LEGAL COMPLIANCE, PLANNING FOR
PRIVATE PATIENT SUBSCRIPTION/PAYMENTS:
REIMBURSEMENT MODELS AND METHODS FOR
NON-PLAN REIMBURSED INTEGRATIVE HEALTH
SERVICES
James J. Eischen, Jr., Esq.
October 2013
San Diego, California
JAMES J. EISCHEN, JR., ESQ.
Partner at Higgs, Fletcher & Mack, LLP
25+ years of experience as an attorney in California
4+ years of experience in the healthcare field: medical
groups, EHR firms, health coaching enterprises and
healthcare products.
Studied at the University of California School of Law,
emphasis in corporate/real estate.
Professional Memberships: San Diego County Bar
Association Law & Medicine Section, Attorney-Client
Relations Committee, State Bar Of California Section
Member
Direct/Subscription Medicine Generally
Defined
History, Evolution, Various Models
History
(c) 2013 James J. Eischen, Jr., Esq.
MEDICINAL REGULATION
•
•
•
•
•
•
(Event Driven)
1848: Drug Importation Act requires U.S. Customs
Service inspection to stop entry of tainted, low
quality drugs from overseas.
1906: Food and Drug Act outlaws states from
buying and selling food, drinks, and drugs that
have been mislabeled and tainted.
http://www.fda.gov/downloads/D
1912: Sherley Amendment outlaws labeling
rugs/ResourcesForYou/Consumers
medicines with fake medical claims meant to trick
the buyer.
/BuyingUsingMedicineSafely/Unde
rstandingOver-the1939: Federal Food, Drug and Cosmetic Act
requires new drugs show safety before selling and
CounterMedicines/ucm093550.pd
safe limits be set for unavoidable poisonous
f
matter, and allows for factory inspections.
Dangerous drugs must be given under the
direction of a medical expert.
1951: Durham-Humphrey Amendment defines
the kinds of drugs that cannot be used safely
without supervision.
1962: Kefauver-Harris Drug Amendments require
drug makers to prove drug works before FDA can
(c) 2013 James J. Eischen, Jr., Esq.
approve for sale.
HEALTH INSURANCE CONNECTED
TO EMPLOYMENT
• 1942: WWII wage + price controls =
Employer-paid health insurance to increase
compensation
– IRS ruled health insurance a “legitimate cost of
doing business” and not taxable income for
employee.
– Institutionalized employer-provided health care
begins.
Paul Starr, The Social Transformation of American Medicine, (New York: Basic Books, 1982), p.
311.
(c) 2013 James J. Eischen, Jr., Esq.
HISTORY SUMMARIZED
•
•
•
•
•
•
•
•
•
Negative health events and questionable health product sales drive US health
regulations, AMA formation
WWII connects US health insurance with employment, leaving gaps (disabled,
retired, government employees) that lead to government plans (Medicare formed
1965)
Fears about abusive government plan billing lead to stringent billing laws to
prevent fraud (and frustrate physician business)
Fee for service with restrictions on utilization: to keep underfunded government
plans afloat (and private plans follow Medicare)
Plan fee for service tilts toward intervention and away from prevention, and plans
do not reimburse for patient connection
Health outcomes drop while healthcare spending increases
US healthcare market broken and badly needs reform
Some physicians seek alternatives to plan dependence and plan-driven healthcare
http://www.ama-assn.org/ama/pub/about-ama/our-history/timelines-amahistory.page
(c) 2013 James J. Eischen, Jr., Esq.
Evolution
(c) 2013 James J. Eischen, Jr., Esq.
PRIVATE MEDICINE HAS COME A LONG WAY
 Washington
 Qliance

 Florida
 MDVIP
 Expansion with confirmed FFNCS model
compliance
 Fee For Non-Covered Service
(c) 2013 James J. Eischen, Jr., Esq.
FEE FOR SERVICE (FFS)
Does FFS work?
Consensus = NO
(c) 2013 James J. Eischen, Jr., Esq.
“The way we pay doctors is profoundly flawed. We
need to move rapidly away from fee-for- service and
embrace new ways of paying doctors to encourage
cost-effective, high quality care.”
(c) 2013 James J. Eischen, Jr., Esq.
(c) 2013 James J. Eischen, Jr., Esq.
One problem is that the current fee-for-service system makes it difficult to
coordinate after-hours care with a patient's regular doctor. This is problematic
considering that providers that know a patient well, or at the very least have a
patient's medical record, are able to give better quality of care.
