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What Medical Spa Owners Need to Know About LLC Taxation

Posted By Administration, Monday, November 4, 2019

tax forms

By James M. Stanford, JD, Partner, ByrdAdatto

Fake or Real: My company is taxed as an LLC—Fake!

There is no such thing as being taxed as a limited liability company (LLC).

Clients, as well as tax and legal professionals, routinely confuse entity structure with tax classification. Quite commonly, we hear clients state that an entity is taxed as an LLC when, in fact, no such tax classification exists.

Many people do not realize that when forming an entity—such as a medical spa—typically there are two principle filings. Understanding the difference can alleviate a lot of confusion.

  1. The first filing is at the state level, which incorporates the company as a legal entity (i.e., filing as a limited liability company).
  2. The second filing—or filings—are with the Internal Revenue Service to obtain an employer identification number. This filing determines how the new entity will be treated from a federal tax perspective.

An LLC is purely a state-level entity structure. In turn, the LLC elects how it will be taxed: either as a partnership, an S corporation, a C corporation or a disregarded entity. Generally, when someone says they are taxed as an LLC, what they really mean is that they are taxed as a partnership.

AmSpa members receive a complimentary 20-minute Introductory Compliance Assessment with a ByrdAdatto attorney. Click here to learn how to join AmSpa today!

James M. Stanford is an attorney and partner at the ByrdAdatto law firm. From transitions, mergers, and acquisitions to structuring complex ownership arrangements, James enjoys the personal reward that comes from bringing parties together and making deals happen. James practices primarily in the areas of health care and corporate law with a focus on intellectual property. A proud father, Jim served in the U.S. Army and is fluent in Russian. In his spare time, he enjoys hunting, fishing, and spending time outdoors.

Tags:  Business and Financials  ByrdAdatto  Med Spa Law 

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How Forming an LLC Can Help Your Medical Spa

Posted By Administration, Wednesday, October 30, 2019

llc

By Courtney P. Cowan, JD, ByrdAdatto

Beginning Labor Day Weekend through the first few weeks of 2020, you will find ByrdAdatto attorney Robert Fisher proudly wearing the same red fishing shirt imprinted with the distinctive University of Georgia “G” logo. That garish shirt signals to everyone in the office that college football is upon us. We take football seriously at ByrdAdatto—and in the state of Texas, generally—so it seemed fitting to compare the similarities of our two loves of college football and limited liability companies (LLCs). “What could these two things possibly have in common?” you ask. The answer is simple: absolutely nothing.

But that hasn’t seemed to stop people, particularly college football coaches, from using LLCs as a means of conducting business. Originally used as a way to circumvent the optics of making more money than prominent state officials, collegiate head coaches formed LLCs to function as depositories for the large amount of supplemental income they received in addition to their base salaries. A recent Dallas Morning News article detailed some of the reasons for doing this, including tax relief and liability protection.

While we appreciate the publicity the head football coaches bring to the LLC, these reasons are not novel to those familiar with this business structure. Many business owners, accountants and attorneys have long been proponents of the LLC due to the advantages offered by it, including:

  • Tax flexibility: The LLC can elect to be taxed as a disregarded entity, partnership or corporation (s-corporation or c-corporation). By default, an LLC is taxed as a “pass-through entity” (i.e., a disregarded entity or partnership, depending on the number of members), meaning all of the profits and losses of the LLC “pass through” the LLC to the members, who then report the profits and losses on their personal tax returns. The LLC itself does not pay federal income taxes, unless it elects to be taxed as a c-corporation.
  • Limited personal liability: The owners (members) of an LLC are protected from the liabilities and creditors of the LLC as long as the LLC is formed and operated properly. Moreover, LLCs provide protection against outside liabilities (i.e., the liabilities of the other members).
  • Perpetual existence: The LLC can survive the death of its owners. This means the business will survive even if its owners do not.

Whether you are a Power Five coach making millions or a small medical spa, virtually anyone can form and take advantage of the benefits of an LLC.

AmSpa members receive a complimentary 20-minute Introductory Compliance Assessment with a ByrdAdatto attorney. Click here to learn how to join AmSpa today!

