Coffee Break with Maria Todd 4/7/2014

Many physicians call me to ask what to do about the threatening letters they receive from managed care organizations (MCOs) that threaten to discharge them because they opened a concierge practice. There are many things to consider but much depends on three things: your current contract, how you’ve organized your concierge practice, and how you market your concierge program.

One thing is for certain, you may have more leverage than you realize, healthcare reform may make payers less likely to terminate you, because they may need you more than you need them, and to force you off the contract doesn’t force you to stop treating your established patients. In fact, to stop treating them without the proper procedure and advanced notice, you could actually be abdicating your responsibility under your state’s medical practice act.

That being said, handled improperly, continuing managed care relationships can land you in a heap of legal trouble.

The first strategy you need to develop is a way to sequester all your non-covered amenity-based services from those that are considered covered services.  If you or your consultant didn’t consider this and you already did you roll out, all is not lost. But don’t wait to call me to discuss how to remediate this. If you wait until the MCOs come after you, it gets much more difficult and you could lose your ability to sort things out.

When I set up a concierge practice, I recommend that the physician establish the concierge practice as a wholly separate business corporation alongside their professional corporation. This is cleaner, and can be owned by anyone without running into problems in conflict with corporate practice of medicine laws. The business corporation, which owns the concierge membership accounts is separate from the company that collects the fees for covered services and contracts with MCOs. The medical corporation accepts payment in full for covered services from third-party payers, subject to coinsurance, deductibles, and copays.  Then a second strategy is used to compensate the concierge physician for the concierge services, paid out by the business corporation.Please contact me for a courtesy consult if this applies to you. Let’s manage this risk together and fix the situation before it gets nasty.  We’ll look at your managed care contracts, analyze your membership arrangement, come up with a corrective action strategy if necessary, and get everything sorted out quickly. It’s not an expensive ordeal if you act quickly.

If you wait until the MCOs start sending you letters, depending on your corporate form and organizational structure, you risk spending thousands on legal defense, and could ultimately face either termination from the MCOs “for cause”, give rise to bad publicity – which can damage your brand and standing in the community, and make existing and prospective members have doubts on their decision to sign up.