Category: Physicians Practice

I was speaking with a health lawyer this week about a case, and he lamented that the entire Texas Administrative Code had disappeared. I replied, “Oh, you have been looking for the Texas Medical Board Rules?”

The rules aren’t gone; they have moved. Effective January 9, 2025, the Texas Medical Board reorganized its rules, in keeping with a legislative mandate that the board update and clean up the rules. While this is probably a good thing, it confuses the heck out of anyone (like me) who had committed to memory that the rule physicians must follow when moving or leaving a practice is the “Medical Records” chapter at 22 TAC 165.5. (It is now moved to 22 TAC 163.4)

Worse, it takes a little while for search engines, such as Google, to realize the rules have moved. When you search for a rule by the old rule number or content (perhaps by using the old title or simply the general content you might need), you may be directed to a page that no longer exists, at least according to an official-looking page published by the Texas Secretary of State. (This is where you would get the idea that the rules have simply disappeared.)

What is actually happening, is the same thing that happens when you move your physical office address. It takes a while for search engines to figure out where you went and stop leading people to the wrong address.

Not to worry, the Texas Medical Board has found a new way to keep health lawyers employed, by publishing a handy Rule Conversion Table which contains everything you need to know about the rule changes, except any mention of any rule. (Go figure.)

Instead, the table discusses where the “Chapters” moved. Which is absolutely useless, unless you know what “sub” topics are located in a given “Chapter.”I will illustrate. The old TMB rule on what a physician must do when “retiring” or “moving” a practice, was in Chapter 165 at 22 TAC 165.5. This Rule 165.5 was a “subsection” of Chapter 165 regarding “Medical Records.” If you simply search, “leaving a practice,” you might have trouble finding the rule in the TMB Rule Conversion Table (because it is not there).

Under the new Conversion Table, Chapter 165 has moved to Chapter 163. In order to use the TMB chart, you would still need to have some understanding that Rule 165.5 “what to do when leaving or retiring” was under the “medical records” chapter. Which makes some sense but isn’t exactly “intuitive.”

Other rule changes are not so opaque. For example, the Chapters on “Physician Delegation and Supervision” have moved from Rules 193 and 197 can now be found under Chapter 169. This means, that all the rules for supervising mid-levels (which is very helpful in a MedSpa practice) now can be found at rules beginning with “22 TAC 169.01.” You simply must go to the first rule, 169.01 and keep searching until you find the rule you need.

After nearly 40 years of handling health care malpractice cases, it has finally happened. The case that will answer the age-old question: “Can a DA actually indict a ham sandwich?”

The case of the ham sandwich

An in-house lawyer from a governmental (county) health care facility called me in a panic this week. He had just received his first-ever grand jury subpoena from the County District Attorney’s Office(and was clearly rattled.)

A patient’s relative had brought a patient a ham sandwich, the patient wasn’t able to swallow fully, and despite the arrival of paramedics in minutes from the first alarm, the patient did not survive.

The attorney representing the health care agency first received a 4590i (medical malpractice) demand letter from the family of the decedent. But, perhaps realizing that you can’t sue a ham sandwich (and the Tort Claims Act and governmental immunity is a very big problem in malpractice cases), the health care facility did not hear from the lawyer again.

Instead, the facility received a grand jury subpoena for employment records from the local DA.

The grand jury process

The grand jury process is, as with many things the government provides us, a constitutional right in theory, which in practice is something of a “joke.” One that no one with any sense would snicker at. My clients receive these all the time in health care cases.

Google AI will tell you, “A grand jury is a group of citizens, typically 16 to 23 in number, convened to assess whether there is sufficient evidence (probable cause) to bring criminal charges against someone. They function as an investigative body, privately hearing evidence presented by a prosecutor and deciding whether to issue an indictment.”

It has been long observed that the grand jury is a secret, cloistered court with practically no oversight, no due process, no right to counsel, with a predetermined outcome which is all but dictated by the District Attorney or Federal Prosecutor.

In 1985, Sol Wachtler, then the chief justice of New York’s Supreme Court said, “Any good prosecutor can get a grand jury to indict a ham sandwich.”