As the daughter of a periodontist, Courtney P. Cowan has been fascinated by the health care field since childhood. She often accompanied her father to his office, where she developed an appreciation for physicians and their respective practices. Having absolutely none of the dexterity that is required to be a surgeon, however, Cowan instead decided to pursue a degree in business while attending Baylor University. It wasn’t until she was required to take a business law course that she discovered her passion for the law. After graduating from Southern Methodist University Dedman School of Law, Cowan serendipitously connected with ByrdAdatto and now assists clients by combining her business background with her enthusiasm for health care and the law.

Tags:  Business and Financials  ByrdAdatto 

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How the Update to the Texas Privacy Breach Notification Law Could Affect Your Medical Spa

Posted By Administration, Friday, October 11, 2019

data breach

By Jay Reyero, JD, Partner, ByrdAdatto

Target. Equifax. Facebook. Capital One. For us, a data breach is a reminder that the sensitive information we routinely entrust to organizations has inherent value and can be subject to nefarious attacks. For organizations, it is a reminder of the great responsibility accepted because of the great power received from valuable information. For states across the country, it is a reminder that more needs to be done in the fight for privacy and protection of sensitive information. With the passage of House Bill 4390 (HB 4390), Texas has showed how it plans to address the privacy of personal identifying information.

Signed into law on June 14, 2019, HB 4390 amends Texas’s privacy breach notification law—Texas Business and Commerce Code Chapter 521, Identity Theft Enforcement and Protection Act—by specifying a time frame for when notice of a breach is required and creating a notification requirement to state regulators. Beginning January 1, 2020, if a breach occurs and disclosure is required, the disclosure must be made “without unreasonable delay and in each case not later than the 60th day after the date on which the person determines that the breach occurred.” Previously, the disclosure only needed to be made “as quickly as possible.”

It is important to understand that the 60-day time frame doesn’t create a window for compliance, so organizations should not feel comfortable simply getting disclosures out by the 60th day to comply. Instead, organizations are first responsible to provide disclosure “without unreasonable delay,” which, depending on the circumstances, could be well short of the 60 days. If the circumstances support a reasonable delay approaching 60 days, an organization will then need to ensure that disclosure is provided before the deadline.

Also, beginning January 1, 2020, HB 4390 requires notification to the attorney general for breaches involving at least 250 Texas residents. The notice will need to include:

  1. A detailed description of the breach;
  2. The number of residents affected;
  3. The current and planned mitigation efforts; and
  4. Any law enforcement involvement.

All organizations subject to Texas’s breach notification law should begin reviewing and updating their breach notification policies in preparation for the new rules in 2020.

In addition to the current changes to the Texas privacy breach notification law, HB 4390 signals that Texas is not done addressing privacy with the creation of the Texas Privacy Protection Advisory Council. The purpose of the council will be to study various privacy laws and make recommendations to the Texas legislature on specific changes regarding privacy and protection of sensitive information.

To learn more about legal and business best practices to keep your med spa compliant and profitable, attend one of AmSpa’s Medical Spa & Aesthetic Boot Camps and become the next med spa success story.

Jay Reyero, JD, is a partner at the business, healthcare, and aesthetic law firm of ByrdAdatto. He has a background as both a litigator and transactional attorney, bringing a unique and balanced perspective to the firm’s clients. His health care and regulatory expertise involves the counseling and advising of physicians, physician groups, other medical service providers and non-professionals. Specific areas of expertise include federal and state health care regulations and how they impact investments, transactions and various contractual arrangements, particularly in the areas of federal and state anti-referral, anti-kickback and HIPAA compliance.

Tags:  AmSpa's Med Spa & Aesthetic Boot Camps  ByrdAdatto  Med Spa Law  Med Spa Trends 

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How Your Medical Spa Can Address Negative Patient Reviews

Posted By Administration, Monday, September 30, 2019

one star

By Kita McCray, JD, ByrdAdatto

Benjamin Franklin said, “It takes many good deeds to build a good reputation, and only one bad one to lose it.” It’s been a couple of centuries since Franklin made this statement, yet the same remains true today. It is especially true in health care, where patient dissatisfaction can be amplified with just a few keystrokes and the click of a mouse.

