Urgent Care Centers: Key Legal and Business...
Transcript of Urgent Care Centers: Key Legal and Business...
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Presenting a live 90-minute webinar with interactive Q&A
Urgent Care Centers:
Key Legal and Business Considerations Complying With Corporate Practice of Medicine Laws,
State Licensure Requirements, EMTALA Mandates, and Reimbursement Laws
Today’s faculty features:
1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific
WEDNESDAY, SEPTEMBER 21, 2016
Jon M. Sundock, General Counsel and Chief Administrative Officer,
CareSpot Express Healthcare, Brentwood, Tenn.
David F. Lewis, Esq., Butler Snow, Nashville, Tenn.
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5
Forming Urgent Care Centers:
Addressing Complex Legal Challenges
September 21, 2016
David F. Lewis Jon Sundock
Butler Snow CareSpot and
MedPost
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What is an Urgent Care Center?
• No universal definition
• Provide services that fall in between primary care and emergency
department
• Can also include some primary care services and could branch into other
areas, e.g., weight loss, allergy care, wellness, etc.
• Urgent Care Association of America:
• The delivery of ambulatory medical care outside of a hospital emergency
department on a walk-in basis, without a scheduled appointment
• Generally focused on episodic, acute care rather than
on long-term management of chronic illness or preventive care
7
Common Features of Urgent Care Centers
Retail healthcare
High focus on customer convenience
No appointments required and short wait times
Extended hours, including weekends and evenings
Broad list of services beyond primary care offices
X-ray
EKG
Onsite lab for CLIA waived testing
Ability to perform minor procedures like laceration repair and
splints
8
Why the Growth in Urgent Care Centers?
• Growth spurt began in mid-1990s and has continued
• Since 2008, the number of urgent care centers has increased from 8,000
to more than 11,000
• Why the continued growth?
• Acceptance by the public
• Lack of access to primary care (no access or delayed access)
• Overcrowding in Emergency Departments (ED)
• Affordable Care Act has not slowed growth in ED visits
• Long wait times at other providers (EDs especially)
• Convenience of longer hours and walk-ins
• Emphasis on high-quality care
• Increased healthcare consumerism spurred by
high-deductible plans
9
Current State of Urgent Care Centers
Over 150 million patient visits to urgent care centers
each year in the United States
By 2018, total urgent care industry revenue is projected
to exceed $18 billion
There have been significant transactions in the urgent
care industry
Tenet Healthcare’s purchase of CareSpot Express Healthcare
Wellpoint’s purchase of Physicians Immediate Care
Dignity Health’s purchase of US Healthworks
10
Current State of Urgent Care Centers
Would anticipate additional consolidation in the industry
More health systems acquiring urgent care centers and
developing additional urgent care centers
Continued interest by private equity players in having interests in
urgent care companies
Various strategies remain viable:
Urban focus
Rural focus
Pure play urgent care
Hybrid models
primary care focused
Telemedicine
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Current State of Urgent Care Centers
2015 UCAOA Benchmark Report
Nearly 90% of urgent care centers saw an increase in the
number of patient visits from 2013 to 2014
Nearly 25% of all urgent care centers are owned by hospitals or
health systems
Approximately 20% of urgent care centers are owned by two or
more physicians
About 27% of all emergency room visits could take place in
urgent care centers (with approximate cost savings of $4.4
billion)
By 2019, large metropolitan areas could support two to three
times the number of current urgent care centers
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Current Distribution of Urgent Care Centers
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Key Legal Considerations
Corporate Practice of Medicine
Staffing Models
State Licensure and Permits
Documentation and Coding
Other Focus Areas
Medical Director
Accreditation
EMTALA
Other Compliance Matters
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Corporate Practice of Medicine
The corporate practice of medicine doctrine prohibits
employment of clinical personnel by corporations
Purpose is to protect the integrity of medical profession
by keeping it separate from corporate interests
State laws vary on the doctrine
Strict prohibitions
Some Limitations
No prohibitions
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Corporate Practice of Medicine
Certain states are very strict - any corporation
employing a licensed physician to treat patients and
receive fees for those services is unlawfully engaged in
the practice of medicine
Texas, New York, California, and Illinois are examples of states
with strict corporate practice of medicine perspectives
Employee-physician subject to disciplinary action or
license revocation
In strict states, structuring arrangements carefully is very
important.
