This article was submitted by contributing author Jordan Saint John.
I. What is a Multi-Discipline Practice?
Healthcare in America is becoming increasingly integrated. For instance, the American Medical Association (“AMA”) notes rapid changes in healthcare delivery and an expanding environment of integrated modes of practice. A strong impetus for this change was the enactment of the Affordable Care Act, which created a broad regulatory framework for such initiatives as clinical integration, care coordination, quality and other performance metrics, and cost containment. However, the AMA understandably focuses on physician-led practices that integrate several medical specialties.
By contrast, this article discusses multi-discipline practices, which delivers non-medical modalities alongside more conventional medical services. These non-medical modalities, such as chiropractic, naturopathy and acupuncture, are often designated by the term “complementary and alternative medicine” (“CAM”) and are widely accepted in the general populace. Confusingly, such multi-discipline practices are also sometimes known as integrated medicine.
More particularly, this article focuses on multi-discipline practices that integrate medical services with a chiropractor-operated entity, which we will refer to as DC/MD integrated practices. These practices are almost invariably set up by the chiropractor, who arranges with a physician to either oversee medical services provided by a mid-level medical practitioner, or to enter a contractual relationship whereby the chiropractor provides administrative services through a management service organization (“MSO”) to a medical practice, and also offers chiropractic services to this pool of patients.
Increasing numbers of chiropractors are utilizing or considering this model, for good reason. For one, it allows the chiropractor to offer more healthcare services to his/her patients. A typical example is the alleviation of chronic pain through injections that a chiropractor otherwise could not provide. Alternatively, chiropractors seek the financial benefit of a business relationship with a medical doctor’s practice. Meanwhile, the medical doctor benefits either through an additional income stream for his/her oversight role, or through handing off the administrative side of the practice, allowing him/her to concentrate on the practice of medicine.
Despite the attractiveness of these arrangements to both parties and the fact that if properly structured they are not per se illegal, pitfalls abound, especially when the practice serves federal healthcare program ("FHP") beneficiaries. Along with a discussion of a typical model of a DC/MD collaboration, this article presents some of the possible pitfalls of these arrangements, and is meant to be a cautionary tale.
II. Potential Pitfalls of a DC/MD Integrated Practice
The possible pitfalls of a DC/MD integrated practice that is either poorly structured or operated are many and potentially ruinous. As every practitioner surely knows, active fraud in the healthcare arena can result in criminal liability at both the federal and state level. However, even well-intentioned practitioners can find themselves facing criminal charges, civil penalties, licensing board sanctions and financial collapse. The following discussion presents the greatest areas of concern.
A. Legal Structure – the Corporate Practice of Medicine
Most states have some form of prohibition against the corporate practice of medicine (“CPOM”). This doctrine generally prohibits a business corporation from practicing medicine or employing a medical doctor to provide professional medical services. Even where a distinct law may not exist, this doctrine is often embodied in the prohibitions against practicing medicine without a license and against fee-splitting between someone with a medical license and someone without. It is this doctrine that generally disallows a chiropractor from co-owning an entity with, or employing – even as an independent contractor – a medical doctor.
The basic public policy reason behind the prohibition against CPOM is the conflict between the interests of a corporation and the needs of a patient. However, most states make some exceptions to their CPOM doctrine, such as for hospitals, health maintenance organizations, and professional corporations. Thus, the first step in setting up a DC/MD integrated practice is to understand the CPOM doctrine of the state where the entity will be formed and operate, and to structure the entity or entities accordingly.
An additional source of rules and regulations concerning the CPOM is state medical licensing boards. For example, California’s Medical Board finds problematic a number of scenarios that are foreseeable in a DC/MD integrated practice. In California, the following health care decisions would constitute the unlicensed practice of medicine if performed by an unlicensed person:
· Determining what diagnostic tests are appropriate for a particular condition.
· Determining the need for referrals to, or consultation with, another physician/specialist.
· Responsibility for the ultimate overall care of the patient, including treatment options available to the patient.
· Determining how many patients a physician must see in a given period of time or how many hours s/he must work.
