By Matt Fisher, Esq
Twitter: @matt_r_fisher
Concierge medicine is a term and concept often discussed, but at the same time often not fully understood. It is not necessarily a new model of practice, but it has gained significantly increased attention since passage of the Affordable Care Act. From one perspective, concierge medicine creates small, boutique medical practices that charge a fee for access, which is represented as limiting the types of patients that can remain in or access the practice. From another perspective, concierge practice enables a physician to spend more time with each patient while offering more personalized services for what could be a modest fee. Each perspective contains a kernel of truth.
Since concierge medicine practice are popping up with greater frequency, it makes sense to get a better understanding of what it is, how it operates, and some of the risks associated with it. Because a concierge practice does not operate like a standard medical practice there are a number of business and legal questions to consider. It is important to thoroughly understand the potentials risks and rewards because, like everything, concierge medicine is not for everyone. This includes both physicians and patients.
Business Considerations
From the business side, a fundamental determination to make is what type of concierge practice to set up. This introduces one of the first surprising features of concierge medicine, it is not just one concept. Concierge medicine encompasses a number of different practice options, which can appeal to different patient bases and different physicians.
For example, Matthew Jacobson, President of SignatureMD, Inc., describes three models that are available in the marketplace. One model, the full conversion, completely changes how an existing practice operates. Only patients that sign up for the full concierge offering and who are willing to pay the enrollment fee will continue to be seen at the practice. There is a clear break from the previous practice because it solely becomes a pay to be seen operation.
The second model described by Mr. Jacobson is a hybrid model. In the hybrid model, a physician practice converts to a concierge practice for the patients who want to sign up for the concierge and continue to see the non-concierge patients as well. This results in the same physician operating under two different structures at the same time. Practically, this approach could place a burden on the physician because the same physician will treat patients differently depending upon their status.
The last model identified by Mr. Jacobson is a dynamic or segmented model, which is the model recommended by SignatureMD as the preferred model. Mr. Jacobson described this model as taking the best of the other models. Physicians who integrate this model into their practice wholly convert their practicedevote the majority of their time to program members, but still oversee an associate physician or physician extender in the care of non-member patients. Furthermore, the concierge physician is still available to intervene when medically appropriate in the care of non-member patients. This means that the converting physician focuses on a cohort of 200 to 600 members, but oversees the care all patients regardless of membership status.
Another major consideration for a concierge medical practice is how much to charge patients to join the concierge services. If a physician chooses to use a company such as SignatureMD or other management company, then the management company will likely recommend or establish a fee. If a physician goes it alone, then the physician would be well advised to examine the market and seek advice when setting up the practice in order to come up with the fee to charge for the concierge services.
If considering going into a concierge practice, timing is another important business decision. As a baseline, succeeding in the concierge model is difficult. A practice must not only start with or attract a sufficient number of patients, but also retain and grow those patients over time. In light of these considerations, a physician right out of residency would have a very difficult time setting up a concierge practice. New physicians do not have existing patients to bring into the concierge practice, nor do new physicians have a relationship with patients. As such, it makes more sense for an established physician with a good size panel to consider going into a concierge practice. Even then, there is no guarantee of success.
Once a practice decides to convert, what kind of patients should it seek? Are young healthy patients desirable, or more needy patients? SignatureMD’s Matthew Jacobson suggests that an ideal concierge practice would have a significant number of patients who are in their fifties to seventies as well as a strong connection with those patients. This scenario gives a new concierge practice the best chance of succeeding according to Mr. Jacobson. Focusing on patients who are in the age range identified by Mr. Jacobson can tap into individuals with a statistically higher concern for and focus upon their health. Additionally, individuals in those age ranges are more likely to need medical services as opposed to younger individuals, which provides a good supplement of insurance billing on top of the concierge fee collected.