That humor aside, grand jury subpoenas must be taken seriously, and you should always hire experienced counsel when responding to one. It is a state and federal offense in every jurisdiction to obstruct justice or a grand jury proceeding.

When a drug manufacturer like Eli Lilly invents a new drug (or buys the license from someone who did), it can gain “exclusivity” for its stockholders and make a ton of money in the process. Which exactly what happened with GLP-1 and other peptide weight-loos drugs.

If “Eli Lilly” sounds like a Civil War character, he was. The company was founded by a real-life pharmacist and colonel in the Union Army who was captured and imprisoned by Confederates during the Civil War.

One way to gain exclusivity for stockholders, is to patent the drug, which Eli Lilly did to gain exclusivity for Mounjaro® and Zepbound®. Patents can last for up to several decades, but there are shenanigans that can extend the patent.

The other way to protect shareholder’s is to gain FDA “exclusivity” which can be granted, even to generic drugs, but usually for a shorter period of time.

While a US Patent is only enforceable by the patent holder, the FDA enforces compounding restrictions under Section 503A of the FD&C Act. Often the FDA will pay states Attorneys General to do the enforcing through Consumer Protection Divisions.

FDA Shortage list. There was only one problem, while Eli Lilly patented salvation in a syringe, it couldn’t make enough of the stuff to keep it in stock. In such a case, the FDA publishes a “drug shortage” list. Eli Lilly’s Tirzeptide had been on the list for obvious reasons, but on August 2, Lilly announced that it had plenty in stock, and to protect shareholders, you can imagine what happened next.

Kirkland Ellis to weight loss centers: “Cease and desist.” A number of MedSpas and clinical practices began receiving “Cease and Desist” advising that the drugs were no longer on the shortage list.

But there is a second way to compound, even if the drug is not on a shortage. If the prescription states a “medical necessity” from the doctor for a compounded version of one of these drugs (many are adding B-12 due to the fact that weight-loss drugs can lead to a B-12 deficiency.) And that appears to be where we are now.

I would predict that there will be a few major lawsuits against a few targeted sellers, challenging the “medical necessity” claims. But this is typically a matter for medical boards, not the FDA. Meaning that the only recourse for Eli Lilly is to file medical board complaints. So far, I am not getting any reports of this happening, but as medical board complaints can be confidential, especially if settled, a complaint could be filed and settled, and no one would be allowed to talk about it.

When I was a kid, we played an electronic board game called “Operation,” a surgical game of skill. The gist of it was, kids took a pair of tweezers and attempted to remove plastic items from the patient, a “funny bone” for example. If we touched the metal edges of the make-believe incision, the patient’s red nose lit up and a buzzer sounded. The game box was emblazoned with an imperative subtitle, “make him better or get the buzzer!” Meaning, mistakes were instantly punished.

We aren’t kinds anymore, and while CMS (as well as commercial payers) are not kidding around when it comes to the treatment of diabetic ulcers with human tissue-based placental membrane grafts; mistakes are not always punished and certainly not “instantly.”

As a health lawyer representing physicians, nurse practitioners, and physician’s assistants, I am seeing a significant spike in Medicare and commercial insurance investigations, with staggeringly high recoupments or “clawbacks.”Clinics are being audited and the result is a demand to repay as much as $500,000 to $1 million per patient.

Worse, even when practitioners don’t make a mistake, they are nevertheless being haunted with the threat of recoupment audits, months and even years after CMS paid the claim.

“Schrödinger’s Cat”

A 1935 thought experiment called “Schrödinger’s Cat,” (in which a cat is in a box with a lethal device with 50-50 chance activating, until we open the box, we can think of the cat as being both dead and alive) is often used as a rhetorical metaphor, to describe any situation in which someone is in a “superposition.”

Although originally employed to describe quantum mechanics, any 10-year-old fan of American football understands how it works. If the defense jumps offsides, a flag is thrown but the game is not stopped. The flag informs the quarterback he is in a “superposition.” He gets to try to throw a reckless touchdown pass, which only counts if it works, but does not count if intercepted. The Quarterback is in a “superposition,” because no matter what, he can’t lose.

