apply to: i. A health care service that is provided at the practitioner’s medical office for which the patient is billed directly by and in the practitioner’s name…. (c) The following pertain to miscellaneous monetary arrangements: 1. A licensee shall not, directly or indirectly, give to or receive from any licensed or unlicensed source a gift of more than nominal (negligible) value, or any fee, commission, rebate or bonus or other compensation however denominated, which a reasonable person would recognize as having been given or received in appreciation for or to promote conduct by a licensee including: purchasing a medical product, ordering or promoting the sale or lease of a device or appliance or other prescribed item, prescribing any type of item or product for patient use or making or receiving a referral to or from another for professional services. For example, a licensee who refers a patient to a health care service (such as a cardiac rehabilitation service or a provider of durable medical equipment or a provider of testing services) shall not accept from nor give to the health care service a fee directly or indirectly in connection with the referral, whether denominated as a referral or prescription fee or consulting or supervision fee or space leasing in which to render the services (other than as permitted in (h) below), or by any other name, whether or not the licensee has a financial interest as defined in (a) above…. ii. This section shall be construed broadly to effectuate its remedial intent. It shall not, however, prohibit a flat-fee payment by a licensee for regular advertising services (including placement on a commercially-sponsored “referral list” of licensed health care providers). It shall not prohibit receipt of reasonable payment for bona fide participation as a speaker at a professional workshop or seminar nor attendance by non-faculty licensees at a continuing medical education program whereby in conformance with the guidelines of the Accreditation Council on Continuing Medical Education or the American Podiatric Medical Association commercial sources have been utilized in calculating the registration fees to be charged to all participants. It shall not prohibit receipt of normal, commercially reasonable discounts for volume purchases from vendors, nor prohibit compensation for the sale of medical equipment by a licensee of the Board, in the disclosed capacity of a salesman, to another licensed health care professional. It shall not prohibit a licensee’s participation by permit in an FDA-approved research project. 2. A laboratory director licensee may bill either the patient or the prescribing physician who submits the specimen, as permitted by N.J.S.A. 45:1-10. 3. All other categories of licensees who bill for professional services shall submit the bill directly or via a named designee entity to the patient or patient representative if for treatment services, or to the recipient of the professional services in a non-patient capacity, as applicable. 4. A bill for services of members of a professional service corporation, or services of a physician’s employees which have been rendered by licensed professionals authorized to provide services without medical supervision, shall identify the provider of service by name and degree, as well as the name of the service entity (if different). 5. A licensee may bill for only the actual cost of prescribed professional/technical services (including, for example, laboratory services, radiologic and EKG consultation, fabrication of eyeglasses, orthotics, etc.) ordered by or through the licensee, with the patient’s consent, provided that the name and address of the provider of the professional/technical services and the cost as billed to the licensee, are disclosed to the patient. A licensee may contract with and provide professional/technical services to the prescribing licensee, supplying the information necessary for incorporation in the bill prepared by the prescribing licensee to the patient. (d) A licensee shall not charge for “free samples” or other similar items obtained by the licensee from any source. (e) Acting within the scope of lawful practice, a licensee may offer to and provide to a patient medications, including a prescription drug or an over-the-counter preparation or vitamin or food supplement (emphasis added), but only in accordance with the requirements of P.L. 1991, c. 187, sec. 46 N.J.S.A. 45:9-22.11 and N.J.A.C. 13:35-7.[5] A licensee may also offer to and provide to a patient, at fair market value, medical goods and devices such as hearing aids, eyeglasses, contact lenses, prosthetic devices, orthotics, etc. 1. Where items are prescribed by a licensee, and the consumer elects to fill the prescription elsewhere, the prescriber’s obligation to the patient shall include, if requested by the patient, follow-up to ascertain that the item prescribed is appropriate and/or the fit is acceptable (for example, as in the prescribing of eyeglasses or external contact lenses), and that the result of the prescribed service is properly evaluated and integrated into the treatment plan for the patient….. (j) A licensee having a significant beneficial interest, as defined in (a) above, in a health care service including a professional service corporation or a general business corporation (see N.J.A.C. 13:35-6.16(f)) shall notify the Board of such interest no later than February 18, 1993. Notice is not required for a practice conducted under the practitioner’s own name. Thus, it seems that New Jersey limits a physician’s markup to cost plus 10% to cover administrative expense. If you need legal counsel concerning sales of nutriceuticals or dietary supplements by a medical doctor, osteopathic physician, or other clinician, whether in New Jersey, New York, California, or elsewhere, contact an experienced healthcare lawyer for relevant legal and regulatory advice. [1] N.J.S.A. 45:9-22.5. [2] N.J.S.A. 45:9-22.5. [3] N.J.S.A. 45:9-22.6. [4] N.J.A.C. 13:35-6.17 (2012); see also the official New Jersey medical board’s publication of these rules. [5] 46 N.J.S.A. 45:9-22.11 provides that when a physician dispenses “medicines:” “The drugs or medicines shall be dispensed at or below the cost the physician has paid for the particular drug or medicine, plus an administrative cost not to exceed 10% of the cost of the drug or medicine.” N.J.A.C. 13:35-7 deals with prescription, administration, and dispensing of drugs. The subchapter defines “drug” as: “any article recognized in the official United States Pharmacopoeia, official Homeopathic Pharmacopoeia of the United States or official National Formulary, or any supplement to those sources, including, but not limited to, a controlled substance, a prescription legend drug, an over-the-counter preparation, a vitamin or food supplement, or any compounded combination of any of the above….” N.J.A.C. 13:35-7.1.
January 11, 2013
Page 44 of 44
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