The Steady Creep Towards Concierge Medicine

December 10, 2005

Authored by Joseph Geraci, JD

Brown McCarroll, LLP, Austin, Texas

A quiet medical revolution is occurring in this country.  Physicians are dropping out of managed care plans and Medicare, or continuing to participate and risking contractual and other sanctions to implement a concierge medical care model.  Specifically, physicians are exploring, and in many cases implementing, a system (referred to as concierge care or boutique medicine) where private medical practices charge retainer fees for more personalized services.  The personalized “concierge” services can vary greatly, but typically include periodic wellness checkups, availability during non-business hours, unhurried consultations, guaranteed “wait free” appointments, and even house calls.  Concierge medicine is attractive to many physicians because in a typical scenario, a physician can maintain his pre-concierge income while reducing his patient panel by 50% or more.  From a professional satisfaction standpoint, concierge medicine allows physicians the opportunity to really know their patients.

Switching to a concierge model, however, carries some risk, especially if the physician or group intends to continue its managed care relationships, and treat Medicare, Medicaid or other governmental payor patients.  Specifically, contracts with the health plans limit how and when a participating physician may charge the enrollee.  Additionally, the traditional fee for service Medicare program prohibits providers from charging its beneficiaries any additional fee for services Medicare covers.

I. Concierge Care Under the Health Plan Contracts

Significant obstacles to adopting a concierge medicine program are the contractual limitations health plans have on billing their enrollees.  Also problematic are provisions which limit when a physician may turn away existing or new members seeking treatment (i.e., make patient panel changes).  Each of these issues require independent contractual analyses.

In our experience, most managed care agreements require that the contracted physician accept the rates set forth in the agreement as payment in full for all services provided.  These provisions, taken in isolation, seem to prevent charging enrollees anything more than the contract’s rates for any services whatsoever.  But usually that general prohibition is limited by another clause that clarifies that the health plan’s payments are for “Covered Services” only, which are defined as payable services under the enrollee’s health plan.  Consequently, if a physician offers concierge services to a contracted managed care population, he must be prepared to argue that the concierge services offered are totally distinguishable from “Covered Services.”

Another standard provision which impairs concierge implementation is a contractual limit on how and when the existing or new health plan patients can be turned away.  It is not uncommon for a plan to require that a physician give prospective notice that he will decline to accept new members.  Also common are non-discrimination requirements that prevent physicians from treating patients differently based on payment source.  This “non-discrimination” clause makes it difficult for physicians to offer concierge services to only certain patient populations, and can impede a concierge medicine plan roll out.

II. Medicare Compliance Risks

Pronouncements by federal authorities add additional risks to physicians offering concierge medicine.  Specifically, on March 31, 2004, the Office of Inspector General (“OIG”) released an “OIG Alert” aimed at concierge services.  In that report, the OIG stated

“when participating providers request any other payment for covered services from Medicare patients they are liable for substantial penalties and exclusion from Medicare and other Federal health care programs.”

The OIG went on to specifically mention its settlement with a physician that offered his patients a “Personal Health Care Medical Care Contract” for an annual fee of $600.  The OIG explained that even though the physician characterized his “Personal Health Care Medical Care Contract” services as not being covered by Medicare, the OIG believed they were.  The physician’s allegedly non-covered services were standard concierge benefits, including “coordination of care with other providers,” a “comprehensive assessment and plan for optimum health,” and “extra time” spent on patient care.

Other than maintaining the belief that the services the physician offered were covered by Medicare, the OIG Alert did not give any indication of the legal basis for the OIG’s position.  A more recent, August 2005 United States Government Accountability Office (“GAO”) report entitled “Physician Services, Concierge Care Characteristics and Consideration for Medicare,” however, does.  In particular, it cites to Medicare’s general prohibition on charges to beneficiaries beyond Medicare limits.  The prohibition the GAO cites is in the Civil Monetary Penalties section of the Social Security Act.  The prohibition applies to providers who accept an assignment of benefits from Medicare and Medicaid patients, which is necessary for providers to receive payment in the traditional Medicare and Medicaid programs.  Accordingly, providers offering these services to traditional Medicare patients should be aware of the significant compliance risks they are taking.

These compliance risks, however, arguably do not extend to Medicare Advantage patients.  Specifically, a provider treating a Medicare Advantage patient under a contract does not accept an assignment of the patient’s Medicare benefits as is necessary under the traditional Medicare program.  Consequently, there is an argument that the civil monetary penalty the GAO referenced in the report, which is presumably the basis for the OIG’s rational, does not apply to an offer of concierge medical care to Medicare Advantage patients.

Nonetheless, offering concierge care to Medicare Advantage patients, while arguably not explicitly prohibited as under the traditional Medicare program, is still problematic.  Under the Medicare Advantage rules, the Centers for Medicare and Medicaid Services mandates that a health plan offering a Medicare Advantage plan ensure through contract that its Medicare Advantage patients are not charged extra for services otherwise covered under the plan.  If the plan fails to establish procedures to ensure that individuals are not billed in excess of what the law allows, the plan is subject to intermediate sanctions.

In other words, given the potential for intermediate sanctions and the OIG’s apparent dislike of concierge care, health plans offering a Medicare Advantage product may try to prevent any type of concierge care product that includes Medicare Advantage patients.

III. Conclusion

Concierge medicine appears to be on the rise.  Although, as the GAO noted, the overall number of physicians transitioning to concierge care is still relatively insignificant, we anticipate a slow but steady increase in the numbers as more physicians witness their peers implementing successful concierge practices.  If you or your group is considering a concierge practice, however, it is important to know the contractual and other compliance risks that you may face.  Equally important are precautions to mitigate those risks wherever possible.

If you have any questions regarding this article, please contact Joe Geraci at (512) 703-5774 or jgeraci@mailbmc.com.

Previous post:

Next post: