Medical Practice Management
Mar 11

Is a Boutique Practice in Your Best Interest?

In recent years, practices have explored options to being solely reliant on insurance contracts. Some practices are opting out of all insurance contracts and Medicare and charging an annual fee to patients that covers all services provided for the year. The practice limits the number of patients accepted in order to allow more personalized attention to each patient. Claims for clinical tests and procedures are submitted by the patient to their insurer. The annual fee is not reimbursed by the insurance company and therefore comes out of the patient’s pocket.

Other practices are charging patients an annual membership fee that entitles the patient to extra privileges such as same-day appointments and other amenities. These practices continue to participate with insurance companies and Medicare, or bill private payors as an out-of-network provider and justify the membership fee as covering those services that are not otherwise covered by insurance. Those patients who cannot pay the membership fee are turned away.

The membership fee option has come to the attention of HHS’ Office of Inspector General (OIG).  Several years ago, Dara Corrigan, acting chief of the OIG, issued the following warning to medical practices: “We are hearing reports about physicians asking patients to pay additional fees. Charging extra fees for already covered services abuses the trust of Medicare patients by making them pay again for services already paid by Medicare.”

A physician in Minneapolis was charged with violating federal rules by having Medicare patients sign a “personal health-care medical care contract” that provided “extra services” for a $600 annual fee. The physician agreed to pay $53,400 as a settlement of the case and will no longer ask Medicare patients to sign the contract.

Charging patients who have commercial insurance — with whom you are contracted — additional fees and then billing the insurance company for services rendered is a violation of your contract and can result in termination of the contract.

If you are not happy with the reimbursement you receive from Medicare, the only safe option would be to opt out of the Medicare program entirely. This option allows the physician to charge whatever he/she wants to any patient. However, the physician, as well as the patient, cannot submit any claim for reimbursement to Medicare for at least two years. Continuing to operate as a participating or non-participating Medicare provider while charging extra fees puts the practice at serious risk with the OIG.

Terminating your contracts with private payors may result in a denial of benefits for your patients or an increase in their out-of-pocket costs due to higher deductibles and co-pays for out-of-network services. Accepting what insurance pays as payment in full without having a ”medical hardship” policy in place and going after the patient for the deductible and/or coinsurance can result in prosecution under the False Claims Act.

About Reed Tinsley, CPA

As a top advisor to physicians, I help increase practice profits by delivering hands-on, expert medical accounting/tax support, practice counsel, and revenue-building strategies. Read more →