Alert warns of Medicare conflict for concierge practices

Washington -- A new federal fraud alert highlights the fine line doctors must walk when treating Medicare patients in concierge practices.

Medicare participating physicians face potential civil monetary penalties if they charge extra for services already covered by Medicare, wrote Acting Principal Deputy Inspector General Dara Corrigan in the alert, issued March 31.

"We are hearing reports about physicians asking patients to pay additional fees, and we believe this is an ideal time to remind physicians and Medicare patients about this potential liability," Corrigan said. "Charging extra fees for already covered services abuses the trust of Medicare patients by making them pay again for services already paid for by Medicare."

The Dept. of Health and Human Services' Office of Inspector General recently alleged that R. Douglas Thorsen, MD, an internist from Minneapolis, violated his Medicare assignment agreement when he presented his patients with a medical care contract with a $600 annual fee.

The contract offered patients "coordination of care with other providers," "a comprehensive assessment and plan for optimum health," and "extra time" spent on patient care. After looking at the facts and circumstances of the case, the OIG alleged that at least some of these contracted services were already covered and reimbursable under Medicare.

The OIG stated that the physician agreed to pay an undisclosed settlement amount and to stop offering the contracts to his patients. Dr. Thorsen could not be reached for comment.

Although the alert refers to the three services offered in exchange for the annual fee, it does not represent a list of prohibited behaviors, said OIG General Counsel Jennifer Leonardo.

"That's not intended to read that our position is whenever any physician is offering a comprehensive assessment and plan for optimum health, it would always be a covered service," she said. "The point of this new alert is, if you're charging extra fees for covered services, then you face liability under the statute."

Leonardo also said the alert was not intended as an indication of the OIG's position one way or another on concierge care. It merely reiterates the law regarding extra charges.

But the document has raised red flags for many physicians operating or considering concierge practices, also known as boutique practices.

Garrison Bliss, MD, an internist with Seattle Medical Associates, said models for these types of practices are still evolving, and he hopes that federal and state governments won't attempt to kill the initiatives before they can fully develop.

"For the models that both accept a monthly fee and accept payments from Medicare for services rendered, [the alert] clouds the arena considerably," he said.

"They will probably force a lot of those people to drop Medicare. The threat of withdrawing their money or, worse, penalizing you makes it harder and harder to continue with those models."

Dr. Bliss has avoided potential conflicts with Medicare in his practice by not billing the program or any other insurer. His practice offers patient care in exchange for a fixed monthly fee.

"Our model, where we fully separate ourselves from all insurance money, is a rare one," he said. "I think most doctors would like to have the insurance companies paying for services, and they would like to supplement that with some income from the patient. Those are going to be the least expensive systems for patients."

Concierge care still an option

The alert doesn't mean physicians accepting Medicare can't open concierge practices, said Allan Jergesen, a health care attorney with Hanson, Bridgett, Marcus, Vlahos & Rudy in San Francisco. "If they're not with Medicare, it becomes easier because you don't have to worry about this. But if they are, then one spends an awful lot of time defining what exactly they're going to be giving to Medicare patients and charging extra for."

But as Medicare expands its coverage options, it's getting harder for concierge practices to find uncovered services to justify the extra fees.

"It was very easy to provide an initial and an annual physical because Medicare clearly did not cover that," Jergesen said. But the Medicare Modernization Act of 2003 provides coverage for an initial physical for new Medicare beneficiaries starting in 2005.

According to John Marquis, an attorney in the Grand Rapids, Mich., office of Warner, Norcross & Judd, the easiest way to avoid getting in trouble with Medicare-for charging an extra fee is to offer nonmedical services. For example, some doctors offer transportation or cell phone access.

Physicians who simply send letters to their patients asking for an additional $200 a year to offset lower revenues or higher liability premiums could run afoul of the prohibition on added charges, he said.

"It's hard to justify that in a Medicare context because you're just asking everyone to pay more money," Marquis said. "That's not what concierge medicine is all about."