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Strict Prohibition Against Corporate
Practice of Medicine
Narrow exceptions could apply:
Professional corporations formed by physicians – this is a
common permitted corporate structure in states
Texas utilizes the “501(a)” structure as a unique exception
California permits the use of a “foundation” model
The “Friendly PC Model” is commonly used in strict
corporate practice of medicine states
Physician owned professional corporation is managed by a
corporate entity for a fair market value management fee.
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Less Strict Approach to
Corporate Practice of Medicine
Permits physician employment as long as the terms of
relationship do not violate statutory requirements:
“Entity does not direct or control independent medical acts,
decisions, or judgment of the licensed physician”
Most physician-entity employment relationships
permitted as long as physician’s professional medical
discretion is preserved
Indiana and Florida are examples of states with this
approach.
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Urgent Care Staffing Models
Common staffing models for urgent care centers:
Physician-only staffing
Primarily physician staffing supplemented on a limited basis by
mid-level providers
Primarily mid-level staffing with supervision provided by
physicians most often through “indirect supervision”
Considerations for choice of staffing models:
Economic considerations
Public perception considerations
Availability of staffing to meet needs
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Urgent Care Staffing Models
Here are some 2014 statistics on staffing models used at
urgent care centers:
11% are physician only
Will this percentage decrease over time?
29% have a physician and midlevel working together
54% have physician supervision with the physician not onsite
4% have no physician supervision (permitted by state regulation)
For non-clinicians, over half of the urgent care centers use
medical assistants (40% used RNs) and nearly all urgent care
centers (93%) use X-Ray Technicians
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Urgent Care Staffing Models
Direct Supervision versus Indirect Supervision
Direct supervision - when the physician is working at the same
time in the same building with the mid-level provider
Indirect supervision – when the physician and the mid-level
provider are not working at the same time but the physician is
available for consultation
State requirements impact supervision arrangements
Scope of practice for nurse practitioners and physician
assistants may not be the same
Supervision requirements for NPs and PAs may not be same
State requirements may be harder to satisfy
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Urgent Care Staffing Models
Items to Consider when Exploring Indirect Supervision
Can PAs and NPs perform the same scope of services?
What written agreement is required?
With what agencies are forms or agreements to be submitted?
What requirements must the supervising physician fulfill?
Chart reviews – a certain percentage each month, other charts?
Availability?
Regular meetings?
Periodic reviews of protocols?
Clinical quality assessments?
What are the legal consequences for the supervising physician?
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Urgent Care Staffing Models
Additional considerations for indirect supervision:
Limits on the number of mid-levels that may be supervised at
any one time
Prescription pad requirements vary widely by state
Prescribing controlled substances
How do you document that supervision requirements are met?
Key to indirect supervision – follow the rules and do
more than simply “check the box” in satisfying the state
requirements
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State Licensure
Facility licensing varies greatly from state to state
The general rule is that most states do not have an urgent care
license or any state licensure for urgent care centers
Will that remain the case?
Some states do have license requirements for urgent care
centers:
Florida
Massachusetts
Arizona
States with urgent care licensure require pre-opening surveys
and periodic surveys thereafter
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State Licensure (continued)
Case Study: Massachusetts
State license process is very involved, complicated and lengthy
Massachusetts has many requirements with respect to the
physical layout of the urgent care center, for example
The application is substantial and the review process is very
detailed.
