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Pay-Per-Call Marketing: Twenty First Century Marketing Programs Impeded by Twentieth Century Rules Print E-mail
Written by Jeffrey Segal, MD, JD and Michael J. Sacopulos, JD   
Wednesday, 17 August 2011 12:53

Remember the days when a doctor took out a half page ad in the Yellow Pages - and we quaintly called that marketing. The world has changed. One 21st century marketing program, pay-per-call, is being embraced by doctors across the country.

Here's how it works. Internet marketing companies create a platform which either markets to patients (push) or serves as a magnet for prospective patients (pull). This might include an email blast to a proprietary list. Or a search-engine optimized web site with rich information.  Once a prospect is interested in the services being promoted, the company directs those prospects to healthcare providers participating in a designated geographic area. The provider pays a fee for each substantive lead - the lead being measured as a phone call to the doctor's office lasting longer than a few seconds. It's up to the office staff to convert the phone lead into an office appointment. Sounds great. A lead on the telephone is probably more valuable than an email inquiry. If the phone's ringing, what's not to like?

We hate to be the skunks at the garden party, but legacy statutes are not particularly supportive of 21st century marketing programs. The federal government has laws on its books which prevent "kickbacks" or fee-splitting. These laws predate pay-per-call marketing by many years, but these laws are still valid. The laws say a kickback is a payment designed to induce a referral for health care. On the surface, pay-per-call programs seem to contain the ingredients referenced in anti-kickback statutes.  Fortunately, there are safe harbors which don't trigger enforcement of fee-splitting penalties - such as when a doctor refers to another doctor in his multi-specialty practice - and they are both employees in the same facility. If they split profits at the end of the year, then, in a sense, the referral has generated extra fees split by all. As a safe harbor, this does not trigger any action.

On the other hand, if two unrelated doctors have a handshake agreement whereby referrals will be paid a cool $300 for every surgery - that's likely against the law. No safe harbor there. We should note that the federal anti-kickback rules apply only to Medicare-Medicaid providers. Those physicians they do not participate in Medicare-Medicaid are outside the scope of these laws. Also the laws apply to professional services. It may be possible to structure pay-per-call to fall outside the scope of federal law by limiting the scope of offers to products only. However, as these pay-per-call marketing plans typical operate, they would be in violation of federal law. Many states, though, have parallel statutes affecting fee-splitting; such as California Business and professional Code Section 650 which bars licensed physicians from offering or receiving any form of consideration in return for patient referrals.

WWDHHSD (or What Would Dept. Health and Human Services Do)...The Office of Inspector General for U.S. Dept. Health and Human Services ("OIG") issued an Advisory Opinion on a pay per call program. There, OIG concluded that a pay per lead program did indeed violate the plain language of the Anti-Kickback Statute. And, such a program did not qualify for any statutory safe harbor. That said, OIG concluded they would not enforce the statute against participants in those programs, because such programs did not promote the type of abuse the statute was meant to curtail. The federal government opined pay-per-call, as outlined in the Advisory Opinion, was kosher. 

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(Pay Per Call Mktg:  continued from top of page)  

The policy is similar to choice the federal government exercises to "tolerate" medical marijuana purchases. Medical marijuana is legal under a number of state statutes. But, medical marijuana still violates federal law. Nonetheless, the current federal policy is to look the other way.  While the above is helpful in giving a doctor comfort, a doctor making a decision whether or not to participate in a pay-per-call program must also pay attention to policies of their state professional licensing board. Most licensing boards have explicit prohibitions against "fee splitting."  

It's unclear whether state licensing boards would follow the lead of the federal government, Would they acknowledge, as Dept. H.H.S. does, that such programs violate criminal statutes with no safe harbor - but opt against enforcement? Nobody knows. We can all agree that no physician wants to be the test case. The reality today is that many Board investigations are complaint-driven. So, if patients complain to the Board for any number of reasons, an investigation might broaden to include allegations fee-splitting. Doctors who want to test the waters with pay-per-call programs would be well advised to proactively lobby their licensing bodies to update their decades-old fee-splitting policies. Medical Justice can provide you with a template of model language for revising the policy.                  

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Jeffrey Segal, MD, JD, is founder and CEO of Medical Justice Services. Mike Sacopulos, JD, is general counsel for the organization. Run by physicians for physicians, Medical Justice, is a membership-based organization that offers services and proprietary methods to protect physicians' most valuable assets - their practice and reputation. The company offers proactive services to deter frivolous medical malpractice lawsuits, prevent Internet defamation and provide strategies for successful counterclaim prosecution. Medical Justice works as a supplement to conventional professional liability insurance.

Last Updated on Wednesday, 24 August 2011 17:57
 
Why Ratings Matter in Evaluating Medical Malpractice Insurance Companies Print E-mail
Written by MATT GRACEY   
Wednesday, 27 July 2011 16:40

MED MAL Q & A    
                     

Q. Why is a rating of a malpractice insurance company so important?  Are some rating agencies considered better than others?