On one hand, the internet has expanded our accessibility to one another and information; on the other hand, it provides a medium for bad reviews and feedback to travel further and faster than our reputations can keep up with. As a result, many patients think they “know” their providers before they ever meet them. So, what’s the solution when that one dissatisfied patient tries to start a fire by posting a negative review of you or your practice? The answer is simple: Dilute the fire—the solution to pollution is dilution.

Jeff Segal, MD, JD, a ByrdAdatto partner and CEO of Medical Justice, has built a simple strategy for dealing with negative patient reviews. Specifically, when writing a response to a negative patient review, you must remember these five golden rules:

  1. A model response shows the practice is reasonable and isn’t engaged in a debate;
  2. A model response educates the public;
  3. A model response addresses the concerns raised in the review;
  4. A model response takes the conversation offline; and
  5. A model response does not address the author directly.

Segal further advises that the person or employee who is responsible for locating and responding to negative reviews should commit to these rules in order to dilute or drown out the dissatisfied voices in the crowd. These rules also will help you to avoid potential violations of HIPAA or professional licensing board regulations that may cause regulators to perceive the filtering of negative reviews as false and deceptive advertising.

Remember that it takes two flints to make a fire. Engaging in a debate with a dissatisfied patient in a public way is a bottomless pit. Once you fall in, it can be difficult to pull your reputation out.

To learn more about legal and business best practices to keep your med spa compliant and profitable, attend one of AmSpa’s Medical Spa & Aesthetic Boot Camps and become the next med spa success story.

Kita McCray’s decision to become a lawyer was solidified in fourth grade after job shadowing a local lawyer in her hometown of Ferriday, Louisiana. In college, Kita dedicated all her enthusiasm and energy to becoming well-read in classic English literature before attending law school. But while working as a public health graduate researcher, she developed an interest in health law and policy, and decided to focus her legal studies toward health care law.  Today, Kita brings the full scope of her multidisciplinary background to assist clients with their business and health care needs.

Tags:  AmSpa's Med Spa & Aesthetic Boot Camps  ByrdAdatto  Med Spa Law 

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Building Your Exit Plan

Posted By Administration, Friday, September 27, 2019

doctors speaking

By Bradford E. Adatto, partner, ByrdAdatto

My father is a retired orthopedic surgeon. I’ve witnessed his personal retirement journey and know that closing the book on a successful practice can feel both daunting and exciting. But before you begin that last chapter, you must first define your goals and set yourself up to meet them.

There are several steps a physician should consider in building an exit plan: practice assessment and valuation; pinpointing late-career and retirement goals; and, finally, customizing your plan. More than anything, you need to make a plan. The most common struggle among our physician clients is taking action, because they become paralyzed by the complicated question of “when” to retire.

Practice assessment and valuation means realistically evaluating the current state of your practice and understanding your practice’s financial value. The valuation process requires you to recognize and identify your revenue streams, how they differ (professional services vs. ancillary services) and how they contribute to your bottom line. Additionally, during the practice assessment process, it’s important to assess your practice’s legal health. Even financially successful practices can be impacted by compliance issues. Recognize ahead of time if your legal model is helping or hurting your practice and make changes accordingly. You will also want to evaluate your practice from a cultural perspective. If a prospective buyer will inherit your team, it is important to be realistic as to whether there are dysfunction issues or overpaid staff that commonly result from long-term employment with a practice.

Ultimately, a successful valuation of your practice results from years of fostering goodwill with your patients. Practice goodwill relates to your practice’s ability to continue to generate earnings without the presence of any particular physician. If you want to eventually be in a position to sell, you must brand and run your practice as an enterprise. Patients must be seen as transferrable to the buying physician, and creating practice goodwill helps ensure that.

Next, it’s time to determine your retirement goals and late-career objectives. Think about your legacy and the impact you’d like to leave. Think about if you’d like to retire in stages (surgery first, cutting hours, etc.). Based on those intentions, we at ByrdAdatto can help customize a plan that sets you up for success.

