We adhere to the traditional understanding that the corporate practice of medicine doctrine forbids employment of health care professionals by business entities or nonprofessionals absent legislative authorization.” Washington Supreme Court, 2010

Create the Right Company

“Washington’s corporate practice of medicine doctrine prohibits corporations from employing medical professionals to practice their licensed professions.In other words, medical professionals generally cannot form or work for limited liability entities.”

“The PSCA [Professional Service Corporation Act] is a statutory exception to this prohibition. It allows medical professionals to form (and to be employed by) professional (limited liability) services corporations, if and only if all of the corporation’s shareholders are themselves licensed to provide the offered medical services.” [Tacoma Federal Court, 2014]

The judge quoted above was ruling in a case where State Farm Insurance was asking for a refund of practitioner payments. Why?

Because “it is not disputed that all owners of Tacoma Therapy and Tacoma Rehabilitation were at no time themselves licensed to provide all of the medical services the entities were providing to State Farm’s insureds (and for which State Farm was paying).”

“The entities were not within the PSCA’s exception to the corporate practice of medicine doctrine, and that doctrine prohibits the entities from operating as they did.”

Create the right kind of company with legal owners.

Employees or not

Just because you call someone an “independent contractor,” doesn’t mean they aren’t an employee.

If they really are an employee, as explained by the Department of Labor, the IRS, or other state agencies, you owe a lot money to a lot of folks.

Did you remember to write down and sign an agreement with your employees and contractors?

Did you remember to train them in their HIPAA responsibilities?

Did you give them copies of your HIPAA Privacy and Security Policies and Procedures?

Health care practices exist in a heavily regulated environment. It’s not enough to know the rules of employment and contract.

You have to think about health care practice rules and health care insurance reimbursement, and other issues.

Compliance may seem impossible; but it’s not.

Get organized and get signed pieces of paper.

Mistakes vs fraud

Running a health care practice can drive you crazy. Too many forms, too many online billing systems, and too little time for patients.

So, a practitioner facing a routine audit by a health plan realized that he forgot to make a certain notation on patient records. Oddly, when the auditor took a stack of papers and flipped through them, the same notation, of the same size and shape appeared in exactly the same place on each record. From that point on, the audit became a settlement negotiation.

Another story –  a health plan reduced its network and a couple of practitioners were not able to bill their patients’ insurer. But, a good friend of theirs decided to pretend the practitioners worked at her network clinic. But the practitioners forgot to move into their friend’s clinic.

The practitioners were never listed in the clinic’s contract with the network either. A provider directory request by a patient led to a completely different inquiry. Oops.

Last story – a practitioner decided to make life financially easy on his patients so he devised a prepayment plan. For a fixed monthly payment, patients could see the practitioner without worrying about insurance coverage. But, that’s called insurance.

Pre-payment plans must satisfy the insurance laws and professional rules of conduct.

Make sure you organize your billing, collections, and contracts in a way that looks good under a microscope.

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