A.  An insurer with a high rating from A.M. Best could be considered the equivalent of a doctor being board certified, experienced, and considered competent in their chosen specialty by an outside peer review group.   For some years now, many doctors and their administrators seem to have forgotten the vital importance of their malpractice insurer having a solid financial rating from one of the major rating agencies, including A.M. Best and Fitch.  Malpractice insurance is one of the most important purchasing decisions doctors make each year.  With such a potentially long time between deciding on an insurer and a potential multimillion-dollar payout to satisfy a judgment, the stakes are high for making an astute decision.  Insurance is a strange beast in that policyholders are essentially purchasing a promise from an insurer to pay an undetermined amount of money at an undetermined future date.  With Florida's bad-faith laws the payout could be many times the policy limits purchased, and in a multidefendant, complex lawsuit a judgment could be awarded up to ten plus years after a claim is first filed.  The significance of that is that an insurer that looks marginally healthy today when a doctor is making a decision on his or her insurer could well be gone in those ensuing years, and in Florida such seems to happen with rather regular frequency.  Unrated, financially fragile insurers also tend to settle more lawsuits, thus providing compromised claims defense.  That is why doctors must get back to fundamentals of financial decision making by determining which prospective insurers hold a high rating from A.M. Best or Fitch.  Some doctors with serious claims histories, however, might not have the luxury of being insured with a highly rated company, but most still do, particularly in our present "soft" market conditions when underwriting is much looser than in "hard" market conditions.  In previous times, Florida's widely variable malpractice insurance cycles have resulted in doctors having few choices and ratings at times had to be overlooked, but in the current market's conditions doctors with good claims histories and normal practice profiles have the ability to find fair pricing from highly rated insurers without taking the risk of purchasing coverage from unrated insurers. 

Other rating agencies have been formed in recent years to help newly formed insurers or those who choose for strategic reasons not to ask the more highly regarded agencies for a rating, so be diligent to ask about and understand the rating agencies' differences.   Some unrated insurers also tell their prospects that their reinsurers are all highly rated, but reinsurers are only a backup to the insurers' risk and can decide not to continue their participation with any insurer in any given future year at their own reinsurance policy's renewal.   
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Matt Gracey is a Medical Malpractice Insurance Specialist in Delray Beach with Danna-Gracey, Inc. He actively lectures and writes educational material to help doctors and legislators around the state understand the malpractice insurance issues facing doctors today. You can reach him at (800) 966-2120 or matt@dannagracey.com.

Last Updated on Wednesday, 03 August 2011 13:14
 
Hospital-Physician Alignment Print E-mail
Written by Todd Demel, MBA   
Monday, 20 June 2011 00:00

Strategy

During a time when we are seeing a cyclical change towards hospital employment of physicians, there has been an increased focus on strategies for achieving successful physician/ hospital alignment. Although similar such efforts failed in the early 1990s, hospitals today are adopting a different approach to employing practices. While the primary difference has to do with the structure of physician compensation, there are best practices that can be employed to increase the likelihood of successful relationships.

Trend

The trend toward hospital employment has come about for a number of reasons. Among these, it has become increasingly challenging for physician practices to go it alone. Most physicians expect at least some sort of increase in compensation when teaming-up with a hospital. In addition, malpractice liability insurance along with certain administrative functions is often assumed by the hospital, thus giving physicians an added sense of security.  In an increasingly competitive environment, hospitals may employ physicians to gain market share, to support Emergency Department call, or increase referrals to their facility. The hospital may also seek out particular specialists in order to assure strength in strategically important clinical services.  

Collaboration

With new pressures being exerted on providers, such as quality/outcomes reporting, reductions in professional and technical fee reimbursement, and increased regulatory requirements, the need for clinical integration has become more pronounced. A recent development that both supports and encourages integration is the collaborative effort between hospitals and physician practices in establishing an electronic medical record (EMR).

EMR

Previous federal policy that enacted a 'Safe Harbor' related to Stark Regulations has allowed hospitals to donate EMR hardware, software, training and support services to physicians. While practices must contribute 15 percent toward the donor's cost of the items and services provided, this still represents a significant savings for physicians. Due to impending deadlines beginning in 2011 on financial incentives associated with the Health Information Technology for Economic and Clinical Health Act (HITECH Act), there has been increased focus on the establishment and use of EMR systems. This type of shared technology goes right to the foundation on which hospital-physician integration should be based: the care of patients and patient information. And the sharing of patient clinical data provides the opportunity for providers to improve the quality and effectiveness of care delivery as well as achieve the long-range goal of cost reduction.       