While there are many exit strategies, the four most common plans we see at our firm are:

  • The Fixer-Upper Plan: This plan is all about repurposing your practice to fit your late-career goals and retirement timeline. Basically, it requires some legal restructuring. For example, under this plan, we’ve had clients develop separate entities as cost centers under a single legal model. This remodeling allows each entity to operate more independently, but still develop value under a single legal model.
  • The Sensei Plan: You, the sensei, will teach him or her, the student. This plan follows the standard concept of bringing on an associate, training him or her as a partner, and prepping him or her to take the reins in a buyout. Under this model, it is extremely important that the sensei and student develop the four Cs: cost, control, contingencies and compensation. Without mapping these elements, expectations from both parties are often unmet.
  • The Old School Plan: For many clients, the retirement timeline is compressed. Once they decide it’s time, the process of stopping practicing moves forward in months, as opposed to years. Historically, these late practice sales have ended in less value, but that is not always the case. We have worked with clients on creative solutions to retire on a shorter horizon, while still capturing full and fair value for their practice.
  • The Drop the Mic Plan: This is your show, and you draw the curtains the way you want, when you want. This exit requires you to position the practice—financially, legally and operationally—in a way that allows you to walk away on your own terms. Here, we help leverage offers to optimize your endgame.

The last bit of advice I offer is from my father: Once you retire, keep yourself busy—no matter your exit plan.

To learn more about legal and business best practices to keep your med spa compliant and profitable, attend one of AmSpa’s Medical Spa & Aesthetic Boot Camps and become the next med spa success story.

Bradford E. Adatto is a partner at ByrdAdatto, a national business and health care boutique law firm with offices in Dallas and Chicago. His background is in regulatory, transactional and securities law. Having worked in health care law his entire career, he has an in-depth knowledge of the “dos and don’ts” of this heavily regulated industry. Brad has worked with physicians, physician groups, and other medical service providers in developing ambulatory surgical centers, in-office and freestanding ancillary service facilities, and other medical joint ventures. He regularly counsels clients with respect to federal and state health care regulations that impact investments, transactions and contract terms, including Medicare fraud and abuse, antitrust, anti-kickback, anti-referral, and private securities laws. Adatto has been recognized as Top Rated Lawyer by the Dallas Morning News (2016) and a Best Lawyer in Dallas in health care by D Magazine (2016 & 2018-2019), selected as a Best Lawyer in America in health care (2017-2019), and was recently named a Best Lawyer in Texas (2019) and Texas Super Lawyer, published by Thompson Reuters (2019).

Tags:  Business and Financials  ByrdAdatto  Med Spa Trends 

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How Your Medical Spa Can Legally Use Telemedicine

Posted By Administration, Friday, September 20, 2019

telemedicine

By Bala Mohan, JD, ByrdAdatto

Telemedicine is gaining popularity and acceptance across the United States. Some of the benefits of telemedicine include easing health care access to patients in remote and underserved areas, increasing cost-effectiveness, efficiently delivering health care service, and broadening the opportunity to receive secondary opinions. Telemedicine, in a nutshell, is the provision of health care services using telecommunication from a health care practitioner in one location to a patient in another. However, telemedicine compliance is tricky and varies from state to state. In addition to state laws, telemedicine also is subject to federal reimbursement, patient privacy and confidentiality laws.

This article will focus on the basic state law compliance considerations and general rules for providing telemedicine in your medical practice; however, any decision to provide telemedicine requires deeper scrutiny of the laws and regulations.

