Regulatory considerations continue to be an area for women’s health companies to address, as discussed in a meeting on April 14, 2022, online seminar presented by McGuireWoods Health Advocates Kayla Marty and Tim Frire. The predominant areas of focus for women’s healthcare providers include: strategies for implementing alternative payment models, developing ancillary service lines, executing multi-state growth, and navigating outside of relationships with physicians.
- As more payers look to alternative payment models, women’s health companies have economic opportunities by leveraging clinical efficiencies. The webinar discussed several alternative payment models, ranging from individual price impacts based on service site, to bundled payment agreements aimed at the full continuum of pregnancy care. Regardless of the alternative payment model, the discussion focused on the importance of preparing for the implementation of the alternative payment model.
Recommendations for such preparations included: (i) study of models available from payers in a marketplace; (ii) hire experienced staff to manage the alternative payment model; (iii) map the desired economic impact of the alternative payment model, due to the potential economic risk; (iv) understand the business’s recommendation patterns to ensure it is a good candidate for the alternative payment model; (v) ensure that the company has the appropriate technology and data to track results and referral pathways; and (vi) analyze the regulatory risks and reporting requirements associated with the alternative payment model.
Additionally, practices should ensure they understand their quality metrics, as payers will want to see how these models improve care. Failure to implement the above steps may present the risk that the alternative payment model will have undesirable economic or regulatory consequences for the women’s health business.
- Physician compensation for ancillary services triggers federal and state laws, so women’s healthcare providers should be careful when developing ancillary care alignment strategies. Most women’s health platforms seek to add ancillary services, including services in which their physicians are heavily involved as part of a patient’s standard care delivery. For example, mammography services are covered by Medicare. But even groups with little or no Medicare patient enumeration — for example, obstetrician groups that focus on younger patient populations — may face scrutiny under federal law. on Physician Self-Referral or Stark’s Law, Elimination of Bribery in Recovery Act (EKRA), Anti-Kickback Statute Law or equivalents of the law of l ‘State.
Because of these regulatory restrictions, group practices generally cannot compensate physicians based on referrals for ancillary services. Instead, within group practices, in addition to payment based on productivity, auxiliaries will have to be distributed 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 when making such payments. Additionally, for large platforms with multiple practices, especially investor-backed platforms, indirect payments through a management entity can create challenges that need to be considered and considered.
- These alignment issues can challenge cross-border growth strategies. Many women’s health platforms invest in expensive genetic testing equipment, which can be difficult for a single practice to sustain purchases (especially if the platform has more than one practice in the same state). This expense is one reason women’s health physicians might be interested in partnering with larger platforms. However, genetic testing is often subject to federal regulations, even without government payers (see EKRA), as well as regulation by state laws.
Therefore, platforms need to think carefully about how to invest in such laboratory equipment, while respecting these regulatory frameworks. This can mean creating regional supergroups that cross state lines, which can provide the benefit of aligning ancillary compensation as discussed in the previous paragraph within a single group while adding additional geographic reach. Other options include equipment-sharing agreements and investor-only lab ownership (i.e., not matching compensation to referring physicians).
Depending on the exact platform parameters and business goals, different strategies may come into play, but in general, women’s health platforms need to be intentional and thoughtful here as they grow beyond a single state or a single practice.
- Relationships with external physicians are prevalent in the women’s health sub-sector and pose unique challenges for women’s health practices. The webinar discussed many types of physician-to-physician relationships that can exist outside of a physician’s group practice. These include (i) physician investments in laboratories, imaging facilities, outpatient surgery centers or birthing centers; (ii) physician consulting and exchange relationships with pharmaceutical or medical device companies; (iii) doctors’ agreements with hospitals through medical directors or call coverage agreements; and (iv) role of expert witness.
Each of these relationships potentially creates regulatory and commercial considerations. Direct investments in ancillary services, in particular, may present a risk under federal fraud and abuse laws (such as the Anti-Kickback Act and the Stark Act), as well as similar laws on fraud and abuse at the state level. Business considerations of physicians’ outside activities, such as conflicts of interest and the time required for these outside activities, were also discussed.
Finally, the webinar covered various strategies for women’s health companies to examine relationships with outside physicians without eliminating them. These included creating a clear and fairly enforced regulatory and economic review pathway, and implementing conflict of interest policies to ensure the entity has a mechanism to monitor, audit and regularly evaluate external activities.