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Health Law Highlights

Post-Chevron Health Care Regulations: The Dawn of a New Day

Summary of article from ArentFox Schiff, by Douglas a. Grimm, Lowell C. Brown, David S. Greenberg, Pascal Naples:

The Supreme Court’s decision in Loper Bright Enterprises v. Raimondo overturns the Chevron deference, requiring courts to independently interpret ambiguous statutory provisions rather than deferring to federal agencies. This shift, particularly impacting the health care industry, reinstates the more limited Skidmore deference, where courts only defer to agency interpretations found persuasive. Additionally, the decision in Corner Post v. Federal Reserve extends the statute of limitations for challenging agency actions, potentially increasing litigation against agency regulations. Health care organizations may face greater regulatory uncertainty and variability across jurisdictions as courts independently interpret complex statutes and regulations. Consequently, HHS may adopt more cautious regulatory approaches and increased reliance on guidance over formal rulemaking.

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Health Law Highlights

Addressing Patient Transportation Needs

Summary of article from Dentons, by Susan Freed:

A significant barrier to accessing healthcare services is the lack of transportation, with one in five patients forgoing needed care due to this issue, particularly in rural areas lacking public transport and ride-share options. Hospitals are increasingly offering free transportation to ensure patients, especially the most vulnerable, do not miss critical services. However, these programs must comply with the Anti-Kickback Statute and the Civil Monetary Penalty Law. This article references a podcast that explores these compliance issues and provides guidance on structuring compliant transportation programs, along with a sample transportation policy.

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Health Law Highlights

Chevron’s End Means Uncertainty and Opportunity for the Healthcare Industry

Summary of article from Schwabe, Williamson & Wyatt PC, by Gary Bruce, Jon French:

The U.S. Supreme Court’s decision in Loper Bright Enterprises v. Raimondo, which overruled the Chevron Doctrine, will significantly affect the healthcare industry by allowing courts to independently interpret statutory ambiguities rather than deferring to administrative agencies. This shift is expected to increase legal challenges to federal health agencies’ regulations and actions, leading to greater unpredictability and slower rulemaking processes. Healthcare providers may face more litigation, particularly concerning reimbursement rates and enforcement of fraud, abuse, and privacy laws. Consequently, healthcare organizations should anticipate ongoing disruption, stay informed on legal developments, and be prepared to adjust their policies and procedures swiftly.

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Health Law Highlights

Chevron Runs Out of Gas: The Bumpy Road Ahead for Health Regulations After Loper Bright

Summary of article from Akin Gump Strauss Hauer & Feld LLP, by Anna Abram, Sudhana Bajracharya, Jenna Becker, Craig Bleifer, Nathan Brown, Kelly Cleary:

The Supreme Court’s decision in Loper Bright Enterprises v. Raimondo overturns the Chevron doctrine, which previously allowed federal agencies to interpret ambiguous statutes with judicial deference. This change raises the bar for agencies like CMS and FDA, requiring them to provide the “best reading” of statutory gaps rather than a “permissible” one. The ruling will significantly impact lower courts, which have continued to apply Chevron, and could lead to increased litigation challenging longstanding regulations. Additionally, the Corner Post decision extends the timeframe for challenging agency regulations under the APA, further exposing agencies to potential lawsuits. These developments will necessitate more precise statutory language from Congress and could constrain agency policy changes across administrations.

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Health Law Highlights

How the Chevron Doctrine’s Overturn Could Effect Public Health, FDA

Summary of article from The Washington Post, by David Ovalle, Joel Achenbach, Rachel Roubein:

Recent Supreme Court decisions have significantly curtailed the power of federal health-care agencies, leading to potential challenges in regulating drugs, tobacco products, and medical technologies. The court’s ruling in Loper Bright Enterprises v. Raimondo overturned the Chevron doctrine, which had required courts to defer to agency interpretations of ambiguous laws, thereby increasing judicial scrutiny over agency decisions. This shift is expected to result in extensive litigation, complicating the administration of health programs like Medicare and Medicaid and potentially undermining public health protections. Legal experts warn that these changes could hinder the ability of agencies like the FDA to respond effectively to health emergencies and regulate emerging technologies. The Biden administration and health officials express concern over the long-term impact on public health and regulatory stability.