  1. Licensure. Clients commonly ask if they can provide telemedicine to a patient in another state. Typically, the practitioner providing the service must be licensed in the state where the patient is physically located. However, as with everything else in law, there are exceptions. For example, Maryland exempts physicians licensed in an adjoining state from obtaining a Maryland license, and Minnesota has a provision for physicians not licensed in the state to practice medicine in Minnesota via telemedicine by meeting certain telemedicine registration requirements. Appropriate physician licensure is a necessity when practicing medicine across state lines because providing telemedicine services in a state where the practitioner is not licensed can result in disciplinary action—including civil or criminal penalties—for the unlicensed practice of medicine.
  2. Standard of care. Practitioners using telemedicine will be held to the same standard of care that would apply to the provision of health care services in an in-person setting. To meet the standard of care, the practitioner must, at a minimum, establish a valid practitioner-patient relationship, provide quality health care service, obtain appropriate informed consent, document and maintain accurate patient medical records, and abide by the patient and medical record confidentiality standards required by law. Performing a proper initial consultation is a key aspect of establishing the practitioner-patient relationship; thus, an appropriate patient examination or evaluation is an important part of meeting the standard of care. Physicians must take the patient history and conduct a thorough evaluation of the patient’s medical condition prior to diagnosing the patient and prescribing the treatment plan.
  3. Establishing a valid practitioner-patient relationship. As the initial step, telemedicine laws usually require the practitioner to establish a valid practitioner-patient relationship, if one does not already exist. The legal requirements and process to establish this relationship vary by state. Generally, if a prior practitioner-patient relationship does not exist, it can be established via telemedicine using appropriate means. Some states may have restrictions as to the physical location of the patient for the patient evaluation or the telecommunication modalities that can be used in practicing telemedicine. However, filling out online questionnaires, telephone calls or text messages alone are not sufficient to establish the practitioner-patient relationship. Generally, acceptable telecommunication means use real-time streaming audio-visual technology or streaming audio coupled with store-and-forward technology.
  4. Reimbursement. Reimbursement for telemedicine services also varies widely amongst states. Accordingly, health care practitioners must review their respective payor contracts prior to billing for telemedicine services. For example, Texas has parity laws that require private payors to reimburse the same way as would be required in-person. On the other hand, Florida allows the payor and provider to negotiate the reimbursement rate for telemedicine services.

As you can see, a myriad of legal issues must be considered prior to engaging in telemedicine practice. If you have specific questions about setting up a telemedicine practice, the telemedicine laws in your state, contact ByrdAdatto, and consider attending The 2020 Medical Spa Show from January 31 – February 2 at the Aria Resort & Casino in Las Vegas. The Medical Spa Show is the premier trade show for non-invasive medical aesthetics, and this year’s iteration features four tracks of curated education covering practically every topic a medical spa owner/operator would need to know about, as well as two tracks of sponsored education. Click here to register today.

Bala Mohan, JD, knew from a very young age that her choice of career would be related to science because she excelled in her biology and chemistry coursework. With a strong passion for genetics and the desire to find a cure for her mother—who was diagnosed with diabetes at an early age—Mohan obtained a Bachelor of Technology in Pharmaceutical Biotechnology. Having worked as a scientific researcher during her undergraduate studies, Mohan greatly values attention to detail and is a meticulous person. She then pursued a master’s in Entrepreneurial Biotechnology to gain knowledge about business and startups. This landed her a position with Cleveland Clinic Innovations, where she evaluated over 100 innovations and negotiated deals with potential investors. In this role, Mohan had the opportunity to interact with business and health care lawyers from multiple health care organizations, and she quickly realized that her real calling in life was to be a health care attorney. Subsequently Mohan obtained her JD and was able to pursue a career that combined all her interests—science, business, and law.

Tags:  ByrdAdatto  Med Spa Law  Med Spa Trends  The Medical Spa Show 2020 

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Is HIPAA the Patient Privacy Standard of Care?

Posted By Administration, Monday, September 16, 2019

patient record

By Courtney P. Cowan, JD, ByrdAdatto

Anyone working in the health care industry is intimately familiar with the Health Insurance Portability and Accountability Act of 1996, better known as HIPAA. Generally, the purpose of HIPAA is to establish minimum federal standards for protecting the privacy of protected health information (PHI). While it is widely understood that health plans, health care clearinghouses, and health care providers are potentially subject to HIPAA regulation at the federal level for maintaining patient privacy, what may be less well known is how the patient privacy standard of care established under HIPAA applies to a private right of action.

Only the U.S. Department of Health and Human Services Office for Civil Rights (HHS) and the state attorneys general can enforce HIPAA violations. As a result, HIPAA lacks a private right of action. This means that an individual whose PHI has been used or disclosed by a health care provider in violation of HIPAA may not bring a civil claim against the provider under HIPAA. HIPAA also preempts state privacy laws that are contrary to HIPAA, the exception being when a state law is “more stringent” than HIPAA regarding privacy protection.