Also, the following business or management decisions and activities, resulting in control over the doctor's practice of medicine, may not be made by an unlicensed person or entity:
· Selection, hiring/firing (as it relates to clinical competency or proficiency) of medical doctors, medical assistants, and allied health staff.
· Decisions regarding coding and billing procedures for patient care services.
· Approving the selection of medical equipment and medical supplies for the medical practice.
The Board states that these “business” or “management” decisions and activities cannot be delegated to an unlicensed person, “including management service organizations,” and that while may consult with unlicensed persons in making these types of decisions, the medical doctor retains ultimate responsibility.
Additionally, the Board prohibits the following types of medical practice ownership and operating structures, deeming them the unlicensed practice of medicine:
· Non-physicians owning or operating a business that offers patient evaluation, diagnosis, care and/or treatment. . .
· Management service organizations arranging for, advertising, or providing medical services rather than only providing administrative staff and services for a physician’s medical practice . .
· A physician acting as ‘medical director’ for a business providing medical procedures.
Nevertheless, even in states which are widely considered to have robust CPOM laws, such as California, it is possible to set up a DC/MD integrated practice that will not run afoul of state law.
B. Additional Legal and Regulatory Requirements
Laws and regulations governing the healthcare arena can apply to any healthcare entity or be specific to certain programs such as Medicare. For example, the Health Insurance Portability and Accountability Act (“HIPAA”) established national standards for electronic health care transactions which apply to nearly every healthcare practice. On the other hand, the federal Physician Self-Referral law applies specifically to Medicare and Medicaid. However, some states have their own versions of such laws which may be even broader than the federal version, such as applying to all healthcare payers not just FHPs. The regulatory schemes where a DC/MD integrated practice would most likely run afoul are briefly discussed below.
1. Anti-Kickback and Fee-Splitting Statutes
A medical practice operating in collaboration with a non-medical practice implicates both anti-kickback and fee-splitting prohibitions. Anti-kickback laws prohibit any kind of remuneration for referrals. A “safe harbor” in the federal anti-kickback statute ("AKS") is that of referring a patient to a practitioner of another specialty in return for an agreement to refer that patient back, as long as there is no remuneration or splitting of a global fee for the referral other than the compensation each practitioner receives for his/her services. Presumably, this would protect the passing back and forth of a patient between a medical doctor and a chiropractor in a DC/MD integrated practice. However, states can have their own anti-kickback laws which could be broader than the AKS and not include such a safe harbor.
Meanwhile, fee-splitting is the sharing of fees across professions for services provided to a single healthcare consumer. Fee-splitting is generally prohibited because it raises similar issues to that of CPOM laws, in that financial considerations may run counter to professional judgment. It also raises issues similar to those addressed by anti- kickback laws, in that healthcare referrals may be made for financial reasons, rather than the patient’s best interests.
Fee-splitting prohibitions derive from state statutes and professional licensing boards; therefore, while prohibiting similar behavior, these laws are state specific. In Florida, for example, it is a criminal offense for a healthcare provider or facility to split fees, a practice known there as “patient brokering.” The prohibition does not apply to a group practice, but a chiropractor and medical doctor could not form a group practice in Florida because by statutory definition, each member of the group must provide “substantially the full range of services which the health care provider routinely provides, including medical care, consultation, diagnosis, or treatment.” However, in Florida as elsewhere, DC/MD business arrangements can operate legally and compliantly.
2. False Claims Act
The federal False Claims Act (“FCA”) prohibits the knowing presentation of false claims to the government. While every healthcare practice must avoid submitting claims known to be false to any FHP, the DC/MD integrated practice can create particular opportunities to run afoul of this law, especially where an chiropractor-owned MSO submits claims on behalf of the medical doctor’s practice.
The FCA allows private persons to file a false claims suit in their own name and in the government’s stead. This is known as a qui tam action, and is designed to bring to light wrong-doing that only an insider would know about. The government may decide to intervene, taking over the action as its own after examining the complaint and supporting evidence. While a qui tam action is a powerful tool for genuine whistleblowers, this law is sometimes invoked in retaliation, often by a disgruntled ex-employee terminated for good cause. Even where meritless, such actions can create big headaches for the healthcare practice.
