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Transforming Texas Long-Term Care: The Upcoming PDPM LTC Methodology

Big changes are on the horizon for long-term care in Texas. The Texas Health and Human Services Commission (HHSC) is gearing up to implement a new payment methodology, the Patient Driven Payment Model for Long-Term Care (PDPM LTC), set to take effect on September 1, 2025. This marks a significant shift from the current Resource Utilization Group (RUG-III) model, promising enhanced payment accuracy and a stronger focus on the individual needs of patients.

Why the Change? A Shift Towards Patient-Centric Care

The core objective behind PDPM LTC is to move away from a payment system based solely on the volume of services provided, towards one that prioritizes the unique characteristics and complex needs of each individual patient. This aligns payments more closely with the actual costs of care, particularly for long-stay residents with complex conditions and cognitive impairments.

This Texas-specific version of PDPM is modeled after the framework already implemented in skilled nursing facilities (SNFs). Its development has been a collaborative effort, stemming from an internal HHSC workgroup formed in 2019 and extensive consultation with the Nursing Facility Payment Methodology Advisory Committee (NF-PMAC) since early 2020. In April 2022, the NF-PMAC recommended the Texas-specific PDPM model as the best fit for accurately representing Texas nursing home resident characteristics, care services, and costs. This recommendation ultimately led to a legislative directive in the 2024-25 General Appropriations Act (House Bill 1, Rider 25) formally tasking HHSC with its development and implementation.

How PDPM LTC Works: Key Components

The new PDPM LTC methodology leverages the Minimum Data Set (MDS) version 3.0 as its foundational data source for classifying residents. Unlike RUG-III, which has five rate components with only two case-mix adjusted, PDPM LTC operates with a different structure:

  • Nursing Component: This component aims to quantify the direct care needed by a resident based on their MDS 3.0 assessment data. Residents are classified into one of six nursing groups, ranging from “extensive services” (Group E – for high-acuity needs like tracheostomy or ventilator care) to “reduced physical function” (Group P). It’s important to note that this Texas version includes six nursing groups, not all 25 possible CMS SNF PDPM nursing groups. Section GG items are utilized in the calculation of this component.
  • Non-Therapy Ancillary (NTA) Component: This component captures the medical complexity of residents by identifying specific conditions and services, using a weighted count of comorbidities derived from MDS items. Residents are assigned to one of three NTA groups based on their total NTA score.
  • Case-Mix Index (CMI): The Nursing and NTA components are adjusted by a CMI, a relative value assigned based on assessment data. These CMIs for both components will be directly based on the Skilled Nursing Facility (SNF) Medicare PDPM CMIs from the CMS Final Rule for fiscal year 2024. HHSC will not automatically adjust CMIs when CMS updates them, but will evaluate the impact for legislative consideration.
  • Non-Case-Mix Component: This part of the total reimbursement rate is constant for all residents and is not adjusted by CMI. It covers costs related to dietary services, laundry, housekeeping, general administration, and fixed capital assets. This component will be calculated as a weighted median from the most recently examined cost reports.

Special Considerations and Add-ons

PDPM LTC also includes specific considerations for certain patient populations:

  • Severe Cognitive Impairment (BIMS Add-on): Residents with confirmed severe cognitive impairment, as determined by their Brief Interview for Mental Status (BIMS) score on the MDS, will receive an additional 5% of the highest CMI-adjusted nursing rate.
  • HIV/AIDS Add-on: Mirroring Medicare’s SNF PDPM, residents with a confirmed HIV/AIDS diagnosis will receive an additional 18% of their nursing group’s rate and be assigned to the highest NTA rate. Due to federal and state regulations, this diagnosis cannot be reported on MDS data and must be indicated on the claim using ICD-10 Code B20.
  • Therapy Components: The new methodology does not include payments for physical, occupational, and speech/language therapy (PT/OT/SLP) components in the daily care rates; these will continue to be reimbursed through Nursing Facility Specialized Services.
  • Hospice Care: The proposed methodology does not introduce any changes to reimbursement for hospice care, which will continue at 95% of the total rate per resident’s PDPM LTC group.

In total, the combination of these components allows for 72 possible different reimbursement rates. Additionally, two default groups will be in place for situations where MDS assessments are missing or contain errors, ensuring providers are still reimbursed at a base rate.

Implementation and What Comes Next

HHSC plans a phased implementation, with algorithms for PDPM LTC replacing RUG-III calculations and relevant changes being made to the Long-Term Care Online Portal (LTCOP) and claims system. While Section GG of the MDS will be visible in the LTCOP by August 2024 (nursing facilities have been completing it since November 2022), it will not be used for payment calculations until the September 1, 2025, implementation. The Assessment Reference Date (ARD) of the MDS will continue to guide the calculation of PDPM LTC. Importantly, the Long-Term Care Medicaid Information (LTCMI) will still be required for assessments, though the data collected will not be used in PDPM LTC calculations.