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Health Law Highlights

Forecasting the Integration of AI into Health Care Compliance Programs

From Robinson Cole, by Kathleen Healy, Josh Yoo:

Healthcare entities need to incorporate AI standards into their compliance programs to manage and mitigate legal risks. Executive Order No. 14110 outlines key principles for AI including confidentiality, security, transparency, governance, and non-discrimination. The National Institute of Standards and Technology (NIST) provides a Risk Management Framework for AI and a playbook to help organizations manage AI risks. Key federal privacy and security laws like HIPAA and Section 5 will impact the use of AI in healthcare. It’s vital for healthcare entities to monitor evolving AI laws and regulations, inventory existing and upcoming AI use, educate themselves on updates, and adapt their compliance plans accordingly.

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Health Law Highlights

Highlights from OIG’s New Compliance Program Guidance

From Gardner Law:

The U.S. Department of Health and Human Services Office of Inspector General (HHS OIG) released the General Compliance Program Guidance (GCPG) in November 2023, a reference guide for health care compliance. It includes information about Federal laws, compliance program infrastructure, OIG resources, and other useful compliance-related information. 

The GCPG highlights primary sources of governing authority in the health care industry, including the Federal Anti-Kickback Statute and Physician Self-Referral Law. It also discusses the HHS OIG’s exclusion authority and potential civil and criminal implications of non-compliance.

The GCPG outlines seven key elements for an effective compliance program:

  1. Written Policies and Procedures
  2. Compliance Leadership and Oversight
  3. Training and Education
  4. Effective Lines of Communication
  5. Enforcing Standards
  6. Risk Assessment, Auditing, and Monitoring
  7. Responding to Detected Offenses and Developing Corrective Action Initiatives

The HHS OIG emphasizes that these elements are nonbinding recommendations, but they cover mandatory compliance obligations. Therefore, health care stakeholders should use the GCPG to identify and address their compliance duties.

Starting in 2024, the HHS OIG will issue industry segment-specific compliance program guidance and will publish new compliance guidance documents online instead of in the Federal Register. The release of the GCPG is an opportunity for health care stakeholders to audit their compliance programs and ensure they meet HHS OIG standards.

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Alert

OIG Publishes a New Guidance Resource and a Report

OIG released our General Compliance Program Guidance (GCPG). The GCPG is a reference guide for the health care compliance community and other health care stakeholders. The GCPG provides information about relevant Federal laws, compliance program infrastructure, OIG resources, and other items useful for understanding health care compliance. The GCPG is voluntary guidance that discusses general compliance risks and compliance programs. The GCPG is not binding on any individual or entity. Download the guide in whole or access individual sections.

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Article

Texas-Sized Pitfalls for Med Spas

Med spa growth across Texas and the nation continues to increase. The American Med Spa Association (AmSpa) found in 2018 that there were 5,431 med spas in the United States with average revenue of more than $1.5 million. That was up by 9% from the year before.1

Revenues during 2020 were strong relative to other industries. While 52% felt the impact and project revenues below $1 million, 37% projected revenues between $1-4 million.2

The outlook for the future is bright. Sixty-two percent (62%) of med spas owners expected their revenue in 2021 to increase by more than 10%:3

Many respondents expressed optimism for the post-pandemic future, with some citing the so-called “Zoom effect” as a reason why more people than ever before might seek out aesthetic services.

It’s no wonder Texas is experiencing a growth in med spas. Unfortunately, there is a lot of misunderstanding about med spas. While people rush to open practices and reap the financial rewards, many (or most) are not following Texas law. Starting a med spa without the right knowledge, structure, ownership, and licensure could subject you to legal liability, civil and criminal penalties, cease and desist orders from the Texas Medical Board, breach of contract, and a host of other unanticipated risks.

What are Med Spas?

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.4

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.