With data breaches becoming increasingly common, individuals have attempted to circumvent HIPAA’s lack of individual enforcement power by bringing negligence claims under state law based on violations of HIPAA. Using HIPAA as the patient privacy standard of care in negligence cases is beginning to look more like the equivalent of a private right of action under HIPAA, which HIPAA does not allow. This essentially means that a violation of the HIPAA rules may be used to establish that a health care provider has breached the duty of care owed to a patient under state law negligence claims relating to the improper disclosure of patient PHI. As a result, health care providers should understand that a HIPAA violation may result in a variety of state law claims.

Perhaps even more alarming than the attempted private right of action as a HIPAA workaround is the recent trend of state courts both finding in favor of the plaintiffs bringing the private rights of action, as well as finding that HIPAA violation claims can be brought at the state level. In California, for example, a medical center found itself at the center of a major data attack, with 4.5 million patients affected by the breach. After suspecting suspicious activity on its network, it contacted the FBI for help. Although it took close to nine months to notify the patients of the breach, HHS ultimately found that the medical center followed appropriate protocol and was satisfied with the health system’s post-breach efforts to improve security. However, despite the findings by HHS, a California state court found that the medical center failed to notify its patients of a data breach in a timely manner and awarded a settlement of $7.5 million in favor of patients who had filed the class-action suit.

The Arizona Court of Appeals also added itself to a number of courts across several states holding that HIPAA may define the standard of care for state law claims. The claim before the Arizona court alleged a privacy violation by a Costco pharmacist when the pharmacist verbally joked about a man’s erectile dysfunction medication to the man’s ex-wife. The long and short of it is, the Arizona Court of Appeals ruled that negligence claims using HIPAA as the patient privacy standard of care could be brought against Costco in Arizona courts.

While data breaches occur in virtually every state, health care providers in Texas have the added burden that the state has led the country in total hacking breaches reported to HIPAA for four of the past five years. In light of other rulings similar to those in California and Arizona, it is no surprise that Texas hospitals have recently been devoting more resources to cybersecurity. The added protection seems to be working—data shows that despite Texas often being in the top two states in terms of total hacking attempts over the past five years, it is further down the list when it comes to individual records actually breached.

Since it is becoming increasingly common for state courts to find HIPAA as the patient privacy standard of care for private rights of action, health care providers should re-evaluate, establish and enforce HIPAA compliance and training programs within their organizations. Otherwise, not safeguarding against HIPAA violations could result in substantial penalties against an organization.

AmSpa members receive a complimentary 20-minute Introductory Compliance Assessment with a ByrdAdatto attorney. Click here to learn how to join AmSpa today!

As the daughter of a periodontist, Courtney P. Cowan has been fascinated by the health care field since childhood. She often accompanied her father to his office, where she developed an appreciation for physicians and their respective practices. Having absolutely none of the dexterity that is required to be a surgeon, however, Cowan instead decided to pursue a degree in business while attending Baylor University. It wasn’t until she was required to take a business law course that she discovered her passion for the law. After graduating from Southern Methodist University Dedman School of Law, Cowan serendipitously connected with ByrdAdatto and now assists clients by combining her business background with her enthusiasm for health care and the law.

Tags:  ByrdAdatto  Med Spa Law  Med Spa Trends 

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Medical Board of California Issues Warning for Hair Restoration Technicians

Posted By Administration, Friday, September 13, 2019

hair restoration

By Michael Byrd, JD, partner, ByrdAdatto

The Medical Board of California (MBC) has warned physicians against using unlicensed persons for hair transplant procedures in the summer issue of its newsletter. (The issue is available here, with the article appearing on page 12.) It states that the MBC has become aware of many physicians or clinics that are employing trained but unlicensed persons, referred to as medical assistants (MAs), to perform or assist with hair transplant procedures. The article gives the example of MAs creating holes or slits in the patient’s scalp using a needle, scalpel or other device as being prohibited. While it does not explicitly state that this is the case, its warning would seem to apply equally to harvesting follicles as it would to preparing the follicle implantation sites.

