Concierge Medical Practices
By Matt Dickstein
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You know the story. As Medicare spins out of control, many doctors turn to concierge medicine. Concierge medical practices offer primary care, on a fixed monthly or annual fee, to a limited number of patients (e.g. 300 to 800 patients). In this article, I discuss two legal issues for a concierge practice –Medicare, and the basic terms of the patient contract.
The watershed decision is whether to opt out of Medicare. If you opt-out, then neither you nor the patient may bill Medicare, that is, you directly bill the patient for all medical services, and the patient does not seek reimbursement from Medicare. A physician who opts-out may not receive any money from Medicare for 2 years; this includes sharing in practice income where other practice physicians remain in Medicare.
Word to the Wise: A doctor who wants to opt out must do so exactly per Medicare’s rules, including signing an opt-out affidavit and having patients sign opt-out contracts. Any defect in the opt-out process will nullify the opt-out. A defective opt-out leaves the physician in Medicare and subject to its rules.
Many concierge physicians opt-out because it’s too risky to stay in. As a general rule, a concierge physician who remains in Medicare may charge fees only for medical services that are not covered under Medicare. The rationale is that the physician is double-dipping if she receives Medicare reimbursement for a service -and- she charges the patient for the service through the retainer fee. The same issue exists for private insurance that prohibits balance billing for covered services.
You might say, why not stay in Medicare and just make sure that you only bill for non-covered services? Because in real-world billing, you frequently can’t distinguish between covered and non-covered services. Consider the concierge practice that receives an up-front, general retainer from the patient. If the doctor later bills Medicare, who knows what part of the general retainer went to covered services, such as physical exams, routine visits, and routine diagnostic tests? If any part of the retainer went to covered services, then likely the physician overcharged the patient in violation of Medicare.
In sum, the concierge physician who has not opted out of Medicare will always be at risk, because she can never know if a package of prepaid services includes Medicare-covered services.
The Patient Contract
As my clients know, I believe that there is one simple exchange at the heart of most contracts. In the patient contract for a concierge practice, the exchange is money for medical services. The patient contract must be clear on the terms of this exchange.
1. Money – State clearly the terms of payment, including when and how much, whether the practice accepts Medicare or private insurance, and whether the fee, or any portion of it, is refundable at cancellation of the contract.
2. Services – State clearly what medical services are covered by the retainer fee, what services cost extra, and what services are not provided at all. Avoid a promise of open-ended, unlimited medical services because it’s bad business, and because it might trigger state insurance laws to classify you as an “insurer,” hence subject to insurance company regulations.
Some additional tips on the patient contract:
3. Most contracts have a one year term. Consider whether the contract renews automatically at the end of each term, or requires an active renewal each year.
4. If the physician has opted out of Medicare, the patient should promise not to seek reimbursement from Medicare. If the physician has not opted out of Medicare, the contract should cut off any connection between the retainer and covered services, including that the patient’s payment of the retainer fee should not be a condition to receiving covered services.
5. Per AMA Ethical Guidelines, the patient should have the ability to cancel the contract without financial penalty or undue inconvenience.
6. To avoid a charge of patient abandonment when terminating the patient relationship, include a notice period that gives the patient enough time to find another doctor.
Medicare and the patient contract are the two fundamental legal issues for a concierge practice, but there are many more issues. For example, you should consider your medical corporation, the office lease, buy-sell agreements, employee contracts, etc.