Why You Need Affiliate Agreements for Your Med Spa or IV Hydration Business

By: Carlos Arce

Partner, Florida Healthcare Law Firm

In the era of social media, everyone is paying social media ambassadors or influencers to promote their business, product, or services. But if your business is a Med Spa or IV Hydration business, engaging these relationships without a proper contract can lead to significant legal pitfalls.

What are Affiliate Agreements?

Affiliate agreements are marketing contracts that outline the relationship between a business and its affiliates (i.e., social media ambassadors or influencers) who generate leads and drive sales. In the healthcare space, these agreements take on even greater importance due to stringent state laws that regulate how businesses can compensate individuals for referrals.

Why You Need Affiliate Agreements

Legal Compliance

Without proper documentation, you risk violating Anti-Kickback laws, fee-splitting regulations, and laws designed to prevent illegal leads and referrals. States like Florida have laws such as the Patient Brokering Act that apply not just to physicians but to laypeople as well. This makes it crucial to vet and document all affiliate marketing arrangements correctly.

Safe Harbor Requirements

Marketing arrangements in healthcare often need to comply with specific safe harbor requirements under anti-kickback laws. Typically, these agreements follow the guidelines set by the Personal Services and Management Contract Safe Harbor. By having an affiliate agreement, you ensure that payments to promoters and lead generators are compliant with your state’s regulations.

Mitigate Litigation Risks

Engaging in informal agreements can lead to disputes that could end in costly litigation. A well-drafted affiliate agreement helps mitigate these risks by clearly defining the roles, responsibilities, and compensation terms for both parties.

Enforcement and Compliance

States are becoming increasingly vigilant in enforcing these laws, particularly in the wellness industry. It’s better to be compliant now than to face legal repercussions later. Being aware of how marketing works in the healthcare space will not only guarantee the success of your business but also ensure sustained revenue.

Different Types of Affiliates

Social Media Ambassadors vs. Influencers

  • Social Media Ambassadors:
  • Use the product
  • Provide testimonials
  • Typically tied in a long-term relationship with the company
  • Influencers:
  • Do short reviews
  • Typically don’t lead to direct introductions

For healthcare businesses, affiliate agreements should primarily be considered for social media ambassadors due to their long-term engagement and direct testimonials. Influencers should only be included in these agreements if they are making direct referrals.

Affiliate agreements are not just a formality; they are a necessity for any Med Spa or IV Hydration center that plans to engage social media ambassadors or influencers. These agreements help you stay compliant with state regulations, mitigate litigation risks, and ensure that your marketing efforts are legally sound. 

Don’t wait for enforcement actions to catch up with you—be proactive. Document your relationships with social media ambassadors and influencers through well-crafted affiliate agreements to safeguard your business and ensure its continued success.

What Your Medical Practice Revenue Says About The Health of Your Business


By: Adam Lusthaus 

In the world of healthcare businesses, revenue often gets the spotlight. But focusing solely on revenue can be misleading and even detrimental to long-term success of any business, be it a medical practice, wellness clinic or even a pharmacy. Ultimately, though it does offer insights to your business’ health, revenue should never be the only benchmark for success. 

If you’re a physician or a medical practice owner, you’ve likely been told that revenue growth is the ultimate sign of a thriving practice. However, while revenue is important, it alone doesn’t paint the full picture of your practice’s health. A deeper analysis reveals that other elements—like corporate structure, tax elections, proper agreements, and risk mitigation—are equally vital. 

Having a proper corporate structure with the right choice of entities is fundamental for any business, including medical practices. A sound structure ensures that responsibilities and roles are clearly defined, which in turn enhances operational efficiency. There are several types of corporate structures to consider, including sole proprietorships, limited liability companies, partnerships, and corporations. Each has its own set of advantages and challenges that can impact your practice’s long-term success. Neglecting corporate structure can lead to operational chaos and legal issues. An appropriate structure supports strategic growth and offers protections that a revenue figure alone can’t guarantee.

Tax elections are choices made by a business regarding how it will be taxed by the IRS. For example, some practices may opt for S-corp status to benefit from pass-through taxation and save on self-employment taxes. While certain elections can significantly impact your take-home pay, they may create unintended issues should the business wish to sell in the future.  Both tax elections and corporate structuring are important considerations that have short and long-term repercussions.

The existence and state of fundamental business documents is another important indicator. Operating and partnership agreements outline the rules and expectations for the operation of the business. These documents are essential for avoiding disputes and ensuring smooth operations. Effective agreements should clearly define roles, responsibilities, profit-sharing, and conflict resolution mechanisms. Without these, the misunderstandings and conflicts that are inevitable in life and business may lead to costly and time consuming litigation in the future.