What does this have to do with placental membrane grafts in the treatment of diabetic foot and venous leg ulcers? Much more than you would think.

Human tissue-based placental membrane grafts are more frequently being pitched to clinics and mobile home care practitioners as an effective method of treating diabetic foot ulcers and venous leg ulcers, when these wounds do not respond to conservative treatment. Priced per cm2 with higher end costs ranging from $50,000.00 to $250,000.00 per graft, the course of treatment can be very expensive.

Practitioners must ordinarily purchase the grafts from people calling themselves “distributors,” apply the grafts to wounds that won’t heal, and then hope to get paid.

There are at least four problems with this model: (1) the FDA has never determined tissue-based placental membrane grafts are an effective method of treating diabetic foot ulcers (2) CMS and private plans generally won’t pay for any treatment that is not FDA approved (3) there is a method which is somewhat supported by two Local Coverage Determinations “LCD’s” one is the old version (marked “superseded”) but the new one has been pushed back until 2026 and is marked “future effective.” The government can use this pair of LCDs as a “superposition,” to either pay a claim or deny the payment because the LCD is not yet in effect (4) there is a way to game the payment system by artificially inflating wholesale price, then offer rebates to doctors, as described in a New York Time article entitled “Medicare Bleeds Billions on Pricey Bandages”.

In essence, while Medicare and private payers might pay for the use of less expensive allografts, especially if they work, but the risk of an audit and recoupment grows exponentially with the price tag. Unlike the child’s game, practitioners can “make him better” and still “get the buzzer” if the price tag is too high.

CMS and commercial payers are in a superposition of waiting until the treatment plays out, then deciding whether or not to call a “penalty,” depending upon how much the treatment cost. I have seen cases where a doctor was flagged for not documenting the recommendation that patient “quit smoking” as a more conservative treatment.

Takeaway: If a practitioner intends to incorporate allografts into diabetic foot and leg ulcers, it is critical to obtain advice from a health lawyer who is knowledgeable in this area.

The United States Department of Justice issued a press release on March 9 announcing that the CEO of Palo Pinto General Hospital in Texas pled guilty to a scheme that defrauded commercial carriers by use of what is termed pass-through billing. Physician practices need to be aware of the risks posed by these schemes. 

Pass-through billing arrangements are typically pitched to clinics as a way to increase revenue, without increasing overhead. A contractor proposes to provide equipment and a technician to perform some ancillary service, whether it be a CLIA laboratory, sonogram testing, or some other well-patient test using the latest gadget or device. 

As the scheme entails, all you need do is order the test, let the contractor do the work on a machine you don’t own using personnel employed by the contract, and then your clinic is expected to bill for the service using your clinic NPI number. When the claim is paid, you both split the money. The contractor is paid as a 1099 independent contractor. 

There are multiple reasons this is illegal and fraudulent.

1. Pass-through billing is illegal, because the contractor, not your clinic, performed the service. In the Palo Pinto Hospital case, the hospital paid an outside CLIA lab to perform tests, but billed insurance as though the tests were performed by the hospital. 

2. Pass-through billing is fraudulent, because the actual cost of the service is the amount paid to the contractor, not the marked-up price listed in the HCFA 1500 claim form.

3. Pass-through billing violates Stark Law and the Anti-Kickback Statute. In Medicare, Medicaid and federal payer cases, the service will not meet the “ancillary services exception” or safe harbor. This is because the services were not performed by the clinic as part of its own in-office ancillary services, but instead by an independent contractor, yet the services were billed as if the clinic had performed the test. 

4. Pass-through billing is unethical. The American Medical Association takes the position that pass-through billing is unethical as set forth in Opinion 8.0321.  Physicians are not allowed to mark-up the costs of ancillary services performed by others. 

5. Pass-through billing violates your PPO contract. The Texas Medical Association website lists the provisions of various insurance manuals that are violated by pass-through billing. 

Furthermore, it’s very easy for insurance and government agencies to spot these schemes. Particularly in well-patient visits, insurance companies employ algorithms which detect spikes, or changes in utilization. A clinic may previously bill $200 for a well-patient exam, then suddenly the cost is $500.00.  This will trigger an audit. 