•
•
•
•
In 2010, 40.2 percent of people said their primary care clinics offered extended
hours, such as at night and on weekends.
One in five people found it very difficult or somewhat difficult to reach their
clinician after hours.
People that reported less difficulty reaching a physician after hours had fewer
emergency department visits (30.4 percent compared to 37.7 percent).
Furthermore, there were lower rates of unmet medical needs (6.1 percent
compared to 13.7 percent).
http://www.ncpa.org/sub/dpd/index.php?Article_ID=22692
(c) 2013 James J. Eischen, Jr., Esq.
Already, one in five physicians is restricting the number of Medicare
patients in their practice and one in three primary care doctors –
the providers on the front lines of keeping the cost of seniors’ care
low – are restricting Medicare patients, according to a 2010 AMA
survey of more than 9,000 physicians who care for Medicare
patients.
(c) 2013 James J. Eischen, Jr., Esq.
(c) 2013 James J. Eischen, Jr., Esq.
(c) 2013 James J. Eischen, Jr., Esq.
(c) 2013 James J. Eischen, Jr., Esq.
(c) 2013 James J. Eischen, Jr., Esq.
EVOLVING AWAY FROM FEE FOR SERVICES:
Private Subscription?






Average annual fee = approximately $1,800
> 4,000 physicians practice privately in the United States in 2012
Private physician averages about 350 patients
Medicare changes = doctors reimbursed less for care provided
Private patients get
 more face-time with doctors
 more thorough annual physicals
 focus on preventive medicine
Private fee makes up for lost revenue from declining reimbursements
(c) 2013 James J. Eischen, Jr., Esq.



Concierge medicine delivers excellent care in a manner that is attractive to physicians.
Question: Whether it has the potential to fix many of the more serious problems that
exist in our system for delivering primary care.
 Affordability
 Reducing the number of patients that concierge-practice physicians see
significantly reduces the number of patients served by each primary care
physician.
Retainer-based medicine remains attractive to doctors and patients in many regards.
But significant questions remain about whether it should be promoted as a model that
can meet the needs of most patients in society even with the advent of hybrid models.
(c) 2013 James J. Eischen, Jr., Esq.
WHY MUST U.S. HEALTH CARE
EVOLVE?
(c) 2013 James J. Eischen, Jr., Esq.
WHY AMERICA PERFORMS POORLY ON HEALTH
MEASURES
(c) 2013 James J. Eischen, Jr., Esq.
WHY AMERICA PERFORMS POORLY ON HEALTH
MEASURES
(c) 2013 James J. Eischen, Jr., Esq.





U.S. has a large and widening "mortality gap" among adults over 50 compared with other
high-income nations.
Two-thirds of the difference in male life expectancy between the U.S. and other countries
is due to deaths in that under-50 age category, and one-third of the gap is due to deaths
among women under 50.
U.S. fares worse in nine health domains: birth outcomes, injuries and homicides, teen
pregnancies and sexually transmitted infections, HIV/AIDS, drug-related mortality, obesity
and diabetes, heart disease, chronic lung disease, and disability.
Areas in which the U.S. is not behind other wealthy countries are cancer screening and
mortality, control of high blood pressure and cholesterol, smoking rates, and suicides.
Part of the nation's poor ranking attributed to problems with its $2.6 trillion-a-year
health care system (the world's most expensive by far). 50 million Americans without
health insurance, fewer doctors per capita, less access to primary care and fragmented
management of complex chronic diseases.
(c) 2013 James J. Eischen, Jr., Esq.
WHY SUBSCRIPTION?
Patient Buy-in/Investment In Health
 Investing in health
 Owning health outcomes
 Realizing actual costs of poor health decisions
(c) 2013 James J. Eischen, Jr., Esq.
REMOVING MENU DISTORTIONS FROM
HEALTH CARE DELIVERY
 Subscription model as financially viable
 Subscription = payment for counseling and medical
direction disconnected from plan-funded
intervention
 Subscription = compensation for
connection/tracking/coordination
(c) 2013 James J. Eischen, Jr., Esq.
INCENTIVIZING CUSTOMER SERVICE/RETENTION
 Remaining connected vs. one-off consults
 Patient accountability only possible with persistent
connection
(c) 2013 James J. Eischen, Jr., Esq.
STABILIZED PRACTICE CASH FLOW
 FFS = financial disincentive to connect with
medical practice
 Subscription = investment in connection, incentive
to remain connected
(c) 2013 James J. Eischen, Jr., Esq.