Every medical practice faces several liabilities, from malpractice claims to operational risks. Insurance, compliance programs, and regular audits are some of the safeguards that can protect your practice from unforeseen liabilities. Furthermore, having the right contracts and other agreements in place can help mitigate potential exposure and ultimate culpability. Proactively managing liability and exposure helps in safeguarding your practice’s reputation and financial health, far beyond just maintaining high revenue.

While revenue is an important indicator of financial performance, it’s not a comprehensive measure of success for medical practices. Corporate structure, tax elections, proper documentation, and risk mitigation play equally crucial roles. By broadening the focus to encompass all of these factors, providers can build a more resilient and successful business. 

How to Leverage Your Billing & Collection Company for Optimal Success in Your Medical Practice

Running a successful medical practice requires more than just offering top-notch patient care. Effective management of billing and collections is crucial for maintaining financial health. Many practices partner with specialized billing and collection companies to handle these tasks, but fail to recognize that the relationship requires active management to truly unlock its full potential. In this post, we’ll explore how to effectively work with your billing and collection company, the importance of quarterly check in meetings, and how your healthcare legal team can be deployed where needed to ensure maximum revenue for your practice.

Understanding the Role of Billing & Collection Companies

Billing and collection companies specialize in handling the financial transactions of your practice. They manage claims processing, patient billing, and collections, ensuring that your practice gets paid for the services rendered. However, they aren’t always forthcoming about their own limitations. This makes it essential for you, as a practice owner, to take an active role in managing this relationship.

The Importance of Taking the Lead

One common challenge practices face is not knowing what they don’t know. Billing companies may not highlight their own shortcomings, so it’s up to you to lead the relationship to success by asking strategic questions that reveal opportunities for improvement. Here are key areas to focus on:

1. Regular Communication

Establish regular communication channels with your billing company. Schedule quarterly meetings to review performance, address issues, and set goals for the upcoming quarter. These meetings are an excellent opportunity to ask questions and get a clear picture of your financial health.

Questions to Ask During Quarterly Meetings:

  • What are our current collection rates, and how do they compare to industry standards?
  • How do our collection rates in each age bucket compare to the prior quarter?
  • What are the top 3 denial reasons?
  • How many zero pays do we have? 
  • How long is the average time from service rendered to payment received?
  • Are there any emerging trends that we should be aware of, such as changes in insurance policies, coding procedures or regulatory requirements with respect to documentation?
  • Are there any trends that you’ve observed that you think we need to evaluate to ensure compliance? 

2. Performance Metrics

Understand and monitor key performance metrics. Knowing these metrics will help you gauge the effectiveness of your billing company and identify areas for improvement. Important metrics include:

  • Days in Accounts Receivable (AR) – The average number of days it takes to collect payments.
  • Net Collection Rate – The percentage of eligible payments collected.
  • Denial Rate – The percentage of claims denied by payers.

3. Compliance and Legal Considerations

Work closely with your healthcare legal team to ensure compliance with healthcare regulations. Your legal team can help you understand where the billing company’s responsibilities end and where you need to step in. This can prevent potential legal issues and ensure that your practice operates within the bounds of the law.

Questions to Discuss with Your Legal Team: 

  • Are there any compliance issues we need to address?
  • What steps can we take to reduce the risk of audits and penalties?
  • How can we ensure that our patient billing practices are fair and transparent?
  • Do I have any systemic payment issues that my legal team can assist with?

4. Continuous Improvement

Encourage a culture of continuous improvement within your practice and with your billing partner. Regularly review processes and look for ways to enhance efficiency and effectiveness. This can involve updating technology, training staff, or revising workflows.

5. Leveraging Technology

Investing in the right technology can significantly improve your billing and collections process. Many practices are investing in AI tools to assist physicians and staff with progress notes and charting, ensuring that progress notes support the codes being charged in each claim. Ensure that your practice management software integrates seamlessly with the billing company’s systems and that any direct payments made to your office are reported within both systems. This integration can streamline processes, reduce errors, and provide real-time data for better decision-making.

Conclusion

Effective billing and collections are vital for the financial health of your medical practice. By taking an active role in managing your relationship with your billing and collection company, scheduling regular check in meetings, and leveraging the expertise of your healthcare legal team, you can uncover opportunities for success and ensure that your practice thrives.

Ready to take your billing and collections to the next level? Schedule a consultation with our expert team today and discover how we can help you streamline your operations and maximize your revenue.

Credit: Sinead

Peptides Gone Wild:  Why Is This So Hard To Pin Down?

