Regulatory considerations continue to be an area women’s health businesses must address, as discussed during an April 14, 2022, webinar presented by McGuireWoods healthcare lawyers Kayla Marty and Tim Fry. Prevalent areas of focus for women’s health providers include: strategies to implement alternative payment models, ancillary service line development, executing multistate growth and navigating outside physician relationships.
- As more payors have an interest in alternative payment models, women’s health businesses have economic opportunities leveraging clinical efficiencies. The webinar discussed multiple alternative payment models, ranging from individual rate impacts based on site of service, to bundled payment arrangements aimed at the full continuum of pregnancy care. Regardless of the alternative payment model, the discussion centered on the importance of preparing for alternative payment model implementation.
Recommendations for such preparations included: (i) investigating the models available from payors in a market; (ii) engaging experienced staff to manage the alternative payment model; (iii) mapping out the desired economic impact of the alternative payment model, due to the potential economic risk; (iv) understanding the business’s referral patterns to ensure it is a good candidate for the alternative payment model; (v) ensuring the business has appropriate technology and data to track outcomes and referral pathways; and (vi) analyzing regulatory risks and reporting requirements associated with the alternative payment model.
In addition, practices should ensure they understand their quality metrics as payors will want to see how such models improve care. Failure to implement the steps above may present risk of the alternative payment model having unwanted economic or regulatory consequences to the women’s health business.
- Compensating physicians for ancillary services triggers federal and state laws, such that women’s health providers need to be careful when developing ancillary care alignment strategies. Most women’s health platforms seek to add ancillary services, including services their physicians are heavily involved in as part of a patient’s standard care delivery. For example, mammography services are covered by Medicare. But even groups with low to no Medicare patient census — e.g., obstetrician groups that focus on younger patient populations — may face scrutiny under the federal Physician Self-Referral Law or Stark Law, the Eliminating Kickbacks in Recovery Act (EKRA), the Anti-Kickback Statute or state law equivalents.
Because of these regulatory strictures, group practices typically cannot compensate physicians based on their referrals for ancillary services. Instead, within group practices, in addition to productivity-based payment, ancillaries will need to be split in a Stark Law-compliant profit-sharing pool. (For additional discussion of these rules, see previous McGuireWoods webinars and articles.) These rules require care and intentionality in making such payments. In addition, for larger platforms with multiple practices, particularly investor-backed platforms, indirect payments through a management entity can create challenges that must be reviewed and considered.
- Such alignment issues can challenge cross-border growth strategies. Many women’s health platforms are investing in expensive genetic testing equipment, which can be difficult for a single practice to support purchasing (particularly if the platform has more than one practice in the same state). These expenses are one reason women’s health physicians may be interested in partnering with larger platforms. However, genetic testing is often subject to federal regulations even without government payors (see EKRA), as well as state law regulation.
Therefore, platforms need to consider carefully how to invest in such laboratory equipment, while adhering to these regulatory frameworks. This may mean creating regional supergroups that cross state borders, which can allow the advantage of aligning ancillary compensation as discussed in the preceding paragraph within a single group while adding additional geographic scope. Other options include equipment-sharing arrangements and lab ownership by the investors only (i.e., not aligning compensation with the referring physicians).
Depending on the exact parameters of the platform and the business goals, different strategies can come into play, but generally, women’s health platforms need to be intentional and thoughtful here as they grow beyond a single state or practice.
- Outside physician relationships are prevalent in the women’s health subsector and pose unique challenges for women’s health practices. The webinar discussed many types of physician relationships that may exist outside a physician’s group practice. These include (i) physician investments in laboratories, imaging facilities, ambulatory surgery centers or birthing centers; (ii) physician consulting and speaking relationships with pharmaceutical or medical device companies; (iii) physician arrangements with hospitals through medical director or call coverage agreements; and (iv) expert witness roles.
Each of these relationships potentially creates regulatory and business considerations. Direct investments in ancillary services, in particular, can pose risk under federal fraud and abuse laws (such as the Anti-Kickback Statute and Stark Law), as well as similar fraud and abuse laws at the state level. Business considerations of physician outside activities, such as conflicts of interest and the time required for such outside activities, were also addressed.
Finally, the webinar covered various strategies for women’s health businesses to review outside physician relationships without eliminating them. These included creating a pathway for regulatory and economic review that is clear and fairly applied, and implementing conflict-of-interest policies to ensure the entity has a mechanism to regularly monitor, audit and assess outside activities.