HOW TO STRUCTURE PRIVATE
MEDICINE MODELS
Read The Rules
(c) 2013 James J. Eischen, Jr., Esq.
 A Roadmap for New Physicians:
Avoiding Medicare and
Medicaid Fraud and Abuse, U.S.
Department of Health & Human
Services and Office of Inspector
General
 http://oig.hhs.gov/compliance/
physician-education/index.asp
 Private reimbursement
compliance issues
(c) 2013 James J. Eischen, Jr., Esq.
(c) 2013 James J. Eischen, Jr., Esq.
(c) 2013 James J. Eischen, Jr., Esq.
OIG: NO “DOUBLE BILLING”
 If you are a participating or non-participating
physician, you may not ask Medicare patients to pay
a second time for services for which Medicare has
already paid
 Charging an “access fee” or “administrative fee” that allows
patients to obtain Medicare-covered services from your
practice constitutes double billing
 It is legal to charge patients for services that are not covered
by Medicare
 If you have opted-out of Medicare
 May charge for “access” and “care coordination”
 Must comply with opt-out contract rules
(c) 2013 James J. Eischen, Jr., Esq.
OIG ALERT – MARCH 31, 2004
•
Alert from Office of Inspector
General, March 31, 2004
 http://oig.hhs.gov/fraud/docs/alertsa
ndbulletins/2004/FA033104AssignVio
lationI.pdf
(c) 2013 James J. Eischen, Jr., Esq.
OIG ALERT 03-31-04
• While the physician characterized the services to
be provided under the contract as “not covered” by
Medicare, the OIG alleged that at least some of
these contracted services were already covered
and reimbursable by Medicare. Among other
services offered under this contract were the
“coordination of care with other providers,” “a
comprehensive assessment and plan for optimum
health,” and “extra time” spent on patient care.
OIG alleged some of these contracted services
were already covered and reimbursable by
Medicare.
(c) 2013 James J. Eischen, Jr., Esq.
http://www.medicare.gov/pubs/pdf/10050.pdf
CHECK FOR MEDICARE
COVERAGE
(c) 2013 James J. Eischen, Jr., Esq.
MEDICARE ASSIGNMENT COMPLIANCE
 Unless you have opted out of Medicare
 Avoiding billing for covered services
 Avoiding billing for “buzz words”
 Watch out for:
 Access
 Care coordination
 Membership (?)
 24/7 communications (?)
 Electronic records access
(c) 2013 James J. Eischen, Jr., Esq.
OPT-OUT COMPLIANCE
•
The physician/practitioner has filed an affidavit in
accordance with §40.9 and has signed private contracts
in accordance with §40.8 but, the physician/practitioner
knowingly and willfully submits a claim for Medicare
payment (except as provided in §40.28) or the
physician/practitioner receives Medicare payment
directly or indirectly for Medicare-covered services
furnished to a Medicare beneficiary (except as provided
in §40.28); (For specific information about Chapter 15,
sections 8 and 28, refer to
http://www.cms.hhs.gov/Manuals/downloads/bp102
c15.pdf on the CMS website. The sections of Chapter 15
that are revised by CR6081 are attached to CR6081.)
•
The physician/practitioner fails to enter into private
contracts with Medicare beneficiaries for the purpose
of furnishing items and services that would otherwise
be covered by Medicare, or enters into private
contracts that fail to meet the specifications of §40.8;
or
•
The physician/practitioner fails to comply with the
provisions of §40.28 regarding billing for emergency care
services or urgent care services; or
•
The physician/practitioner fails to retain a copy of each
private contract that the physician/practitioner has
entered into for the duration of the opt-out period for
which the contracts are applicable or fails to permit
CMS to inspect them upon request.
(c) 2013 James J. Eischen, Jr., Esq.
OPT-OUT NONCOMPLIANCE CONSEQUENCES
•
All of the private contracts between the
physician/practitioner and Medicare beneficiaries are
deemed null and void.
•
The physician’s or practitioner’s opt-out of Medicare is
nullified.
•
The physician or practitioner must submit claims to
Medicare for all Medicare covered items and services
furnished to Medicare beneficiaries.
•
The physician or practitioner or beneficiary will not
receive Medicare payment on Medicare claims for the
remainder of the opt-out period, except as stated above.
•
The physician or practitioner is subject to the limiting
charge provisions as stated in §40.10.
•
The practitioner may not reassign any claim except as
provided in the Medicare Claims Processing Manual,
Chapter 1, “General Billing Requirements,” §30.2.13.