Peptides are short chain amino acids (40 or less amino acids) that are fast becoming one of the underpinnings of the “wellness movement.”  When we’re young and healthy, our bodies make plenty of them.  When we’re older or stressed or sick, the story goes, their production falls off and our physical (and mental quality) of life is undermined.  Because they’re essentially the same chemicals made by our bodies, it makes sense that we ought to be able to augment their decline by injection or ingesting them, right?  Kinda of like bioidentical hormones.  Not so fast Charlie!

The biggest stumbling block re peptides is this:  the Food and Drug Administration (FDA) regulates them as drugs.  More specifically, the FDA has been clear that they can be compounded at compound pharmacies but not made by pharmaceutical companies, because they aren’t “approved” by the FDA.  Moreover, since they are essentially what’s found in nature, they are not subject to the usual intellectual property (IP) protections that allows a company that creates them to “own” them and monetize them in the same way that pharmaceutical companies can.  And unless and until Pharma changes the molecular structure of a peptide, no IP can be obtained and it cannot be FDA approved.

All that said, the FDA is clearly concerned about the growth of peptide use.  Which explains why in February, 2024 (updated in May), the FDA expanded the 503A Category 2 list (bulk drugs items raising “significant safety risks”) to include peptides like BPC-157, Kisspeptin, MOTs-C, ipamorelin, thymosin A and B and many other that were the cornerstone of the peptide wellness movement.  In many instances, the FDA commented about the peptides on the expanded Category 2 list that there was insufficient data to show efficacy or harm, so they’re “suspect.”  Even more “interesting” is the current Category 1 list (“under evaluation) that includes items like aloe vera, CoQ10, curcumin, glutathione, L-Theanine, NAD, pregnenolone, quercetin, resveratrol, tea tree oil and many others that clinicians and patients count on as part of their regular wellness regimen. 

The “why” of all this is confounding to clinicians in the wellness space and the patients who want the right to be proactive about their wellness.  One narrative is how it’s a Big Brother driven issue, that Big Money (i.e., Pharma) is behind it all and just wants to prevent people from driving their wellness regimen and instead turn each of us into drone like consumers of pharmaceutical products that have unwanted side effects.  I don’t know!  But I do know this:  if you don’t know how law is made and if you don’t have a “seat at the table,” your unique point of view will be completely missing from all the laws and regulatory activity downstreamed to us consumers.  Pharma knows the system and has a hand in designing it.  Those businesses understand how policy is created and enforced.  And they pay a ton of money each year to (1) validate their products, and (2) lobby both legislators and regulators to promote their products and invalidate products they didn’t create and which don’t meet the standards (they help design and implement). 

So then…where is all the research on peptides?  Why don’t compound pharmacies or providers that rely on peptides for wellness solutions spend millions of dollars a year on double blind studies to validate peptides?  Maybe…because there is no IP protection for such products.  And if there’s no IP protection, how can any company justify the investment?  They’ll never be repaid.  And if they did make the investment, all their competitors would reap the benefit, since there is no IP protection for wellness solutions found in nature.  Until stakeholders in the wellness industry either (1) invest in changing the regulatory/legislative game and (2) play a very active role in that process, they will just bugle victim and fairness stories.  They’ll sound like a bunch of sore losers.  There is no winning the game without playing it.

So where does that leave peptide providers and consumers right now?  Are they illegal?  Nope.  Can you go to jail if you prescribe or use them?  Nope.  That said, given the fact that the latest FDA directives are aimed at compound pharmacies, the pharmacy space is where we see the most scrambling and confusion.  Because if the FDA takes issue with them, their licensure is on the line.  The net effect for the moment is (i) fear among prescribing professionals and (ii) contraction of peptide availability.  That contraction in the compound pharmacy space has spurred new companies that label peptides “for research use only” or “not for human consumption.”  The trouble is that these new “research companies” are not subject to any quality related regulations.  

Consumers ought to be wary of these new (non pharmacy) companies.  The Alliance for Pharmacy Compounding (APC), for instance, advises that such peptides not be labeled as described above.  They advise that any such substances “must be manufactured by an FDA-registered facility.” For similar reasons, clinicians need to be selective about the companies they’re using to fulfill prescriptions for peptides during this dynamic time. 

All of that said, some peptides, like semaglutide and tirzepatide, are free flowing, which is confusing to consumers and clinicians.  The short reason is there’s an exception for compounding that applies to FDA approved drugs that are “currently in shortage.”                                      

The current state of the law and peptide industry is in flux.  That will mean some providers will contract and others will fill the void created by leaving the market.  It’s a short-lived situation that is expected to develop further during the next year or so.  But if the past is any predictor of the future, the future belongs only to those clinicians and providers (and consumers) that organize and interact with the FDA and legislators to demonstrate both safety and efficacy.