One other business consideration is whether to establish a practice independently or with the assistance of a management company such as SignatureMD. Potential legal issues in working with a management company are discussed below. From the operational and business perspective, deciding whether to work with a management company can be influenced by how entrepreneurial the physician is who opens the concierge practice as well as any previous business experience. Operating a concierge practice requires a significant amount of attention to be paid to issues such as fee collection, marketing, advertising, billing, contracting and a whole host of other issues. Seeking advice strategically can be beneficial. Good consultants and management services can free up a physician to focus on the practice of medicine, which could be a driving factor to set up a concierge practice in the first place. Before engaging any consultant, the physician should vet the consultant’s knowledge and experience with concierge medicine.
Legal Considerations
Legal and regulatory issues play just as important a role in influencing the operation of a concierge practice as the business considerations. In fact, legal and regulatory considerations will set certain parameters that must be obeyed in order to operate in a compliant manner, particularly when a federal healthcare program will be billed.
As suggested above, a concierge practice accepts a fee to access the “concierge” services offered by the practice and also charges insurance for services covered by insurance. This means, contrary to many popular opinions, the concierge fee is not the end of the story when it comes to a concierge practice. Instead, the concierge fee is only intended to grant patients in the practice access to special services on top of the medical or other services covered by an insurer.
If insurance is accepted, and in particular Medicare or other federal healthcare program, then regulations that apply to all other medical practices as well as certain special rules must be identified and followed. While regulatory concerns are driven by accepting Medicare or other government covered patients, the same concerns also apply for patients with private insurance coverage. The main issue, from a general standpoint, centers upon the fact that Medicare does not allow a provider to bill a patient for services that Medicare pays for. As a result, the concierge practice must clearly establish that the so-called concierge services are completely separate and distinct from the services that will be billed to the insurer. For example, certain counseling or advocacy services may be part of the “concierge” services offered, if such services are not covered by insurance. It is important to carefully review covered services and then specify what will be considered the “concierge” services.
Additionally, when working with private insurers, providers should review the terms of the agreement with those insurers. While the relationship with Medicare will be driven by regulatory requirements and guidance from the Centers for Medicare and Medicaid Services, private insurers will set parameters by contract. Often, private insurers require the concierge practice to provide some form of notification if operating as a concierge practice or switching from a traditional model to concierge. The actual operating requirements can mirror those of Medicare, but providers need to assess what each individual agreement with a prevue insurer requires.
When establishing the practice, it may be necessary to create two different entities. One entity will be the medical practice and the other entity will be the concierge practice. This can aid in establishing a separation of the services, namely the concierge services and the insurance covered medical services. From this perspective, it is essential to obtain assistance in understanding what services can be performed in which context.
The issue of obtaining assistance flows into another legal issue. When working with a management company, such as SignatureMD or MDVIP, Inc., the contracting physician must carefully review the contractual requirements and obligations contained in such an arrangement. The contracts with a management company will include but not be limited to terms covering the fee owed to the management company, the scope of services to be performed by the management company, and potentially non-compete provisions. For example, non-compete provisions in the contract with a management company could prevent a physician from operating a concierge practice in any form, whether independently or with another company, both during the term of the agreement and for a certain period of time after the agreement is terminated. As explained by Mr. Jacobson, while SignatureMD does not require its affiliates to sign a post-term non-compete, other companies do, a post-term non-compete provision could effectively require a physician to remain with the management company or be forced to retire or give up the concierge practice. In fact, that issue forms the basis between an ongoing legal dispute between SignatureMD and MDVIP. For providers considering going into a concierge practice, this dispute highlights the need to carefully review and negotiate an agreement with a management company before executing the agreement.
Final Thoughts
As the above discussion demonstrates, concierge practices are complex operations. There are many considerations that must go into the thought process when considering converting to a concierge model and operating within the model. Given the complexities, it is very difficult to run a concierge practice without trusted consultants. Further, concierge practices and the legal requirements applicable to such practices are continually evolving. This means that a concierge practice must be vigilant in its operations in order to avoid running afoul of legal or regulatory requirements. It is possible to run a successful concierge practice, it just requires a careful and thoughtful approach.
About the author: Matthew Fisher is the chair of the Health Law Group at Mirick, O’Connell, DeMallie & Lougee, LLP, in Worcester, MA. Matt advises his clients in all aspects of healthcare regulatory compliance, including HIPAA, the Stark Law and the Anti-Kickback Statute.