3. Physician Self-Referral (“Stark”)
Self-referral is the practice of referring patients to healthcare entities in which the referring provider has a financial interest. Because of the inherent conflict this creates between the provider’s financial considerations and his/her medical judgment regarding the patient, such referrals are prohibited by most states and under federal law. The federal physician self-referral law is known as the “Stark” law, after the bill’s initial sponsor, California congressman Pete Stark. It specifically prohibits self-referral by physicians regarding eleven “designated” healthcare services that are reimbursable by Medicare or Medicaid. However, state self-referral laws may be even broader, perhaps applying to all healthcare providers, or entailing even more healthcare services, or involving any healthcare payer.
A DC/MD integrated practice, unless properly structured, could implicate federal and/or state self-referral laws. Assuming that the collaboration is structured as two entities, if the chiropractor or medical doctor owns an interest in both entities, there could be a self-referral problem. Each scenario would have to be evaluated on a case by case basis, in accordance with applicable law.
4. Scope of Practice, Collaboration Agreements and Supervision
Finally, states have laws governing the scope of practice and supervision of mid-level medical practitioners. Scope of practice refers to the services a licensed practitioner is authorized to provide. A chiropractor looking to expand services to offer to his/her patients might choose to develop, for example, a pain management practice. The diagnosis and treatment of chronic pain due to causes beyond spinal subluxations would involve medical diagnosis and treatment which could often be provided by a mid-level provider, such as a nurse practitioner (“NP”). Depending on applicable state law, a NP may function largely autonomously, giving injections and even prescribing medications, but must usually have a collaboration and supervision agreement in place with a local medical doctor. The doctor would also regularly review patient charts.
Such an arrangement usually means that the doctor is off-site but immediately accessible by phone or email to help with questions or concerns. Thus, this can become a secondary income stream for the doctor, and will usually pass regulatory muster if the doctor’s compensation for this arrangement is fixed and reasonable. Compensation that is based on percentages of patients seen, or beyond fair market value for the services rendered by the doctor, can be construed as either fee-splitting or a kickback.
However, such services must be billed under the practice, with the rendering practitioner duly noted. Where Medicare, for instance, is billed under the doctor’s NPI for services rendered by a mid-level, this is known as “incident to” billing, resulting in reimbursement at the doctor’s rather than the mid-level’s rate. Proper “incident to” billing involves exacting rules, which, if not followed, can lead to an unpleasant audit experience and the repayment of a portion of Medicare payments received.
III. The MSO and other DC/MD Integrated Models
Despite the regulatory risks involved in operating a DC/MD integrated practice, many undertake this collaboration for the reasons mentioned earlier. Some ways a chiropractor and medical doctor collaborate include:
· the chiropractor is employed by a medical practice;
· the chiropractor leases space to the medical practice;
· the chiropractor provides administrative services to the medical practice (MSO);
· the doctor becomes the "medical director" for any medical procedures to be offered at the clinic.
Sometimes, the collaboration involves a number of these options, often the last three, so they will be discussed as a single, MSO-hybrid model. (The first will not be discussed, as self-explanatory). For brevity, the MSO-hybrid model will be referred to simply as an MSO.
While the collaboration entails advantages for both parties, as discussed earlier, it is typically the chiropractor who seeks the collaboration. The chiropractor contacts a medical doctor to discuss a proposed arrangement. The chiropractor offers to provide billing, accounting, marketing, and other management services to the medical practice (MSO model). Usually, the chiropractor also asks the medical doctor to oversee a staff of mid-level practitioners who will provide a range of medical procedures the chiropractor would like to offer his/her patient base, such as pain management injections ("medical director" model). The arrangement will often also include the leasing of space by the chiropractor-owned business to the medical practice.
