How Can Telemedicine Companies Use the MSO Model?

Today, I’d like to talk about some key questions related to telehealth.

First, does telehealth use the MSO model, and are telemedicine companies and platforms essentially MSOs, and who cares? why does this matter?

Second, what functions does the telemedicine company or MSO do typically, and can it take on more, or fewer when it contracts with a physician or medical groups physically?

Hi, I’m Michael H. Cohen, founding attorney of the Cohen Healthcare Law Group. We help healthcare industry clients just like you navigate healthcare and FDA legal issues and launch, or continue to scale, their health and wellness service or product.

Let’s talk first about whether the telehealth company is or is not an MSO and why it matters.  Telemedicine as we know involves medicine from a distance, typically over the Internet, often via mobile device.  The MSO historically was a business organization which provided services to brick-and-mortar medical practices.

What’s important here is that, in the Internet age, you still have this separation between the medical practice, which provides clinical services to patients (or the practitioner), and the business organization which provides business services to physicians, chiropractors, practices.

The difference between the MSO to a brick-and-mortar, and the telemedicine platform, is that the telemedicine platform company does more than marketing at a distance; it takes payments, often directly from patients, and connects them with providers in a very strong way.  In one sense, this direct connection breaks the MSO model; and in theory, violates prohibitions against fee-splitting and corporate practice of medicine.  And yet, this is just how things are done in the Internet age. So a lot of it is in how aggressive is the model.

The brick-and-mortar MSO would do things for the physician or medical practice such as: billing, payroll, recruiting and credentialing, HR, quality management, IT, and all the operations. The MSO may be responsible for equipment and supplies as well.

We can say that telemedicine companies take advantage of the MSO model, and, there’s a bit of a fiction here, because the marketing is so entrenched in and bound up with the digital model itself that, the telemedicine company is almost an extension of the doctors.  But paradoxically, we still have to maintain this fiction of keeping a separation, a good wall of separation contractually so as to mitigate corporate practice of medicine and fee-splitting concerns.  Ideally, the telemedicine company will take its fee from the physicians or medical groups; and receives payment for marketing as a flat fee in order to help assuage anti-kickback concerns.

But again, there are lots of nuances, it’s not all the plutonic ideal, and if you’d like an early read on your healthcare business model, you would probably benefit from having a Legal Strategy Session with a member of our Attorney Team.

Here’s to the success of your healthcare venture, we look forward to speaking with you soon.

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