At the inspection, multiple inspectors took three days to
complete the review
Case Study – Florida
While not as involved as Massachusetts, Florida has an
application and physical space review requirement prior to
opening
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State Licensure (continued)
Even if a state does not have an urgent care license,
patient complaints may lead to an inspection or survey
Urgent care centers should have documented policies
and procedures in place and a way to confirm that those
policies and procedures are consistently followed
An example of a key policy and procedure is a triage
policy:
Front desk staff need to understand what to do when an
emergent patient comes into the center and requires immediate
attention
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State Licensure (continued)
These licenses and permits are commonly required:
CLIA Certificate
Necessary if the center offers certain clinical laboratory testing
Make sure the correct level of CLIA certificate is obtained (i.e,
waived versus provider performed microscopy)
X-ray permit
Watch out for extra requirements (Texas, for example)
Pharmacy license - in some states, highly restrictive pharmacy
provisions have led urgent care centers to forego offering
prescription medications
Other licenses and requirements depend on the location
City or county business permits or special signage requirements
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State Licensure (continued)
Be aware of additional requirements that may come with
licenses and permits
Annual inspection of the lab
Inspection of the X-ray equipment and other diagnostic
equipment not located in the lab
Proper storage of medicines and supplies
Signage requirements:
Notice to patient requirements
X-Ray notices
Posting of provider licenses
Notification to patients if a mid-level provider is on duty
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Documentation and Coding
Not unlike other areas of healthcare, a key area of
compliance for urgent care is appropriate documentation
and coding of claims for services
Expectation is that proper training and oversight is
maintained for clinician documentation and coding
Evaluation and Management (E/M) coding is a key
aspect of urgent care coding:
New patients (99201 – 99205)
Established patients (99212 – 99215)
1995 versus 1997 Guidelines
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Documentation and Coding
If using an electronic health record system:
Does the system suggest an E/M code?
If so, then need to understand how the system determines
Is it entirely up to the provider to determine the E/M code?
Does the system have one check box that results in multiple
boxes being checked?
Is “copy – paste” features available to clinicians?
Who is responsible for completing the Review of Systems and
Past Family and Social History?
Medical Decision Making
Do providers understand the elements in deciding the proper level?
How much time they spend with the patient is not a factor
30
Documentation and Coding
Even if an electronic medical record system is used, the
urgent care center should have a paper process for
documentation available with related policies and
procedures for proper completion
A paper documentation process is necessary when the
electronic medical record system is not available
When locum tenens are used, they may need to document on
paper because they are not trained on the electronic system
Do you give the regular clinicians the option to document on
paper when the center is busy or when they are still new in using
the electronic system?
31
Documentation and Coding
Beyond E/M coding, other aspects of documentation are
important to consider Is a modifier, like the 25 modifier, appropriate to use?
Are procedures, like fracture care and laceration repair, properly
documented to support the charge for the procedure?
Does the documentation contain all of the elements to establish not
only the results of testing but what action the provider takes in
response to testing results?
The “hindsight test” is a good way to evaluate documentation –
would the documentation in a professional liability case stand up
to scrutiny if challenged by the patient?
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Documentation and Coding
How do you properly monitor documentation and
coding?
No financial incentive for providers with respect to coding
Monitoring programs should be implemented, followed and
documented
Random claims reviews
Statistical analyses should also be performed to detect outliers
Particular focus paid to high coding – 99205/99215
Proper documentation also avoids malpractice issues
Does the electronic medical record system prompt clinicians at all?
Balancing complete documentation and need for efficiency is a
constant effort
33
Other Areas of Focus
Medical Directorship Requirements
Some states require urgent care centers have a medical director
Florida requires a “market medical director” (maximum of 5
locations per medical director)
Massachusetts requires a “professional services director” for each
urgent care center
Those states with required medical directors, applicable statutes
spell out the duties of those medical directors
Florida requires medical directors review charts to ensure proper
documentation and coding
Most states have no medical director requirement
How does an urgent care center ensure proper provision of medical
services to patients without medical directors?
34
Other Areas of Focus
Case Study – Allstate Ins. Co. v. Vizcay (No. 14-13947
(11th Cir, June 23, 2016)
Company was accused of violating False Claims Act because
medical director did not review documentation and coding as
required by Florida statute spelling out medical director duties
Court found medical director did not fulfill the statutory duties
and permitted claims to go out for services not provided and
incorrectly documented and coded
“The plain meaning of the statutory language shows that the
Florida legislature intended to establish, not eschew, a principal-
agent relationship between a clinic and its medical director.”