To avoid the unlicensed practice of medicine, fee-splitting or CPOM concerns, two entities either already exist or will be created: the chiropractor-owned administrative entity and the physician-owned clinical entity. The chiropractor/MSO, in its administrative role, often sets up the clinical entity for the doctor, usually employing an attorney to do so. However, this attorney typically specializes in business law and does not necessarily understanding the nuances of health law. Despite the fact that in many states, as in California, it would be the unlicensed practice of medicine for a person other than a medical doctor to hire and fire medical staff based upon competency, the MSO nonetheless usually sees to the hiring of the mid-levels as just another administrative function, and the medical doctor provides oversight only through regular review of an established number of medical records in return for the agreed compensation.
To expand its revenue, the practice may decide to accept, for example, Medicare beneficiaries. The MSO either directly provides staff to handle the Medicare billing or contracts with a third party biller. By becoming a Medicare provider, the practice has accepted the imposition of a vast set of regulatory requirements, and by billing Medicare, the practice has invited the scrutiny of the Medicare contractors overseeing its jurisdiction. For several years, the practice may submit Medicare bills and be promptly paid. This appears to be a validation of everything that the practice is doing.
However, Medicare scrutiny includes data analysis of coding and billing patterns which raise red flags if they fall outside the norm for the geographical area. If so, the practice is notified, sometimes only for educational purposes. But if medical records are requested, an audit has begun, and the practice may soon learn, to its utter dismay, about two extremely powerful aspects of CMS's authority to protect the Medicare trust fund: the four-year look back period and the extrapolation of a medical review of a statistical sample of claims into the practice's history of paid claims.
To put it simply, based upon a small but "statistically valid" sample of claims, the denial rate, based on a medical review by the Medicare contractor, will be projected into the four-year history of similar paid claims and a resulting overpayment assessed. Supposing a denial rate of 80% based on a review of 100 claims comprising perhaps 20 different procedure codes, 80% of the money the practice was paid for those codes for up to a four year period will be demanded back. The practice is faced with either a long and arduous appeal process or the specter of immediate recoupment of the funds. Depending on the practice's viability and the amount of the assessed overpayment, the practice may or may not survive.
Obviously, this fate could happen to any Medicare provider but this appears to be a special vulnerability of the DC/MD integrated practice because in the typical, the MSO bills Medicare on the practice's behalf. The MSO may indeed have experience in Medicare billing but it may not actually have or retain credentialed Medicare billing expertise. Worse, the clinical protocols and procedures, usually furnished by mid-level medical practitioners such as NPs who are often hired by the MSO rather than the medical doctor, can sometimes be subtly influenced by the chiropractor's ambition or judgment, who tends to view the whole enterprise as his/her own. The medical doctor sees the occasional patient, reviews the mid-levels' work, is often busy with other medical offices and collaborations, and having paid for competent management, tends to view little else about the practice as his/her responsibility. There may be too much of a disconnect between the medical judgment and supporting records, on the one hand, and the coding/billing function, on the other, for the medical procedures to be reimbursed under Medicare's rules. Both the chiropractor and medical doctor can find themselves under increasing government scrutiny, facing financial pressure and even legal sanctions. Often, the medical doctor's license is at risk. This is the DC/MD collaboration gone bad, especially in the context of a FHP, and the practice will be lucky to get through intact, with merely hundreds of thousands of dollars to repay.
This article is meant to be a cautionary tale. No doubt DC/MD integrated practices operate legally and successfully in nearly every state, and it may be that the majority, even those serving FHP beneficiaries, never face significant problems. But for those that do, the challenges can be daunting and sometimes insurmountable. Any chiropractor or medical doctor contemplating such a collaboration is well advised to consult a knowledgeable health law attorney before proceeding.
· Healthcare is becoming increasingly integrated, and the American healthcare consumer expects convenience and a wide array of options in making healthcare choices.
· Chiropractor/doctor (DC/MD) integrated practices are attractive to both parties because of the potential financial benefits; however, it is the chiropractor who tends to initiate the collaboration.
· DC/MD integrated practices are not illegal in most states but care must be exercised to structure them in compliance with state law and professional licensing boards.
· The potential pitfalls of such arrangements multiply if the practice will also serve federal healthcare program beneficiaries.The MSO model, or some hybrid which includes it, appears to be the most common form of collaboration, but it comes with the risk that the MSO may not have or retain the actual expertise in Medicare billing required to shield the practice from serious financial and legal liability.