HHSC is committed to providing support and resources for providers during this transition. Webinars like the one held on April 12, 2024, are being recorded and made available online, along with presentation slides and a Frequently Asked Questions (FAQ) document summarizing stakeholder questions and HHSC responses. User guides will be updated, and training materials developed to help providers familiarize themselves with the changes. A PDPM LTC calculation worksheet and a crosswalk for billing under the new payment groupers will also be published closer to implementation.

This significant overhaul represents a move towards a more equitable and accurate payment system in Texas long-term care, aiming to better reflect the diverse and complex needs of its residents. Providers are encouraged to stay informed and utilize the resources provided by HHSC as the implementation date approaches.

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Legal Risks of Patient Marketing

Health care providers seeking to grow their practice must tread carefully when it comes to marketing arrangements. While increasing patient volume is a common business goal, not all marketing tactics are legally permissible—especially when they involve payment structures tied to patient referrals. Even seemingly harmless agreements, such as paying a company based on the number of patients it delivers, can trigger serious legal and regulatory consequences.

The health care marketing industry often promotes services promising fast and measurable patient growth. These offers can be enticing, especially in competitive markets. However, providers must scrutinize these deals, as some cross legal boundaries. In Texas, the Patient Solicitation Act makes it illegal to offer or receive anything of value in exchange for referring patients. That means performance-based marketing arrangements could be interpreted as unlawful inducements.

Federal law also casts a wide net. The Anti-Kickback Statute prohibits remuneration for referrals involving federally funded programs like Medicare and Medicaid. Violations can lead to significant civil and criminal penalties, including fines, exclusion from federal health care programs, and even imprisonment. Additionally, such conduct may run afoul of the False Claims Act, especially if it results in improperly billed federal claims.

Texas law adds another layer of complexity with its barratry statute, which bans the improper solicitation of professional services—including by health care providers. This statute is often enforced in the context of personal injury and legal services, but its reach can extend to medical marketing tactics that resemble client chasing.

Penalties for violating these laws can be severe. In addition to civil and criminal liability, providers risk disciplinary action from their licensing boards, which may include suspension or revocation of their professional licenses.

To avoid these pitfalls, health care providers should never enter into marketing or referral agreements without first consulting qualified legal counsel. A proactive legal review can help ensure that promotional strategies comply with both state and federal laws, protecting the provider’s reputation, finances, and professional standing. When it comes to patient marketing, compliance must always come before convenience.

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Think Twice Before Responding to That Negative Online Review

It’s natural to want to defend your practice—especially when a negative online review feels unfair, misleading, or outright false. But for healthcare providers, responding to a bad review isn’t just a public relations concern—it’s a legal one. You could be walking straight into a HIPAA violation.

Under HIPAA—and many state privacy laws—healthcare providers are prohibited from disclosing patient health information to unauthorized individuals. This includes not only obvious disclosures, such as a diagnosis or treatment details, but also something as seemingly harmless as confirming that someone is a patient. Even a simple statement like, “I’m sorry you felt that way about your visit,” could be interpreted as a disclosure of protected health information (PHI).

So what should you do when confronted with a negative review?

First, decide if it’s worth responding at all. Not every negative review needs a response. Sometimes, the most strategic move is to let it go. However, if the review contains false or defamatory statements, you may want to contact the review platform and request that it be removed in accordance with their content policies.

If you do choose to respond, you can still do so in a way that protects patient privacy. A compliant response should acknowledge that your practice takes concerns seriously, reaffirm your general commitment to quality care, and invite the individual to contact your office directly to discuss the matter further. This approach demonstrates professionalism without crossing any legal boundaries.

What you should never do is reference the reviewer’s condition, visit, or any personal detail—no matter how vague it seems. Likewise, avoid blaming the patient, even if you feel their account is inaccurate or incomplete. Comments like, “You missed several appointments” or “You didn’t follow the treatment plan,” are not only unprofessional—they may constitute a HIPAA violation.

Also, don’t get pulled into an online back-and-forth. Responding more than once can escalate tensions, increase the risk of disclosing sensitive information, and reflect poorly on your practice. One thoughtful, respectful response is enough.

Finally, remember that your response is not just for the reviewer—it’s for everyone else reading it. Potential patients will form impressions about your professionalism, judgment, and values based on how you handle criticism. Always be polite, measured, and HIPAA-compliant. A negative review can be frustrating—but turning it into a HIPAA violation is far worse. Stay calm, stay professional, and when in doubt, don’t respond publicly at all.