35
Other Areas of Focus
Accreditation
There is no regulatory requirement that urgent care centers seek
and obtain accreditation
Two organizations will provide urgent care accreditation:
Joint Commission
Urgent Care Association of America
Benefits of Accreditation
Forces operational discipline and consistency across locations
Establishes minimum requirements, particularly for states which do
not license urgent care centers
Creates perception of quality to patients
May differentiate urgent care centers with payors
36
Other Areas of Focus
EMTALA
Emergency Medical Treatment & Labor Act
Treatment obligations of EMTALA do not apply unless
the urgent care center is owned by a hospital or in a joint
venture with a hospital AND services provided are billed
as a department of the hospital
No obligation to treat patients who arrive at the center
Triage policy – stabilize and transport
37
Other Areas of Focus
Additional Compliance Focus Areas
Regular and consistent compliance training
HIPAA privacy requirements
Small spaces and thin walls
Front desk personnel – critical staff member
Medical records requests
HIPAA security requirements
Agreements with providers
Compensation and bonus arrangements
38
Other Areas of Focus
Liability Risks
Malpractice risk for urgent care centers generally falls between
that of primary care practitioners and emergency departments
Risk factors for UCCs
Lack of long-term, well established patient relationships
Target for drug seekers
Discharge management—patient follow-up plan
Potential for underdiagnosing patients
Rely on patients to correctly self-triage and select appropriate facility for
care
Example of risk area – pulmonary embolism
39
Key Business Considerations
Location, management, and services
Issues in buying or selling an Urgent Care Center
Partnering with hospitals and investors
40
Location
Volume key to financial success
One study showed that a population of 20,000 to
30,000 was needed to sustain an urgent care center
Currently, urgent care centers are concentrated in urban
areas
Convenience for patients
Population demographics, e.g., age, average income
Free-standing v. hospital-associated
41
Management of Urgent Care Centers
How will the urgent care center be managed?
Physician managed
Management company
Customer service oriented management improves
financial success of urgent care centers
Leadership with a healthcare background is key
42
Services Provided
Target population
Know the community’s demographic in order to tailor services to
community’s needs
Specialty v. General
For example, some urgent care centers focus specifically on
pediatric care
One stop shop
All services within the urgent care center or nearby referral
locations
Goes back to the convenience factor
43
Buying or Selling an Urgent Care Center
Buying an existing urgent care center
Location
Competition
Reputation
Property—leased or owned
Valuation
Due Diligence
Exclusivity Agreement
Employment & Non-Compete Agreements
44
Buying or Selling Urgent Care Centers
Due Diligence – areas of focus
Documentation and coding
Policies and procedures
Training for staff
Marketing
Lines of business
Patient satisfaction
Turnover rates
Litigation experience
Operational audit results
45
Buying or Selling an Urgent Care Center
Governing and Ownership Agreements
Voting
Officers
Compensation
Decision making—Management and Control
Retirement
Sale of Ownership Interest
Tax Considerations
46
Partnering with Hospitals and Investors
Possible Ownership Models
Physician or group of physicians
Hospital
Corporation
Non-physician individual
Franchise
With the wide range of services offered and extended
service hours, integration is key to the successful growth
of an urgent care center
47
Management Company Model
Provides the facilities, office space, equipment, non-
physician personnel, and non-professional services to an
existing practice or other healthcare services provider
Must be commercially reasonable and reflect fair market
value payment for the goods and services
Do you obtain a third party fair market valuation?
Does state law permit a percentage-based management fee or is
a flat fee required?
May the fee be adjusted and how?
48
Investor Model
Private equity firm or investor group provides equity
funding for the business
Investors typically own a majority of the equity in the
company
Management holds a minority stake
Board of Directors is dominated by the investors
Ultimate fate of the company’s control is up to the investors
Timing and consideration for when and to whom to sell may not
be what management anticipates
Timing to achieve center-level profitability and
completing beneficial acquisitions are very important
49
Joint Venture Model
Hospital or health system and company jointly own
urgent care centers
Proper structure is very important
Operating agreement describes key business terms
How are decisions made on important decisions
What decisions may the manager make without Board
participation
How are the centers branded
Do each of the members to the joint venture have the same
goals in mind for the jointly owned locations
50
David F. Lewis
Butler Snow
The Pinnacle at Symphony Place
150 3rd Avenue South, Suite 1600
Nashville, TN 37201
Jon M. Sundock
CareSpot Express Healthcare
MedPost
115 East Park Drive, Suite 300
Brentwood, TN 37027