(For more information about the General Billing
Requirements refer to
http://www.cms.hhs.gov/manuals/downloads/clm104
c01.pdf on the CMS website).
•
The practitioner may neither bill nor collect any amount
from the beneficiary except for applicable deductible
and coinsurance amounts.
•
The physician or practitioner may not attempt to once
more meet the criteria for properly opting out until the
2-year opt-out period expires.
(c) 2013 James J. Eischen, Jr., Esq.
STATE LAW INSURANCE ISSUES
(REGARDLESS OF OPT-OUT STATUS)
 Avoiding appearance (or reality) of insurance
 Why?
 Lack of adequate capitalization
 Lack of registration
 State law violation of insurance regulations
(c) 2013 James J. Eischen, Jr., Esq.
BOTTOM LINE
• Subscription for:
– Non-covered services
– All services (as opt-out)
– Limits to avoid insurance issues
• Exclude mandated services
– Electronic records
• Deal with HIPAA! (Or, you can’t avoid the
federal government)
(c) 2013 James J. Eischen, Jr., Esq.
HIPAA/PRIVACY COMPLIANCE (PARTICULARLY
WITH ELECTRONIC COMMUNICATIONS)
 Final/Omnibus Rule updated
 Electronic data storage of any kind = HIPAA
 Basic rules:
 Privacy
 Security
 Add: Accounting (for cash paid services)
(c) 2013 James J. Eischen, Jr., Esq.
DISCOUNTING, REBATES, INSURANCE PLAN CO—
PAYS/DEDUCTIBLES:
AVOIDING IMPROPER INCENTIVIZING UNDER
STATE/FEDERAL LAWS
 May not “incentivize”
 No free toaster oven
 Co-pays and deductibles
 May not induce utilization
(c) 2013 James J. Eischen, Jr., Esq.
Proper Private Practice Formation
PHYSICIAN-PATIENT CONTRACT
DRAFTING RECOMMENDATIONS
• Easy to read contract
– Simplify
• Clarity, particularly on key issues
• Use FAQs and brochures to express details, use the contract to craft
the compliance posture
• Fee structure must avoid state insurance issues
• Amenities allocated to private fees to avoid Medicare compliance
issues (Q: Does your staff know how to properly explain your
retainer/subscription model?)
– Or comply with opt-out requirements
– http://www.cms.hhs.gov/Manuals/downloads/bp102c15.pdf
• Avoid inducements/discounting (i.e. no toaster ovens)
• AVOID PROMISES YOU CAN’T KEEP
(c) 2013 James J. Eischen, Jr., Esq.
PHYSICIAN-PATIENT AGREEMENT
DEALING WITH ELECTRONIC COMMUNICATIONS
 Need separate ePHI agreement for risk
management/HIPAA compliance
 HIPAA Final Rule: Non-compound ePHI consent
(c) 2013 James J. Eischen, Jr., Esq.
EPHI/ELECTRONIC RECORDS AND
COMMUNICATIONS RISK MANAGEMENT
 Privacy Rule
 Security Rule
 Documented permissions
(c) 2013 James J. Eischen, Jr., Esq.
CAN I CHARGE FOR PATIENTS’ ACCESS
TO ELECTRONIC HEALTH RECORDS?
• Patients can ask for a copy of their
electronic medical record in an
electronic form.
• When individuals pay by cash they
can instruct their provider not to
share information about their
treatment with their health plan.
• New limits on how information is
used and disclosed for marketing and
fundraising purposes.
• Prohibits the sale of an individuals’
health information without explicit
permission.
• MUST ONLY CHARGE ACTUAL COSTS
www.hhs.gov/news/press/2013pres/01/
20130117b.html
(c) 2013 James J. Eischen, Jr., Esq.
HIPAA COMPLIANCE: BASIC DOCUMENTATION
 Notice of Privacy Practices (NPP)
 Business Associate Agreement (BAA)
 Internal risk analysis
 Practice’s office procedures and processes
must be examined thoroughly
(c) 2013 James J. Eischen, Jr., Esq.
MUST CHECK MARKETING/PRACTICE
COMMUNICATIONS FOR COMPLIANCE




Website
FAQs
Patient letters
Staff training!!!
(c) 2013 James J. Eischen, Jr., Esq.
THANK YOU
James J. Eischen, Jr., Esq.
Office:
(619) 819-9655
Email:
Eischenj@higgslaw.com
Skype:
jeischenjr
http://www.assessmentandplan.com
http://www.higgslaw.com
(c) 2013 James J. Eischen, Jr., Esq.