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Can Compounding Pharmacies Continue to Compound Name Brand Weight Loss Drugs by Adding B12?

In the world of pharmaceuticals, compounding pharmacies play a crucial role in customizing medications to meet the unique needs of individual patients. However, the practice of compounding is tightly regulated to ensure patient safety and maintain the integrity of the drug approval process.

One contentious issue is whether compounding pharmacies can continue to compound name brand drugs by simply adding an ingredient like Vitamin B12 to the formulation. This blog post will delve into the regulations and guidelines provided by the FDA under Sections 503A and 503B of the Federal Food, Drug, and Cosmetic Act (FD&C Act) to analyze the validity of this practice.

Understanding FDA Regulations on Compounded Drugs

The FDA has established specific conditions under Sections 503A and 503B of the FD&C Act that must be met for compounded drugs to qualify for exemptions from certain regulatory requirements. These exemptions include current good manufacturing practice (CGMP) requirements, labeling with adequate directions for use, and new drug approval requirements. One critical condition is that the compounded drug must not be “essentially a copy of a commercially available drug product” unless there is a change made for an identified individual patient that produces a significant difference for that patient, as determined by the prescribing practitioner.

What Constitutes “Essentially a Copy”?

The FDA defines “essentially a copy” of a commercially available drug product as a compounded drug that:

  1. Has the same active pharmaceutical ingredient(s) (API) as the commercially available drug product.
  2. The API(s) have the same, similar, or an easily substitutable dosage strength.
  3. The commercially available drug product can be used by the same route of administration as prescribed for the compounded drug.

The Requirement for Significant Difference

For a compounded drug to be exempt from being considered “essentially a copy,” there must be a documented determination by the prescribing practitioner that the change in the formulation produces a significant difference for the patient. This determination must be specific and documented on the prescription. Examples of significant differences include:

  • Removing an allergenic dye for a patient with allergies.
  • Changing the dosage form for a patient who cannot swallow tablets.
  • Adjusting the dosage strength for a patient who requires a different dose.

The Role of Adding B12 to the Formulation

Can adding Vitamin B12 to a name brand drug formulation exempt the compounded drug from being considered “essentially a copy”? The answer is not straightforward. The addition of B12 must produce a significant difference for the patient, as determined by the prescribing practitioner. This significant difference must be documented on the prescription, specifying the change and the benefit it provides to the patient.

FDA’s Position on Minor Changes

The FDA’s guidance explicitly states that minor changes in strength or formulation that do not produce a significant difference for the patient do not exempt the compounded drug from being considered “essentially a copy.” For example, changing the strength from 0.08% to 0.09% is not considered significant unless it is specifically determined to be so for an individual patient.

Minor changes that do not produce a significant difference for the patient do not qualify the compounded drug for exemptions. This is to ensure that compounders do not evade the limits set by the FDA by making relatively small changes to a compounded drug product and then offering it to the general public without regard to whether a prescribing practitioner has determined that the change produces a significant difference.

Conclusion

The position that compounding pharmacies can continue to compound name brand drugs by simply adding B12 to the formulation is not valid unless the addition of B12 produces a significant difference for the patient, as determined and documented by the prescribing practitioner.

The compounded drug must meet all other conditions under Section 503A or 503B of the FD&C Act to qualify for exemptions. Without a documented significant difference, the compounded drug would still be considered “essentially a copy” of the commercially available drug product, and compounding it would not be permissible under FDA regulations.

Adding an ingredient like B12 to a name brand drug does not automatically make it permissible to compound unless it meets the specific criteria set forth by the FDA.

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Why You Need a Privacy Program

In a previous video, we talked about what a Privacy Program is. In this video, we look at six reasons why your organization needs a privacy program.

Reason No. 1 – To Comply With the Law

A privacy program may be essential for your organization to comply with federal and state law.

  • Medical records
  • Education records
  • Disability information
  • Employer background checks
  • Financial records

No matter what business you are in, you likely collect, use, store, disclose and share a lot of personally identifiable information that is protected by law.

To comply with the law, you may need a designated privacy officer and policies in place to protect the privacy and security of that data.

Reason No. 2 – To Meet Industry Standards

Your organization may have agreed to abide by industry standards.

Take credit cards, for example. The credit card industry requires everyone who accepts credit cards to comply with the Payment Card Industry Data Security Standard (PCI DSS).

You’re required to protect your network, protect stored credit card information, apply strong access controls measures, regularly monitor and test your network, and create security policies for employees and contractors.

Are your policies compliant? Don’t assume so.

A privacy program will ensure that all standards applicable to your organization are properly addressed.

Reason No. 3 – It’s a Business Differentiator.

The news is replete with examples of companies that squandered consumer trust.

