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Fee-splitting and Medical Spa Treatments

By: Alex R. Thiersch and Renee E. Coover
Posted: January 2, 2014, from the January 2014 issue of Skin Inc. magazine.

Have you ever paid a commission for Botox and laser treatments? Although it’s very common ... it’s also very illegal.

During the past several years, a very troubling trend has developed in the medical spa industry. Nurses, nurse practitioners, physician assistants and laser technicians are being paid by commission in order to incentivize them to bring new business into the spa. This is very lucrative for both the spa and the individual, but unfortunately, in most states, it is illegal.

Recently, a client called me with an urgent concern. This client, a registered nurse in Chicago, worked in a medical spa as an injector and laser technician. She was well-compensated: In addition to an hourly salary, she was also given a commission—a percentage of net revenue—for every Botox and laser treatment she performed. And boy did this nurse perform—during the past 12 months, she personally had generated more than $350,000 in revenue for the spa.

Her concern arose from a conference she had recently attended where she learned that most states have laws prohibiting fee-splitting. She was informed that taking commissions on Botox and laser treatments might land her in hot water with the state nursing board. She explained that this didn’t make sense, given that she had been receiving commissions for years, and that the physicians who paid her surely wouldn’t risk their licenses by doing something illegal.

However, by accepting commissions for Botox treatments, she was engaging in illegal fee-splitting. Not only could she face significant monetary sanctions if she continued to do so, but both she and her supervising physician risked immediate suspension or revocation of their licenses if the state learned she was taking commissions.

Fee-splitting refers to dividing or sharing fees from medical services between a physician and a nonphysician. In most states, all fees generated for medical treatments must be paid directly to a physician or physician-owned corporation. No one other than the physician—including nurses, physician assistants or any nonphysician medical practitioners—may receive any share of a medical fee.

Although the prohibition against fee-splitting has been on the books in most states for years, the practice of paying commissions has become quite prevalent in the medical spa community. This is probably because, in medical spas, most medical directors do not want to spend time firing lasers or injecting since other services can be more lucrative. As a result, injections and laser treatments are delegated to other medical professionals, who, in turn, develop a large client base. An easy way to compensate those professionals is to pay commission.

But the consequences for fee-splitting are severe. In most states, the state licensing board has the power to revoke, suspend or refuse to renew licenses in response to fee-splitting allegations. Accordingly, regardless of the monetary incentives, it is always advised to avoid paying or receiving commissions. A safe alternative to fee-splitting is to use a pre-set bonus structure—the nonphysician can still be rewarded for performance, but the bonus is not related to the number of treatments performed.

It is imperative for any medical spa professional to seek legal counsel immediately if being paid a commission for medical treatments. The laws of each state vary and are often difficult to find, but as is often the case, ignorance of the law is never an excuse.

Editor’s note: None of the information in this article should be considered legal advice. Only a qualified local health attorney can advise you after hearing all the facts of your specific case. Learn more about medical spa legalities from Alex R. Thiersch during the Advanced Education Conference Program at Face & Body®, Midwest on March 22, 2014, at McCormick Place West in Chicago. Register today: www.FaceandBody.com/midwest!

Alex R. Thiersch and Renee E. Coover practice with Thiersch & Associates in Chicago, a practice that specializes in medical spa law and serve as special counsel for the American Med Spa Association (AmSpa). The authors can be contacted at 312-981-0990 or thiersch@thierschlaw.com.