Increasing concerns about underpayment and non-payment by insurance companies have providers focused more than ever on cash services. Many of the active and emerging players in the med spa, IV hydration therapy, and concierge medicine spaces are misguided on the issue of compliance, however. Both legal exposure and health care regulatory compliance create real risk, even in the cash pay space.
Medical Malpractice & Negligence
It is well established law that a cash health care business which does not seek reimbursement from insurance carriers does not require a Health Care Clinic License granted by AHCA if owned by non-providers. However, not being overseen by Florida’s health care police doesn’t mean you don’t need to govern and operate as a medical practice; quite the opposite is true. You are required to keep medical records in accordance with health care privacy laws and you are required to ensure that your medical providers render medical care within the standard of care.
For the most part, all providers under Florida law with the exception of MDs and DOs are required to have active insurance policies. This means hiring an MD or DO to render services for your med spa will raise the question whether they carry professional liability insurance or are considered “bare” under Florida law. If you hire a mid-level such as an advanced practice registered nurse, do they have professional liability coverage that extends over med spa type services or is the insurance only for primary care? Last, as the practice who intakes the patients and serves as the records custodian, does the practice carry professional liability insurance? Are you prepared if your provider commits malpractice?
Employee or Independent Contractor
Compliance with labor and health care laws is as important if not more important than the insurance issue mentioned above. Many med spa’s engage medical providers to perform services on a menu basis or at a fixed rate but do not have an agreement in place specifying whether the provider is an employee or independent contractor. Having an agreement in place is not only a labor concern but could potentially subject you to risk under Florida’s health care laws (specifically, Florida’s Patient Brokering Act). You see, Florida has adopted the federal health care laws, the Anti-Kickback Act and the Physician Self-Referral Law through Florida Statute 817.505 “Patient Brokering Act” and Florida Statute 456.053 “Patient Self-Referral Act of 1992.” Patient Brokering Safe Harbors must be complied with when medical practice’s engage medical providers to perform service on behalf of their practice. If you don’t comply with requirements under the “Personal Services” or “Bona Fide Employee” Safe Harbor you could be found guilty of paying kickbacks.
The above are only a few of the regulatory and legal concerns surrounding cash pay. We suspect that when business increases, legal and compliance requirements follow. Coming to the table early will be the difference between addressing legal issues from a proactive versus a reactive approach.
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Attorney Carlos H. Arce works with the Florida Healthcare Law Firm in Delray Beach, FL. He has deep experience with health law, business law, and mergers & acquisitions. Carlos has handled multi-million-dollar health care transactions and has served as out-of-house counsel to various small to large health care entities. He can be reached via email at carlos@floridahealthcarelawfirm.com or by calling 561-455-7700.