In the first three months of 2024, there have been over 700 million records breached in 658 publicly disclosed incidents.

And that’s just the breaches we know about.

A well-run privacy program keeps you out of the news for data breaches and reinforces positive customer relationships.

Reason No. 4 – It Protects Your Business Data Too.

Good security practices not only protect consumer data, they protect your business data too.

Lax privacy and security controls can lead to loss of proprietary business data.

The same techniques employed by threat actors to steal consumer data, can compromise your business plans.

Improving security controls not only protects customers’ privacy, but also your organization’s secrets.

Reason No. 5 – It Enables You to Scale and Grow.

A good privacy program creates a foundation for your organization to grow.

Every state has it’s own privacy laws, and every country has it’s own regulatory scheme.

With a privacy program in place, you may already satisfy the laws in those other jurisdictions. But if not, you are not starting from scratch.

With concepts like privacy by design integrated throughout your organization, you can more easily adapt to the laws in new markets, even if those markets are on the other side of the globe.

Reason No. 6 – It’s the Right Thing to Do.

Respecting privacy is a fundamental aspect of maintaining trust with your customers and employees.

Data breaches can harm customers financially, reputationally, and emotionally. It leads to identity theft and the feeling of being violated.

A robust privacy program helps ensure that personal data is handled responsibly and ethically, further strengthening the bond between your organization and its stakeholders.

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The Compounding Problems of Semaglutide, the Miracle Weight-Loss Drug

Semaglutide weight loss drugs are quite literally saving people’s lives. There are so many health benefits to losing weight that demand for the drugs is off the charts. Demand is so high that the manufacturer can’t keep up and the drugs are in short supply.

Where there is money to be made, there will be people willing to step in. Enter compounding pharmacies, who are catering to the demand by creating supposed duplicates of the drug.

But not all semaglutide is created equally, and concerns are rising that some pharmacies are creating inferior versions of the drug that are, at best, less effective or, at worst, dangerous.

How does semaglutide work?

Ozempic was approved by the U.S. Food and Drug Administration (FDA) in 2017 for use in adults with type 2 diabetes. After patients reported significant weight loss, Novo Nordisk rebranded the drug as Wegovy and received FDA approval in 2021 for use in chronic weight management in adults.

Semaglutide, the active ingredient for both drugs, mimics the function of a hormone that is naturally produced in the body. This hormone, released into the blood after you eat, helps lower blood sugar by stimulating insulin production, decreasing the amount of glycogen created in the liver, and ultimately making you feel fuller longer.

In short supply

These drugs work really, really well. So well, in fact, physicians prescribe Ozempic, the diabetes drug, “off-label” for weight loss. The manufacturer cannot make them fast enough due to a shortage of semaglutide. Both Ozempic and Wegovy have been on the FDA shortage list since March 2022.

This creates an attractive opportunity for compounding pharmacies. As long as the drugs stay on the official shortage list, they can be copied by compounders without fear of patent infringement.

And copy them they do. But how well?

Base or salt?

Ozempic and Wegovy use the base form of semaglutide. The base form has been approved by the FDA for the treatment of diabetes and obesity. But some compounding pharmacies are using different forms of semaglutide, known as semaglutide “salts,” that are chemically different from the base version.

Semaglutide salts have not been approved by the FDA, leading some authorities to caution patients about the efficacy or safety of the variant.

The FDA has received adverse reports from some patients after using the compounded semaglutide, which prompted them to send a public letter to the National Association of Boards of Pharmacy expressing agency concerns with the use of the salt forms of the compounded products. Some state pharmacy boards have also voiced concern.

The manufacturer of the brand-named drugs is making waves, too, and in some cases, threatening and filing lawsuits against pharmacies compounding the drugs and the health care providers administering them.

Best practices

Although the manufacturer is trying to step up production, the demand for semaglutide products will likely continue to outstrip the supply for the foreseeable future. Undoubtedly, many patients and their providers will turn to compounded variants to meet demand.

A physician’s responsibility goes beyond just prescribing the drug. They should understand how the drug is compounded and investigate the efficacy and safety of the salt forms of the product. Then decide if the salt form is appropriate for their patients.

If it is, providers should inform their patients. The Texas Medical Board considers the administration of non-FDA-approved drugs to be a form of alternative medicine. Medical board rules require that patients be informed that the drug is not FDA-approved and be told of the risks associated with the drug.

Pharmacies, too, play a key role as the backbone of our medication dispensing infrastructure. They should stay abreast of the regulations governing the compounding of semaglutide and the ethical considerations of preparing a medication for an individual patient.

They should follow the United States Pharmacopeia (USP) standards. Maintain a clean and safe environment, train personnel, appropriately label the medications, accurately identify the active ingredients, and provide accurate use instructions.