In California, MAs have a very limited scope of tasks they are permitted to perform. They are permitted to perform only “basic administrative, clerical and technical supportive services,” with several procedures specifically authorized in 16 CCR § 1366. With the exception of puncturing skin or vein for purposes of drawing blood, their other authorized tasks are non-invasive and include tasks such as trimming nails and ear lavage. Likewise, the MBC has stated that MAs may not inject fillers, nor may they fire lasers. The article warns that physicians who violate this restriction are aiding the unlicensed practice of medicine, which can carry penalties of fines or imprisonment. If you are employing MAs in your practice, you will want to carefully review what tasks you are assigning to them and ensure that the delegations are legally permitted.

To learn about legal and business best practices to keep your med spa compliant and profitable, attend one of AmSpa’s Medical Spa & Aesthetic Boot Camps and become the next med spa success story.

Michael S. Byrd is a partner at the law firm of ByrdAdatto, a national business and health care boutique law firm with offices in Dallas and Chicago. As the son of a doctor and entrepreneur, he has a personal connection to both business and medicine. He has blended these life experiences to become a leading advocate for doctors and dentists throughout the United States. He routinely lectures at continuing education seminars on the various business and legal issues that professionals face. Outside of health care, Michael has used these same skills to handle sensitive and complicated business matters for entrepreneurs, business owners, attorneys, CPAs, high-net-worth individuals and public figures. He has been named to Texas Rising Stars and Texas Super Lawyers, published by Thompson Reuters, for multiple years (2009-2019), was named a Top Rated Lawyer by the Dallas Morning News (2016), and has been recognized as a Best Lawyer in Dallas in health care by D Magazine (2013, 2016-2019).

Tags:  AmSpa's Med Spa & Aesthetic Boot Camps  ByrdAdatto  Med Spa Law 

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Can I Reward My Medical Spa Patients for Referring a Friend?

Posted By Administration, Monday, September 9, 2019

gift card exchange

By Robert J. Fisher, JD, ByrdAdatto

We at ByrdAdatto receive numerous questions each week from providers, medical spas, wellness counselors and other businesses in the aesthetic space. These questions range from entity structuring to employee disputes to lease negotiations, but questions relating to patient reward programs for referring friends are among the most frequently asked.

Patient referral rewards come with multiple overlapping layers of laws and regulations. In order to understand the risk you might incur by using these referral programs, it is critical to seek advice from a health care attorney before implementing a rewards system or referral incentive initiative.

The federal Anti-Kickback Statute is the starting point for understanding the implications for rewarding a patient for referring a friend. This law states that providers cannot offer remuneration in cash or in kind to induce the referral of a business or service covered by a federal health care program. Stated another way, a provider cannot give a person gift cards, cash, discounted services or anything else of value in exchange for referrals when federal insurance programs, such as Medicare and Medicaid, are involved. The federal Anti-Kickback Statute likely does not apply to your aesthetic practice, since such aesthetic practices are typically cash-based, but it serves as an important building block.

Most states have their own version of an anti-kickback law that uses the federal language as a base, but broadens the restrictions to varying degrees. For example, Texas, New York, Florida and California all have laws that prohibit providing remuneration to a person for referrals, regardless of whether patients are paying with cash or insurance. In these states, giving a patient cash, gift cards or generally anything of value for referring a friend will create the risk of violating the state anti-kickback law. On the other hand, Illinois law only prohibits remuneration for referrals when insurance is involved and does not regulate paying for referrals where the practice is cash-based.

Finally, the regulatory boards—medical boards, nursing boards, etc.—can issue their own rules and regulations that tighten or otherwise modify state anti-kickback laws. Continuing the Illinois example, while its state law does not prohibit providing remuneration for referrals when cash payors are involved, the medical board has opined that it views this practice as unprofessional and unethical. This can result in a medical provider being at risk for loss of license, reprimands, fines and more from the medical board if he or she pays for referrals.

The complexity of health care laws and the importance of identifying the laws applicable to your practice make the risk of creating a patient referral program without talking to a health care attorney too great. There also may be alternative solutions to boost patient numbers, such as installing membership discount systems, that avoid creating a regulatory headache.

