Health Care Insights

In today’s market, many spas are looking to expand their service lines to include cosmetic medical services, such as laser therapies, IV hydration, and Botox treatments.  With the prevalence of cosmetic medical services on the rise, people are now electing to receive these treatments in a spa setting – as opposed to a traditional medical office. Regulations abound, yet, they often fail to provide spas with direct guidance on these emerging services and the technological advancements in treatments. When forming a spa that provides cosmetic medical services (a “medi-spa”), there are a number of issues a business owner should consider.

First, it is critical to understand whether a medi-spa needs a state license or registration to operate. If a license or registration is required, it often must be obtained in order to form the entity itself.  The time it takes to obtain any necessary license or registration can also impact the medi-spa’s application to state tax authorities during the formation process.

Second, it is critical to understand what licensing boards regulate the medi-spa and its professionals. For example, estheticians are typically regulated by a state cosmetology board. Healthcare professionals can be regulated by a variety of boards, including but not limited to boards of medical examiners, nurses, chiropractors, pharmacists, and dieticians.  Each board has its own applicable rules and regulations, which often require certain credentialing and limit the scope of services the licensed individual can provide.

As a featured guest on Plastic Surgery Practice’s podcast, Setting Up a New Location? Tips for Leasing or Buying, Kerry Cahill, Esq. discusses her thoughts on the establishment of new sites for healthcare practitioners.

Sellers want to maximize their profit on the sale of the property, and, as a result, the practitioners must make competitive offers. For the practitioners who are receiving financing, the mortgage obligations may commence before the practice is physically up and running. As a result, the practitioners must ensure they have enough capital during the fit out period to cover any mortgage, tax, insurance, utility, and repair obligations.

Listen to the full podcast on Plastic Surgery Practice.

COVID-19, inflation, politics, and an impending recession: it is indisputable that the last two years have had an indelible effect on the healthcare industry. Acute care providers, in particular, have faced a plethora of economic challenges, including increasing costs for drugs and medical devices. However, on June 15, 2022, in American Hospital Association v. Becerra, Secretary of Health and Human Services, 142 S.Ct. 1896 (2022), the American Hospital Association (AHA) secured a win for 340B hospitals—often referred to as safety net hospitals—by successfully challenging the Department of Health and Human Services’ (DHHS) calculation of reimbursement rates. As a result, the Becerra court affirmed that DHHS was not statutorily authorized to vary reimbursement rates for different hospital groups; DHHS’s power to increase or decrease the price is distinct from its power to set different rates for different groups of hospitals. Id. As a result, the Becerra decision has far-reaching implications for acute care providers who provide services to uninsured, underinsured, and rural communities.

Legislative Backdrop

In order to appreciate the impact of Becerra, it is imperative to have a general understanding of the evolution of the regulatory landscape for healthcare providers. During the nineteenth century, acute care was generally provided in the homes of the wealthy or through benevolent institutions, including voluntary, religious, and public or governmental institutions. Generally, the Wilson-Gorman Tariff Act of 1894 applied to these early acute care providers, which provided that charitable organizations should enjoy tax-exempt status, provided they operate for charitable purposes.

Lindabury attorney Stephen A. Timoni of the firm’s Health Care industry team was recently interviewed by Relias Media and offered tips and best practices for providers offering telehealth services.

Some of the topics covered in the article include:

  • privacy concerns due to the nontraditional electronic transmission of sensitive information among providers and patients

As the response to the coronavirus pandemic continues to evolve, it is imperative that healthcare providers stay informed about the latest legal developments that may affect their practices.

In the middle of a pandemic and with instructions from all levels of government to practice social distancing, visiting your healthcare provider virtually may seem like an obvious choice. And yet, a patchwork of federal and state regulations governing telehealth has complicated such visits.

As just one example, licensure of physicians is on a state-by-state basis. Each state has its own regulations making it difficult to implement a national telemedicine program. Adding to that are limits on physicians being able to treat patients in a state in which they are not licensed, as well as different state drug prescription and privacy laws.

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Stephen Timoni was recently interviewed by Karen Appold of Managed Healthcare Executive regarding significant changes on the horizon which are expected to affect both health insurers and providers alike.  Many are the result of a shift toward value-based care, a move toward decreased care in hospital settings, technological advances, and other forces.

Along these lines, Timoni says that consolidation has been motivated by the evolving and challenging commercial and government reimbursement models which include lower fee-for-service payment rates, value-based payment components, and incentives to move care from inpatient to outpatient settings. “Basic economic theory suggests that consolidation of hospitals and physicians enables these combined providers to charge higher prices to private payers as the result of a lack of competition,” Timoni says. “Likewise, combined insurers are able to charge higher premiums to their subscribers.”

You can read the full article online here.