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, including O-Shot
  • 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.5

I once had a client physician who was the supervising physician for a med spa. Unbeknownst to him, the med spa did not hire a midlevel practitioner and was allowing a registered nurse (RN) to “order” and administer Botox injections. He immediately resigned from the clinic and reported the conduct to the Texas Medical Board. Last I heard, the TMB was imposing civil penalties against the clinic.

There are also specific licensing requirements associated with some of these services. For example, clinics owned by non-physicians that provide laser hair removal services must be licensed by the Texas Department of License and Regulation. That licensing requires specific training for the employees and contracts with designated and supervising physicians. Because the laser equipment emits radiation, it must also be licensed by the Radiation Control Program of the Department of State Health Services.6

These licensing requirements cut both ways. If a person with an esthetician license is working in a medical office, the medical office is required to have a salon license. 7

Legal Structure for Med Spas

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

Time and time again, I see “med spas” offering medical services through corporations and standard LLCs. Doing so is a violation of the Corporate Practice of Medicine doctrine and could carry civil and criminal penalties. 9

Ownership of Med Spas

Equally important, medical practices can only be owned by physicians.10 The only exceptions are podiatrists, chiropractors, optometrists, and sometimes physician assistants. 11 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.

Physician Supervision

In addition to the ownership requirements, nurse practitioners and physician assistants (“midlevel practitioners”) must be supervised by a licensed physician as required by the Texas Medical Practice Act and the rules of the Texas Medical Board.12

This supervision is memorialized in a Prescriptive Authority Agreement or Collaboration Agreement, which documents the procedures and prescriptions the physician is delegating to the midlevel to perform.13

If the med spa is jointly-owned by another authorized person (chiropractor, podiatrist, etc.), the physician generally will also serve as the Medical Director for the practice and be responsible for all medical protocols and policies.

Danger for the Uninformed

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

If you need help forming a med spa, or if you have already formed one and need assistance bringing it into compliance, please don’t hesitate to contact me at 214-855-3040 or wemmert@ccsb.com.


  1. AmSpa – 2019 Medical Spa State of the Industry Report ↩︎
  2. AmSpa Releases Results of AmSpa 2020 Medical Spa Industry Short Survey – COVID-19’s Impact ↩︎
  3. AmSpa Releases Results of AmSpa 2020 Medical Spa Industry Short Survey – COVID-19’s Impact ↩︎
  4. AmSpa – Med Spa FAQ ↩︎
  5. Title 22, Texas Administrative Code, Section 193.17, Nonsurgical Medical Cosmetic Procedures ↩︎
  6. Texas Department of License and Regulation – Medical Spas Frequently Asked Questions ↩︎
  7. Texas Occupations Code, Section 1602.251(c) ↩︎
  8. Texas Business Organizations Code, Section 301.003(3) ↩︎
  9. 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 ↩︎
  10. Texas Business Organizations Code, Sec. 301.004, 006-007 ↩︎
  11. Texas Business Organizations Code, Sec. 301.012 ↩︎
  12. Title 22, Texas Administrative Code, Chapter 193, Standing Delegation Orders ↩︎
  13. Title 22, Texas Administrative Code, Section 193.7, Prescriptive Authority Agreements Generally ↩︎

Categories
Alert

Revisions to Stark Law Rules Covering Physician Profit Sharing and Bonuses

The new provision allows a member of a group practice to receive profits from DHS directly attributable to the physician’s participation in a value-based enterprise.

CMS clearly has made the determination that participation in such enterprises is so essential that it is allowing a direct tie between a physician’s participation and the profits derived from DHS.

CMS also clarified that if a group has five or fewer physicians, overall profits means the profits from DHS from the entire group; but if a group has more than five physicians, the group may designate a component of at least five physicians to aggregate the profits for the purpose of distribution.

Although other portions of the Final Rule go into effect January 1, 2021, the profit sharing and productivity bonus provisions do not go into effect until January 1, 2022.

Source: Revisions to Stark Law Rules Covering Physician Profit Sharing and Bonuses