Patients have a responsibility, too. Talk to your doctor and discuss the risks and benefits of the compounded drug. If you and your doctor decide the drug is right for you, keep the lines of communication open with your physician and disclose any adverse reactions as soon as possible.

The future

The demand for these weight loss drugs will remain high for the foreseeable future. Until supply catches up with demand, growing pains will be felt in all corners of our healthcare delivery system.

From the companies that manufacture and compound the drugs to the physicians who prescribe them, the patients who take them, to the insurers who will be asked to pay for them – everyone has a responsible role to play.

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How to Start a Med Spa in Texas

I’m going to let you in on a little secret. Most med spas in Texas are not compliant with Texas law.

Either they are formed as the wrong legal entity type, they lack proper ownership or oversight, they are not following the standard of care, or all of the above.

The consequences can be significant for everyone involved.

For med spa  owners, the Texas Medical Board can shut down your business. In extreme cases, you could be charged with practicing medicine without a license. If a patient gets injured, you could face civil liability. If your MedSpa is not formed or owned in compliance with Texas law, the insurance company could deny coverage, leaving you you holding the bag.

Physicians associated with non-compliant med spas can be disciplined by the Texas Medical Board. Those physicians are literally putting their medical licenses at risk.

Med Spas Provide Medical Services

I’m using the term med spa to describe several types of businesses—traditional med spas, IV hydration or IV therapy businesses, medical weight loss clinics, those types of retail medical services.

It should come as no surprise that the “med” in med spa stands for medical. We call them med spas because many of the services they provide are considered medical services. Botox injections, microneedling, dermaplaning and dermablading, cool sculpting, medium and deep chemical peels, are all considered non-surgical medical cosmetic procedures by the Texas Medical Board.

IV hydration and therapy, medical weight loss injections, and hormone therapy are also considered medical services. If a procedure involves injecting a patient or removing living tissue, it is probably a medical procedure.

Med Spas Must Be Formed Correctly

Because med spas provide medical services to the public, they must comply with Texas law just like any other medical practice, and that means they must be formed as an appropriate legal entity.

In Texas, medical practices can only be formed as professional associations, professional limited liability companies or PLLCs, or partnerships with other licensed physicians.

Many med spas in Texas today are incorrectly formed as corporations or regular LLCs. This is not allowed. Corporations and LLCs cannot be medical entities. The other requirement is proper ownership.

Med Spas Must Be Owned by Physicians

Medical entities, like med spas, cannot be owned by non-physicians. They must be owned by persons licensed to practice medicine in Texas.

Let me say that again.

Med spas cannot be owned by non-physicians. They must be owned by persons licensed to practice medicine.

A physician is a person licensed by the Texas Medical Board as a medical doctor, an MD, or a doctor of osteopathy, a DO.

But all is not lost. There is a way to structure a med spa correctly, even if you are not a physician.

Management Model

Through the magic of the management model, non-physicians can run a med spa and share in the profits.

Here’s how it works.

We still create a medical practice, like a PLLC, that will be owned by a physician, but we also create a management company owned by you that will run and manage the medical practice. You will be responsible for running the practice, but you do it through your your management company.

When patients pay for MedSpa services, that money is deposited into the Medical Practices Bank account. You, as the manager, have access to the Practices Bank account and you will pay all the business expenses from that account—rent, supplies, payroll, utilities, insurance, for example. What’s left over is paid to your management company as a management fee for your work in running and managing the practice.

So, in the management model, a physician still owns the medical practice, but you own the management company that runs the medical practice, and you take the profits as a management fee.

Special Arrangements

Let me pause here and say that if you happen to be a physician, things are more streamlined. We don’t have to use a separate management company. Physicians, of course, can own the medical practice.

If you are a podiatrist, chiropractor, or optometrist, there still must be a physician owner, but we don’t have to use a separate management company. You can jointly co-own the medical practice with the physician.

If you are a physician assistant, Texas does allow you to co-own the medical practice with a physician. However, you can only be a minority owner and the physician must be the majority owner.

Nurse practitioners unfortunately do not have the same opportunity as physicians. physician assistants. Nurse practitioners cannot co-own any part of a medical practice with a physician. The same is true for registered nurses.

So, if you’re a business person, a nurse practitioner, or a registered nurse, you must use the management model to operate a med spa.

Good Faith Exams

We have talked about the correct legal entity type and the correct ownership. Now let’s talk about an operational issue, the good faith exam.

A good faith exam is a medical examination conducted by a physician or a mid-level provider, like a physician assistant or a nurse practitioner, to assess a patient’s current condition and develop a plan of treatment. If you’ve ever been to a doctor, you have received a good faith exam.

