Three Hurdles to Integration

By David W. Hirshfeld

Chiropractors often come to us wanting to integrate a doctor of medicine or osteopathy into the chiropractor’s practice so that they can expand their practices to include services such as physical therapy, hormone replacement therapy, or neuro-feedback.  Florida and Federal law create three fundamental challenges that often prevent these arrangements from being accomplished: (i) the M.D./D.O. may have to be a co-owner with the chiropractor or be hired on a W-2 basis; (ii) the M.D./D.O. and the chiropractor may have to provide 75% of their services through the integrated practice; and (iii) services provided by a practitioner other than the referring physician (e.g. a physical therapist) must be directly supervised by the M.D./D.O. or the chiropractor.

M.D./D.O. as W-2 Employee

Generally speaking, physicians may not refer patients for designated health services (“DHS”) (e.g. P.T., rehab and diagnostic imaging) to an entity with which the physician has a financial arrangement unless an exception applies. [1]  A physician has a “financial relationship” with the practice he owns or by which he is employed.[2]  So a physician who refers a patient for services to be rendered by another physician or practitioner in the same practice may be making a referral that needs to fit within an exception.  In order to fit within relevant exceptions, a practice must qualify as a “group practice” under the law.

A “group practice” must be constituted by two or more physicians organized into partnership, corporation, or similar association.  Most solo-practicing chiropractors who ask us about integrating an M.D./D.O. into their practices do not want to offer an ownership position to the M.D./D.O., so the only other way to constitute a “group practice” is for the M.D./D.O. to be hired on a W-2 basis; and this can be a show-stopper.  Many of the M.D./D.O.s do not want to be W-2 employees; they often want to be hired through their professional corporations with the hope of preserving certain advantages with respect to deducting expenses and contributing to their tax-deferred savings plans.  Sometimes the chiropractor does not want a W-2 relationship because of the employment-related taxes and expenses that triggers.  This prevents the practice from being a group practice under Federal law.  Moreover, the presence of the M.D./D.O. as an owner will raise issues with respect to health care clinic licensure under Florida law if the practice submits claims to Personal Injury Protection (“PIP”) insurers, an issue for many chiropractors.

The Seventy-Five Percent Rule

Among the other requirements necessary to be considered a “group practice,” 75% of the services provided by member-physicians (i.e. owners and W-2s) must be provided through the group and billed under the group’s billing number.[3]  The calculation of time spent should be performed on an aggregate basis.  Where there is one chiropractor and one M.D./D.O. the two physicians must spend at least 150% of their collective professional time providing services through the integrated practice (i.e. 75% each).  If one physician, usually the chiropractor, spends 100% of his professional time at the practice; then the other physician need only spend 50% of his time at the practice.  The physicians have twelve months from the first date of integration to comply with this 75% rule.  Even with the aggregated nature of the calculation, often the M.D./D.O. that a chiropractor plans to integrate has other jobs, and cannot commit to spending 75% of his professional time working at the integrated practice.

Direct Supervision

Florida and Federal laws and rules impose supervision requirements on various aspects of integrated practice arrangements.

Medicare billing rules provide that, within a group practice, services that are performed by a non-physician practitioner (e.g. physical therapist), but that are incident to a physician’s services, can be associated with the physician’s provider number and fee schedule if and only if that physician was physically present in the office suite at the time the incident-to services were rendered.  For purposes of this rule, a “physician” is an M.D. or a D.O., but not a chiropractor.  This supervision requirement is a Medicare billing rule, so it only applies to patients insured by Medicare and other programs that adopt this billing policy.

Florida law provides that, within a group practice, services can be performed by a practitioner other than the referring physician if and only if a physician who is part of the practice was physically present in the office suite at the time the services were rendered.  For purposes of this rule, chiropractors are included within the definition of “physician,” but not for Federally or state insured patients.

The supervision requirement seems to pose much less of a challenge than do the 75% rule or the W-2 requirement.  Many chiropractors have little or no Medicare patients, and can schedule the physical therapy and other incident-to services provided to those patients on days when the M.D./D.O. is physically in the office.

There are many other issues that must be addressed in the course of integrating an M.D./D.O. into a chiropractic practice.  In my experience, the three issues addressed above have emerged as the most common threshold issues.  My hope is that chiropractors can better hone their search for an appropriate integration partner by being familiar with these issues. To learn more about the options under this concept, visit our online store for a download of our more detailed A/V presentation HERE.

[1] Florida’s prohibition on self-referrals of patients is found at F.S. §456.053, the Federal prohibition is found at 42 U.S.C. §1395nn (a/k/a the “Stark Law”).

[2] Federal Stark Law applies to financial arrangements other than the ownership and investment relationships implicated by Florida Law.  Some of the other financial arrangements that come within Federal law are employment arrangements (both W-2 and 1099), rentals of office space and/or equipment, practice management service agreements.

[3] 42 U.S.C. §1395nn(h)(4).

2 thoughts on “Three Hurdles to Integration

  1. Pingback: Mega Practices – How Big is Too Big? | Florida Healthcare Law Firm Blog

  2. Pingback: M.D./Chiropractor Organizations Face Licensure | Florida Healthcare Law Firm Blog

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