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The Hidden Healthcare Compliance Risks in Cash Pay 

Prepared by: Carlos Arce, Esq. 

Florida Healthcare Law Firm 

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 healthcare regulatory compliance create real risk, even in the cash pay space. 

 

Medical Malpractice & Negligence  

It is well established law that a cash healthcare 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 governed by Florida’s healthcare police doesn’t mean you don’t need to govern and operate as a medical practice, quite the opposite. 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 MD’s and DO’s are required to have active insurance policies. Which 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 (med spa) 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 Healthcare 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 held guilty of paying kickbacks.  

The above are only a few of the regulatory and legal concerns surrounding cash pay, Med Spa’s. We suspect that when business increases legal and compliance requirements follow. Coming to the table early will be difference between addressing legal issues on a reactive front versus a proactive approach.  

 

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 healthcare transactions and has served as out-of-house counsel to various small to large healthcare entities. He can be reached via email at [email protected] or by calling 561-455-7700.