“Owning real estate can be a great recruiting tool, and can lure physicians into a larger practice,” says Stephen Timoni in a recent interview with Healthcare Finance News’ Jeff Lagasse.

“They become a partner in the practice, but they also offer them a buy-in into the building,” he said. “That’s very interesting for a young physician because, down the road, what physician groups may be doing is they’ll sell their building for a gain to a real estate investment trust or hospital system, and then they’ll lease the building back from the hospital. So they cash in on their equity.”

Another option for physician groups is to retain the real estate and lease it back to the health system for additional income — providing better overall economics, largely in the form of tax benefits.

On March 18, 2019, New Jersey Governor Murphy signed and enacted Senate Bill Number 2773 , which clarifies the definitions of Health Care Service Firms and Homemaker-Home Health Aides. The bill was primarily sponsored by Senator Nellie Pou and was unanimously passed by the New Jersey Senate and Assembly. According to Senator Pou, “[t]his bill will ensure that all firms acting as health care agencies for our elderly, including the ones using the Internet to arrange and provide companions or health care services are properly registered. We need to ensure that adequate care is provided with registered and qualified caregivers at all times.” Health Care Service Firms are closely regulated by the New Jersey Division of Consumer Affairs. Part of the regulation provides that these firms are required to provide comprehensive training, supervision and oversight to their caregivers who must be directly employed by the firm. In May 21, 2018 New Jersey passed legislation requiring Health Care Service Firms to become accredited by an accrediting body recognized by the New Jersey Department of Human Services and to submit to an audit conducted by a certified public accountant.

The recently enacted bill revises the previous law to clarify that any firm, company, business, agency or other entity that is not licensed by New Jersey as a Home Health Care Agency or Hospice which employs, places or arranges for the placement of or in any way refers an individual to provide companion, personal or health care services in the personal residence of a person with a disability or who is 60 years old or older, must register with the New Jersey Division of Consumer Affairs as a Health Care Service Firm. The bill further stipulates that the Division of Consumer Affairs is authorized to take enforcement measures upon any person who operates a firm that is subject to this Health Care Service Firm registration requirement, whether the operations include the direct employment of individuals, the use of an Internet website or application, or any other process or business model.

In addition, the bill imposes a penalty of $500 per day, for each day that the person continues to operate a firm without registering as a health care service firm as required.

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Stephen A. Timoni is quoted in a recent issue of ROI-NJ.  Steve says, “The medical field is very interesting right now.  And I think it’s going to get even more interesting as the rapidly changing dynamics of healthcare continue to unfold. Practices have learned that they can no longer promise to waive copays or deductibles under this law, with some exceptions.  That’s where it leads to some gray areas: How aggressive do you need to get to collect balances?” he said.  We don’t know answer to that. But, certainly, the burden is on out-of-network physicians providing services.”

Often, physician groups find a solution to these complications in just merging in with health systems or other large in-network providers, Timoni said.  But, even if that has been the answer for some time now, the industry’s constant reconfiguring means one can never safely predict what will continue to be true going forward.

You can read the full ROI-NJ article here.

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Clarifying the burden placed upon health care workers alleging New Jersey Conscientious Employee Protection Act (CEPA) violations, the New Jersey Supreme Court’s recent decision in 218 N.J. 8 (2014) illustrates the barriers facing employees who point to alleged violations of codes of ethics or employer policies to support whistleblowing claims.

The Facts: Registered Nurse James Hitesman served as shift supervisor for a nursing home operated by Bridgeway, Inc. (“Bridgeway”). In 2008, Hitesman e-mailed Bridgeway management expressing concerns that seasonal respiratory and GI symptoms were rising at an alarming rate at the nursing home. Unsatisfied with Bridgeway’s response to his concerns, Hitesman reported the increase in infections to governmental agencies and the media. In his communications with the media, however, Hitesman provided partially redacted copies of Bridgeway administrative logs that nevertheless disclosed information that could lead to the identification of patients. Bridgeway ultimately terminated Hitesman for his disclosure of patient information to the media in violation of the facility’s confidentiality policy and the Health Insurance Portability and Accountability Act (HIPAA).

Hitesman filed suit alleging that his discharge violated CEPA’s prohibition of retaliatory action against a health care employee who reports on, or objects to, employer activity that the employee reasonably believes constitutes “improper quality of patient care” or is “incompatible with a clear mandate of public policy concerning the public health.” Hitesman pointed out that “improper quality of patient care” is defined by statute as a violation of “any law, or any rule, regulation or declaratory ruling adopted pursuant to law or professional code of ethics.” To support his claim of a reasonable belief that Bridgeway’s infectious disease practices constituted improper quality of patient care, Hitesman relied upon the American Nursing Association’s Code of Ethics that obligated him to improve patient care, as well as Bridgeway’s Internal Code of Conduct and its Statement of Resident Rights as the governing standard for assessing Bridgeway’s misconduct.

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