To learn about legal and business best practices to keep your med spa compliant and profitable, attend one of AmSpa’s Medical Spa & Aesthetic Boot Camps and become the next med spa success story.

Tags:  AmSpa's Med Spa & Aesthetic Boot Camps  ByrdAdatto  Med Spa Law 

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How Practices Can Effectively Use Social Media

Posted By Administration, Thursday, August 22, 2019

filming surgery

By Renee E. Coover, JD, ByrdAdatto

Social media in plastic surgery practice continues to explode, driven by the marketing opportunities created by the public’s unabashed desire for before-and-after photos and live patient surgeries. But with this reliance on social media to market and advertise, a plastic surgeon’s practice assumes often unknown risks. In a recent Los Angeles Magazine article, Beverly Hills Plastic Surgeon Ashkam Ghavami, MD, who has almost 400,000 Instagram followers to his practice, acknowledged the challenges in balancing ethics with entertainment. According to Ghavami, “Because social media is the most valuable marketing tool of our trade, some surgeons post deceptive before-and-after photos of patients on social media. This creates an uneven playing field and, worse, harms the potential patients who are trying to choose their surgeon.”

Questions arise as to what is appropriate or legal for a physician to advertise on social media: Does it require patient consent? Who ultimately owns the content that is posted to social media?

Here are some key compliance considerations for social media in your plastic surgery practice:

  1. Obtaining patient consent. Patient consent for social media use should be separate from other consents. Consent must deal with the circumstances of the social media use. A wide range of circumstances that can impact consent. Before you ever post before-and-after photos of a patient’s Brazilian butt lift, you must obtain written consent from your patient. Likewise, if your patient brings in a friend or relative to live-stream a video of his or her medical procedure, it still requires direct consent from the patient. Without patient consent, a plastic surgeon puts his or her license at risk by posting patient photos or videos to social media.
  2. Physician advertising rules. Physicians are subject to specific state medical board advertising rules that control the messages they advertise so as not to be deceptive or misleading to the public. The Federal Trade Commission (FTC) also regulates physician advertising. (For more on this, read Michael Byrd’s recent article “FTC Focuses on Social Media for Truth in Advertising.”) The American Society for Aesthetic Plastic Surgery (ASAPS) and the American Society of Plastic Surgeons (ASPS) also regulate physician advertising; for example, check out this article, which discusses the first code of ethical behavior for sharing videos of plastic surgery on social media, published by Northwestern plastic surgeon Clark Schierle, MD, and presented at the ASPS annual meeting. Using “enhanced” before-and-after photos or stock image photos, using models, allowing staff to post their personal beliefs and opinions on your social media accounts, and communicating directly with patients via social media are just a few ways plastic surgeons get in deep trouble with physician advertising laws.
  3. Ownership of social media. The ownership of content posted by employees often is unaddressed. For example, physicians and nurses often post before-and-after photos to their personal social media accounts. This creates both potential infringement issues and patient privacy issues. As attorney Bradford Adatto noted in his recent article, “5 Key Details Every Plastic Surgeon Should Know About Their Employment Agreement,” relating to plastic surgeon’s employment agreements, there are a substantial number of patient privacy laws to understand before posting patient photos to social media. Further, if the practice intends to keep all social media content as its property, whether it is posted to a practice account or an employee’s personal account, this needs to be addressed in a social media policy.
  4. Social media policy. A variety of issues arise when using social media to advertise medical services; thus, it is crucial for every plastic surgery practice to develop a social media policy to address issues such as employees’ use of social media and ownership of the content. The social media policy also should be mentioned in your employee handbook. Simply having a social media policy is not effective unless all staff have been informed of the policy and management is trained to implement and enforce the policy.

All this information also applies to medical spas. To learn more about how to effectively use social media in a medical aesthetic setting, consider attending an AmSpa Medical Spa & Aesthetic Boot Camp. Each Boot Camp features a session on social media, as well as useful information about all aspects of running an effective medical aesthetic practice. AmSpa Members save when registering for Boot Camps—click here to learn how to join.

Tags:  ByrdAdatto  Med Spa Law  Med Spa Trends 

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