Concierge Medicine: A Viable Alternative, Proceed with Caution
Michigan healthcare providers practicing or considering concierge medicine must be aware of contractual and legal considerations applicable to concierge medicine practices. In a typical concierge practice, patients pay an annual fee or retainer to obtain enhanced services or amenities including, but not limited to, greater access to physicians, longer appointments, and enhanced care coordination with specialists. Concierge medicine offers healthcare providers the ability to focus on a smaller patient panel and provide more specialized care, while adding an additional revenue stream to offset the drop in patient volume. Concierge medicine also includes direct primary care, which is an alternative to fee-for-service whereby physicians charge patients a fee that covers all or most primary care services.
Though concierge medicine may offer significant benefits to both healthcare providers and patients, providers must comply with contractual and legal obligations emanating out of state and federal law, contractual agreements with third party payors, and additional requirements for governmental healthcare programs such as Medicare and Medicaid.
Historically, concierge medicine in Michigan was stymied by the state’s Insurance Code, as agreements between providers and patients could fall within the definition of insurance and thus could require providers to comply with complex rules applicable to health insurance plans. In 2015, Michigan enacted Public Act 522 allowing providers and patients to enter into medical retainer agreements without falling under state insurance laws.1 The law defines a medical retainer agreement as a contract between a health care provider and an individual patient or his or her legal representative in which the health care provider agrees to provide routine health care services to the individual patient for an agreed-upon fee and period of time.2 In order to be considered a medical retainer agreement under the law, the agreement must (i) be in writing; (ii) be signed by the health care provider or agent of the health care provider and the individual patient or his or her legal representative; (iii) allow either party to terminate the agreement on written notice to the other party; (iv) describe and quantify the specific routine health care services that are included in the agreement; (v) specify the fee for the agreement; (vi) specify the period of time under the agreement; (vi) prominently state in writing that the agreement is not health insurance; (vii) prohibit the health care provider and the patient from billing an insurer or other third party payer for the services provided under the agreement; and (viii) prominently state in writing that the individual patient must pay the provider for all services not specified in the agreement and not otherwise covered by insurance.3 Assuming concierge practices and patients enter into complaint agreements and otherwise meet the requirements found in the law, concierge practices are not engaged in the business of insurance and may operate in Michigan subject to limitations imposed by third party payors.
Concierge medicine practices must comply with provider participation agreements and other rules of third party payors. For example, most participation agreements typically mandate that providers must accept payment for covered services from the insurance company as “payment in full” and cannot seek prepayments “of any kind” from patients. Further, providers may only seek payment from patients for deductibles, copayments and non-covered services. In 2015, Blue Cross Blue Shield of Michigan (BCBSM) and Blue Care Network (BCN) updated their policy on concierge practices to provide guidance to Michigan healthcare providers. Blue Cross’ policy provides that providers that wish to employ concierge or retainer practices must ensure the models are permitted by the providers’ Affiliation Agreements, and that providers may charge a concierge fee so long as (i) members are not required to pay the concierge fee to become or continue to be a patient in the practice; (ii) members are not required to pay the concierge fee to obtain access to the provider, and are only permitted access to ancillary providers such as physician assistants or nurse practitioners if they do not pay the fee; (iii) the services or products offered are not classified as “covered services” pursuant to the Affiliation Agreements but are instead not covered under the members’ benefit plan; (iv) providers maintain the level of access and service to patients who have not paid the fee and continue to meet BCBSM and BCN access performance standards; and (v) concierge level of service is clearly over and above the usual practice in Michigan. Blue Cross also provides that complaints that patients have suffered deterioration in service level due to a provider’s transition to a concierge practice may result in Blue Cross concluding that the practice is in violation of the Affiliation Agreement’s non-discrimination provisions. Additionally, participating providers and patients enrolled in health maintenance organizations (HMOs) may face heightened restrictions applicable to concierge medicine arrangements. Due to these requirements, providers must carefully structure concierge practices, and structure transitions to concierge medicine to avoid discriminating against existing patients that choose to not enter into a concierge arrangement.
With regard to governmental healthcare programs, Medicare providers are generally permitted to engage in concierge services if the provider complies with Medicare regulations and the terms of assignment agreements, most notably the requirement to not charge Medicare beneficiaries extra for services already covered by Medicare. Medicare’s concerns regarding concierge medicine and assignment agreements are partially summarized in a 2004 Office of Inspector General Opinion alert titled, “OIG Alerts Physicians About Added Charges for Covered Services – Extra Contractual Charges Beyond Medicare’s Deductible, Coinsurance: A Potential Assignment Violation.” 4 As with private payors, Medicare consistently advises providers that the concierge fee cannot include additional charges for items or service covered by Medicare.5 Medicare providers should also review federal authorities for Civil Monetary Penalties, including the Beneficiary Inducement Statute (BIS).6 The BIS prohibits Medicare providers from offering any remuneration to a Medicare or Medicaid beneficiary that the person knows or should know is likely to influence the beneficiary's selection of a particular provider.7 Accordingly, while it is crucial that Medicare beneficiaries not be charged for any service or item covered by Medicare, it is also key that Medicare beneficiaries pay fair market value for any additional benefits or items in order for providers to comply with the BIS.
Finally, while ethical guidelines do not amount to law, providers should consider ethical opinions and other guidance from the American Medical Association (AMA) and Michigan State Medical Society (MSMS) regarding concierge medicine practices.8
In sum, Michigan healthcare providers generally may enter into concierge medicine arrangements with private insurance patients and Medicare beneficiaries. These arrangements must comply with federal and state law, as well as contractual agreements and other rules applicable to third party payors, providers and patients. The general rule is that fees for concierge medicine may not reimburse providers for covered services or items, and that providers may not discriminate against patients that do not enter into concierge arrangements. Concierge medicine thus offers providers a viable alternative to traditional primary care models, however providers must proceed with caution in light in light of business, legal and contractual considerations.
1 M.C.L. § 500.129.
2 M.C.L. § 500.129(4)(b).
3 M.C.L. §500.129(3).
4 Office of Inspector General, OIG Alerts Physicians About Added Charges for Covered Services – Extra Contractual Charges Beyond Medicare’s Deductible, Coinsurance: A Potential Assignment Violation”, March 31 2004.
6 42 U.S.C. 1320a-7a(a); 42 CFR Part 1003.
7 42 U.S.C. 1320a-7a(a)(5). 42 CFR § 1003.1000.
8 See, e.g., “AMA Code of Medical Ethics’ Opinions on Financial Incentives and Conflicts under Various Models of Payment for Care”, AMA Journal of Ethics, Virtual Mentor, July 2013, Volume 15, Number 7: 581-586; see also, e.g., “Ethical Concierge Medicine?”, AMA Journal Of Ethics, Virtual Mentor, July 2013, Volume 15, Number 7: 576-580.