Some med spas hire mid-levels on a part-time or as-needed basis to come into the med spa to perform these good faith exams. Other med spas use telehealth exams. Patients will schedule a telehealth exam prior to a med spa visit. The mid-level will perform a good faith exam and rule out contraindications and then write an order for a med spa treatment like IV infusion or a Botox injection.

Common Questions

That covers some of the requirements for Texas med spas. Now let me answer some common questions I get from clients.

Question 1. No one else I know is doing it this way. Are you sure this is right?

Yes, I’m sure. It’s unfortunate that many med spas are not formed or operating correctly. If you have researched med spas, you know how difficult it can be to get straight answers.

The problem is there is a lot of misinformation on the internet. Much of it is incomplete or just plain wrong. Some of it might be right for other reasons. states, but not in Texas.

It’s important to understand that each state has its own laws that apply to med spas. It’s no wonder there is so much confusion. The information I’m giving you is correct for Texas, but it won’t apply to other states.

Question 2. I don’t want the physician to have access to the business. How can I protect my business?

Well, I don’t blame you, and because of that, we build in certain protections into the documents.

We specify that the physician cannot sell or transfer their interest to any other person without your permission.

We give you access and control to the bank accounts for the medical practice. In that way, you control the money. We create a process to change physicians if that ever becomes necessary. If the physician some day decides they want to move on, we don’t have to create a brand-new medical practice.

We just transfer ownership of the existing medical practice to a substitute physician.

Finally, the management company that you own will own your med spa’s brand and name. The management company will license that name to the medical practice. The medical practice can’t use it without your permission. In that way, you always maintain control of your brand.

Question 3. How does the physician get paid?

The physician gets paid a flat fee every month for supervising the mid-level provider.

In Texas, mid-level providers must be supervised by a physician. The Texas Medical Board has established rules for this supervision. Physicians who don’t properly supervise the mid-level provider can be disciplined by the medical board.

The physician usually doesn’t see the patient. They supervise the mid-level provider who does see patients and for that they get paid a monthly flat fee somewhere in the range of $1,000 to $3,000 per month.

Question 4. What kind of insurance do I need?

You need a general liability policy for slip and falls and you need a professional liability policy for hypothetical malpractice claims.

Physicians and mid-level providers probably already have a malpractice policy. Sometimes you can add the MedSpaw as an additional insured to those policies.

My preference is that you get the med spa its own malpractice policy that covers every practitioner who works works for the med spa. That way, you don’t have to depend on others to have the right amount of insurance for your business.

Question 5. Are there any legal risks for the physician?

There is always some level of risk. A patient who has a bad experience can file a complaint with the Texas Nursing Board or the Texas Medical Board. If that happens, the provider will have to justify the services they provided to that patient.

For the physician, it’s important that they take seriously their responsibilities to supervise the mid-level provider. There must be a supervising agreement between the physician and the mid-level. The physician needs to review a sample of patient charts every 30 days and address any concerns with the mid-level, and the physician needs to be available to answer the mid-level’s questions as they come up.

For the mid-level provider, it’s important that they are thorough when performing the good faith exams and that they keep good medical records. What are the next steps?

Conclusion

I’ve covered a a lot of information. I would encourage you to watch this video more than once. You will probably key in on new information each time.

Well, that’s it. Best of luck to you. You’re on an exciting journey. I look forward to the opportunity to help you along the way.

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Updated: Use of Online Tracking Technologies by HIPAA Covered Entities and Business Associates

From U.S. Department of Health and Human Services:

The U.S. Department of Health and Human Services’ Office for Civil Rights (OCR) updated its guidance to regulated entities when using online tracking technologies. These technologies, used to collect and analyze user interaction with websites or mobile applications, must comply with HIPAA rules if the information gathered includes protected health information (PHI). Unauthorized disclosures of PHI to tracking technology vendors, such as for marketing purposes without compliant authorizations, are deemed impermissible.

The update emphasizes that regulated entities should ensure they disclose PHI only as expressly permitted or required by the HIPAA Privacy Rule. It provides guidance on the application of HIPAA rules to the use of tracking technologies on user-authenticated webpages, unauthenticated webpages, and within mobile apps. For instance, tracking technologies on user-authenticated webpages generally have access to PHI, and tracking technology vendors are considered business associates if they handle PHI.

Unauthenticated webpages, which do not require user login, usually do not have tracking technologies that access PHI. However, in cases where PHI is accessible, HIPAA rules apply. For mobile apps offered by regulated entities, information collected is generally considered PHI, and the entity must comply with HIPAA rules for any PHI the app uses or discloses. However, HIPAA does not protect information users voluntarily enter into non-regulated mobile apps.

