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Can I take consulting work paid on a percentage basis?

Provided by:  Jennifer Kirschenbaum, Esq.

September 14, 2017

 

Question:


Jennifer,

As a consultant, many of my clients look to pay me on a percentage basis.  Recently I have been taking on assignments for telehealth, which for many is a cash business.  What are your thoughts taking the work on a percentage basis?  It seems whoever I am talking to has a different answer. 

Thoughts?

Thanks, 
E

Answer: 

It makes perfect sense why a client would want to pay on a percentage of revenue basis – less risk – let the consultant reap what they sow.  The issue is many states have doctrines or explicit laws prohibiting such reimbursement structures.  Federal laws require certain arrangements that fall within the medical realm consulting or vendor category be structured at a flat rate, fair market value.  To respond to the direct inquiry, its less of which lawyer you talk to, and more of what exposure lurks around the corner from an authority’s review.  That authority may be the Office of the Inspector General if an arrangement involves reimbursement from Medicare or other federal funds, or possibly a state licensing board investigating misconduct.  In NY, we recently had a sprouting of enforcement for “illegal fee splitting” from NYS Office of Medicaid Inspector General – stating entities in fee splitting arrangements were not authorized to receive Medicaid reimbursement.  

I’ve seen a swing towards vendors trying to charge an incentive percentage fee in the last few months – telehealth companies, online marketers, etc.  Billing companies, at least in NY, are starting to become more aware of the prohibition based on the State’s Medicaid enforcement activity.  

An important key to remember in the risk of review is, in some of the broader inquiries nowadays, it doesn’t matter if your deal is small money, small potatoes.  If a vendor goes down for improper structure, even the guppy clients are taken down in the net. In NY, you have the Attorney General's office, US Attorney and DA looking to capture healthcare dollars.  The new protocol coming out of the Medicaid Inspector General's office, who I know works hand in hand with the AG causes me pause that NY may look to bust up fee splitting in areas involving more than just Medicaid funds reimbursement. 

Puts us in a tight spot.  The safest advice I can give is you are better off waiting to work for clients looking to work on a flat fee. To the extent that is not economically feasible, do not work without a proper contract, and protections in place. Call me to discuss further.     


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