Accountability

With discussions regarding Accountable Care Organizations (ACOs) front and center, it is also important for hospital-owned practices to maintain a culture of accountability. This translates into physicians being involved in the strategic decision-making of the practice, and the new entity retaining the ethos of the private practice in spite of the changes in management and standardization of certain processes. Allowing physicians to retain some control, involving them in governance and operations, and providing incentives can contribute to the success and longevity of the newly-formed relationship.

By empowering the physicians, they become accountable for the success of the practice rather than relying on or blaming the hospital for their successes or failures. Promoting participation of physicians on boards, governing councils, and oversight committees, for example, is also likely to reduce physician turnover. This type of collaborative effort fosters a team approach wherein the hospital/ physician partnership becomes aligned.  

ABOUT THE AUTHOR:  Mr. Demel is Senior Executive of Physician Management Services at MF Healthcare Solutions.  Possessing both operational and financial backgrounds, the MF Healthcare Solutions management team has vast experience in a range of healthcare industry settings. Our combined expertise enables us to offer specialized and effective physician practice management services. For more information, please visit: www.mfhealthcare.com or contact Todd Demel at (954) 475-3199.

Last Updated on Wednesday, 29 June 2011 16:36
 
Tail Coverage for Physicians Acquired by Hospitals Print E-mail
Written by Matt Gracey   
Tuesday, 14 June 2011 18:27

Med Mal Q & A 

Q: When a new doctor or a group of doctors is considering selling out to a hospital, will the hospital force the practice to purchase an expensive "tail" for its malpractice insurance policy or will the doctors be allowed to keep their retroactive coverage?

A: Doctors looking to become hospital employees undoubtedly have very different perspectives on this issue than hospitals. The hospitals prefer not to purchase retroactive coverage for the doctors they are integrating for a number of reasons. The first is the decreased expense of a first-year claims-made policy versus a more expensive policy that includes mature retroactive coverage. The second reason is that hospitals do not want the doctors' previous practice risk exposure to potentially harm the claims record of the hospital should a purchased doctor have a claim resulting from their previous practice. Third, if the hospital does allow doctors to join with their previous practice's retroactive coverage intact, then it could become a Stark issue if the whole package is considered over that undefined edge.  Additionally, some hospital insurers or their captives' reinsurers have started to strongly suggest, and in some cases require, that hospitals force doctors to purchase "tails" before a purchase is finalized. Finally, hospitals need to be very concerned about the differing "triggers" in malpractice insurance policies, as serious and expensive gaps in coverage can be created on this front. 

The only reason a hospital would ever want to purchase retroactive coverage for a new doctor is to make its recruitment efforts easier since doctors often balk at the high cost of malpractice insurance tails, but hospitals will inevitably learn that cheap can become expensive quickly on this coverage.
 
In short, many hospitals are taking the position that they do not want to insure what they cannot control, such as doctors' past malpractice exposure, so they are forcing doctors to purchase "tails" before practicing for the hospital

ABOUT THE AUTHOR:  Matt Gracey, Jr. is a medical malpractice insurance specialist agent with Danna-Gracey in downtown Delray Beach. 
To contact him call (561) 276-3553 or (800) 966-2120, or email:
 matt@dannagracey.com.   

Last Updated on Tuesday, 14 June 2011 18:31
 
MEDICAL PRACTICES USING INDEPENDENT CONTRACTORS BEWARE Print E-mail
Written by Jeffrey Cohen, Esq.   
Thursday, 05 May 2011 09:05

IRS IS WATCHING

Though it is customary for many medical practices to pay its physicians as 1099 independent contractors (instead of W-2 employees), doing so can be very expensive because the IRS is expected to increase its investigations and enforcement actions in this area.

Small to mid-sized employers (especially in the areas of hospital based specialties) have traditionally had a very relaxed attitude about how their staff is paid. They figure "What's the big deal? What difference does it make if I pay someone as an independent contractor versus withholding taxes and paying them as a W-2 employee?" The answer: Plenty! Why? Because if the IRS determines a person is wrongfully characterized by the employer as an independent contractor, the employer would be responsible for all the employer related taxes plus penalties.  

Determining whether or not a person would be viewed as a W-2 employee instead of an independent contractor is not a simple thing. The "20 Point Test" typically used to guide the determination is not cut and dry. And tax advisors often advise "When in doubt, characterize the person as a W-2 employee, not as an independent contractor." That advice has never been more true than now, when our government is actively seeking ways to soothe our financial woes.

Though characterizing people as W-2 employees will impact retirement plans (given the discrimination testing requirements), mistaking employees for contractors will definitely sting! 

With over 20 years of healthcare law experience following his experience as legal counsel for the Florida Medical Association, Mr. Cohen is board certified by The Florida Bar as a specialist in healthcare law. With a strong background and expertise in transactional healthcare and corporate matters, particularly as they relate to physicians, Mr. Cohen's practice immerses him in regulatory, contract, corporate, compliance and employment related matters. He is the Founder of The Florida Healthcare Law Firm.  www.FloridaHealthcareLawFirm.com.

 
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