Disclosures of PHI to tracking technology vendors must be specifically permitted by the Privacy Rule. If the vendor is a business associate, a business associate agreement (BAA) must be established. The use of tracking technologies should be addressed in the entity’s Risk Analysis and Risk Management processes. If there’s an impermissible disclosure of PHI, breach notification to affected individuals and the Secretary is required. OCR is prioritizing compliance with the HIPAA Security Rule in investigations into the use of online tracking technologies.

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The Med Spa on the Corner Is Probably Breaking the Law

Look better. Feel better. Fountain of youth promises are making med spas one of the fastest-growing segments in healthcare. Botox injections, laser hair removal, IV hydration and therapy, medical weight loss, and hormone therapy seem to be available on every corner.

But most med spas are not compliant with Texas law. Either they are formed as the wrong entity type, they lack proper oversight and ownership, or all the above.

The consequences can be significant for everyone involved.

Med spa owners face potential civil and criminal liability for the unauthorized practice of medicine. Physicians associated with those med spas could find themselves subject to disciplinary action from the Texas Medical Board. And patients are caught in the middle.

The “med” in med spa stands for medical because many of the services they provide are medical in nature. Botox, Disport, Juvederm, and Kybella injections, microneedling, chemical peels, laser hair removal, dermaplaning, and CoolSculpting are considered “nonsurgical medical cosmetic procedures” by the Texas Medical Board.

IV hydration and therapy, platelet-rich plasma injections, medical weight loss injections, and hormone therapy are also medical services. If a procedure involves injecting a patient intravenously or subcutaneously, it is probably a medical procedure.

Before any medical procedure, a physician or midlevel provider (like a physician assistant or nurse practitioner) must perform a good faith exam, establish a medically appropriate treatment plan, and document everything in a medical record.

Midlevel providers must be supervised by a physician under a Prescriptive Authority Agreement. The physician must review a sample of the charts regularly and generally be available to the midlevel if they have questions.

This does not happen in many med spas.

Then there’s the business side. The practice of medicine in Texas is regulated by the Texas Medical Practice Act, the Texas Medical Board, and administrative rules. Because med spas provide medical services to the public, they must comply with all these rules just like any other medical practice.

Med spas must be formed as an acceptable legal entity type. In Texas, medical practices are limited to professional associations (PAs), professional limited liability companies (PLLCs), and general partnerships with other licensed physicians. Many med spas are incorrectly formed as corporations or regular LLCs.

This is not just a technical problem. It leads to improper ownership. Medical entities, like med spas, cannot be owned by non-physicians. They must be owned by persons licensed to practice medicine in Texas.

There is a lot of information on the Internet, much of which is incomplete or wrong.

Texas is a “Corporate Practice of Medicine” state, which means that physicians cannot be employed to provide medical services by companies not owned by licensed physicians. In practical terms, a non-physician cannot start a company and then hire a physician to provide medical services to patients of that company. With very few exceptions, medical services can only be provided through professional entities owned by physicians.

These same prohibitions apply to midlevel providers like Physician Assistants and Nurse Practitioners. Physician Assistants can co-own a medical practice with a physician only if the physician controls a majority interest in the practice. Nurse Practitioners cannot own any percentage of a medical practice.

These are just a few of the compliance issues for Texas med spas. There are also in-office and website disclosure requirements, registration requirements, reporting requirements, and restrictions on the type of marketing or advertising the practice can engage in.

Patients are caught in the middle. Those injured at a non-compliant med spa may not know where to turn.

These types of complaints to the Texas Medical Board are growing at an alarming rate. If the non-compliant med spa has a Medical Director, the Board can discipline the physician for inappropriate supervision or unprofessional conduct. Physicians associated with non-compliant med spas are putting their medical licenses at risk.

For the unlicensed med spa owner, the Medical Board can shut down their business. In extreme cases, the unlicensed med spa owner could be charged with practicing medicine without a license. If the patient suffers a physical or psychological injury, the owner could be charged with a third-degree felony which carries jail time of two to ten years and a fine of $10,000.

If the patient hires an attorney to sue for malpractice, the med spa’s insurance company may deny coverage if the med spa was not formed or owned in compliance with Texas law.

Med spas are big business and growing rapidly. But with great reward comes great responsibility. Entrepreneurs owe it to themselves and patients to set up the med spa the right way, with the right supervision, and the right ownership.

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Texas Med Spa FAQ

What is a med spa?

The American Med Spa Association defines a medical spa as a hybrid between an aesthetic medical center and a day spa” with four core elements: (1) the provision of non-invasive (i.e. non-surgical) aesthetic medical services; (2) under the general supervision of a licensed physician; (3) performed by trained, experienced and qualified practitioners; (4) with onsite supervision by a licensed healthcare professional. AmSpa – Med Spa FAQ

While that definition is technically accurate, it obscures the point that because med spas offer medical services, they are considered medical practices in Texas and must comply with the rules and regulations that apply to traditional doctor’s offices.

What kinds of services do med spas offer?

In addition to providing aesthetic cosmetic treatments common in many spa settings, med spas provide services that cross the line into the practice of medicine. A small sample of these services include:

  • Laser Hair Removal
  • Botox injections and other dermal fillers
  • IV infusions
  • Platelet-Rich Plasma injections
  • Hormone therapy
  • Cosmetic surgeries

The Texas Medical Board refers to these types of services as Nonsurgical Medical Cosmetic Procedures and requires that an appropriately trained physician, or properly supervised midlevel practitioner, perform an appropriate patient assessment and issue an order for the medical cosmetic procedure. Title 22, Texas Administrative Code, Section 193.17, Nonsurgical Medical Cosmetic Procedures

What legal structure must med spas have?

Because med spas are medical practices, they must follow the requirements of Texas law regarding professional entities. Medical practices can only be structured as professional limited liability companies (PLLC) or professional associations (PA). Texas Business Organizations Code, Section 301.003(3)

They may not be formed as corporations or regular limited liability companies (LLC).

Who can own a med spa?

Medical services can only be offered through professional entities owned by physicians. Texas Business Organizations Code, Sec. 301.004, 006-007 In certain circumstances, non-physicians can co-own a medical practice with the physician. The only allowances are for podiatrists, chiropractors, optometrists, and sometimes physician assistants. Texas Business Organizations Code, Sec. 301.012

That means that nurse practitioners or unlicensed persons cannot form a “partnership” with physicians to own a med spa. Said another way, unless you are a physician, chiropractor, optometrist podiatrist, or physician assistant (in limited situations), you cannot own a med spa. This too is a violation of the Corporate Practice of Medicine.

Can a non-physician co-own a med spa with the physician?

In certain circumstances, non-physicians can co-own a medical practice with the physician. The only allowances are for podiatrists, chiropractors, optometrists, and sometimes physician assistants. Texas Business Organizations Code, Sec. 301.012 That means that nurse practitioners, registered nurses, estheticians, or unlicensed persons cannot form a “partnership” with physicians to own a med spa. Said another way, unless you are a physician, chiropractor, optometrist podiatrist, or physician assistant (in limited situations), you cannot own a med spa. This too is a violation of the Corporate Practice of Medicine.

Can a dentist be the “medical director” of a med spa?

I’ve seen mention that the Texas State Board of Dental Examiners allows dentists to use Botox for dental esthetic and dental therapeutic purposes. I cannot confirm that policy, but it would not be surprising as there are several therapeutic dental uses for Botox: high lip lines, Temporomandibular Joint Disorder, Bruxism, and dentures no longer fitting due to shifting jaw muscles. However, Botox for facial cosmetic purposes would not be in a dentist’s scope of practice.

In my view, dentists can only prescribe Botox and fillers for dental purposes. I do not think dentists can provide Botox for purely cosmetic purposes. The other issue is that since cosmetic Botox is a medical service, and dentists are not medical doctors, they cannot own or co-own a medical practice. Neither are dentists qualified to serve as “Medical Director” since they are not licensed to practice medicine in Texas.

What are some of the risks of a non-compliant med spa?

It is a violation of Texas’s Corporate Practice of Medicine doctrine for corporations or standard LLCs to provide medical services. Doing so could bring civil and criminal penalties. Texas Occupations Code, (Medical Practice Act), including sections 155.001, .003, 157.001, 164.052(a)(8),(13), and 165.001, .051, .101, .151, .156

Is the physician required to be on-site or at mid-level required to be on-site?

Either the midlevel or the physician can do the good-faith exam via telehealth or in person. They must be the ones to write the order for the medical procedure.

How often should a med spa perform good faith exams on patients?

At a minimum, a Good Faith Exam (GFE) should be performed annually, but may be required more often depending on the circumstances.

The good faith exam should be performed on any patient receiving treatment for the first time. From this GFE, the provider develops a treatment plan which will often include multiple treatments over several sessions. A GFE does not need to be performed for each session included in that treatment plan.

With that said, a new GFE should be performed:

  • If a patient seeks additional services not anticipated during the initial GFE, or not included in the initial treatment plan;
  • The patient discontinues the treatment plan, but then desires to resume treatment after a substantial delay; or
  • A patient’s health changes materially, either during the course of a treatment plan or thereafter.

There is no hard and fast rule. It is a question of the applicable medical standard of care. When in doubt, a physician or midlevel should decide if a GFE is required.