At first, you may simply be asked to provide a certificate.At this stage, the payer may assume that you actually own the equipment and employ the personnel. The first line of inquiry will be a request for certification, for example, a CLIA certificate, or other certification showing that you have the proper certification to perform the ancillary service. If you do not produce the requested certificate, payment will be recouped. 

But recoupment is the least drastic consequence.In most commercial insurance settings, recoupment will be the goal of the payer. The Palo Pinto criminal prosecution is somewhat rare, due to the size of the amounts charged. If you cannot pay the money back, you will not be paid on future claims until the amount is repaid. 

In government cases, fines and prosecution are more likely.  Under the False Claims Act, penalties of over $20,000.00 per claim may be assessed. The Anti-Kickback Statute is a criminal statute which may be invoked in appropriate cases. 

Pass-through billing is never a good idea. The trouble lies in the fact that certain exceptions and safe harbors for equipment leases, in-office ancillary services, and group practice exceptions appear similar. If you have any doubt, ask for the help of an experienced healthcare attorney. 

Martin Merritt is a health lawyer and healthcare litigator at Martin Merritt PLLC, and serves as the executive director of the Texas Health Lawyers Association as well as the board of directors of the Dallas Bar Association Health Law Section. He can be reached at Martin@martinmerritt.com.  

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Until recently, arrangements between physicians and commercial laboratories escaped federal anti-kickback rules because the arrangements did not involve government payers. But with passage of the Eliminating Kickbacks in Recovery Act of 2018 (EKRA), physicians will need to review their standing arrangements and ensure compliance.

EKRA is Section 8122 of the Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities Act (SUPPORT Act), which was signed into law on October 24, 2018. EKRA establishes an all-payer anti-kickback prohibition that extends to arrangements with recovery homes, clinical laboratories, and clinical treatment facilities.

The intent of Section 8122 is to address the opioid crisis and prevent patient brokering and kickbacks related to substance abuse treatment facilities. However, the express wording of the statute does not limit the statute’s application to clinical laboratory arrangements which deal with treatment facilities. This means that any commercial-only, clinical laboratory arrangement—whether structured as a small business investment, management arrangement (MSO), or personals services arrangement, such as a medical director agreement—is subject to the new law, which carries severe criminal penalties. 

Penalties under the new law include a $200,000 fine “per occurrence” and up to 10 years in prison. It is not clear what “per occurrence” means. In addition, the Department of Justice may seek forfeiture of assets accumulated through any criminal infraction. Thus, the monetary impact can be much higher than the actual fine.

As a result, physicians with such arrangements should look to experienced health law counsel to ensure that their arrangements meet an available safe harbor.  

Martin Merritt, JD, is the executive director of the Texas Health Lawyers Association and a health lawyer at Friedman & Feiger, LLP.

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Negotiating and reviewing contracts is probably one of the more unnerving task physicians face. That’s good! Your subconscious is sending you “danger” signals. You simply need to channel this emotion into action to protect yourself.

Sales representatives are very good at selling the benefits of their company’s product to you and your practice, with emphasis on how these benefits outweigh the cost. Essentially, the sales meeting is all about what happens if everything goes as planned. You should never agree to the deal as presented until you are provided a contract and understand the terms thoroughly. The contract spells out what happens when things go wrong. Keep the following in mind before you sign any contract.

Sales personnel will tell you anything to make a sale. 

That’s what they do. Watch for it and remember that the contract is what you are bound by. When you receive the contract, read it carefully to note where the contract deviates from the sales pitch and to determine which of three possible types of contracts you have been handed: “A”, “B” and “C”. “A” is very favorable to you. “B” is fair and balanced–so much so that you honestly can’t tell which side drafted it. “C” is only favorable to the seller. These are full of one-sided indemnity clauses, penalties, restrictive covenants, and other legal results which were never negotiated.

Under contract law, a contract is enforceable unless it is illegal or violates public policy. That means, “if you sign it, you are stuck with it, unless your lawyer can get you out.” There are consumer protection laws, but litigating them is very expensive. Retain a lawyer to review a contract before you sign it. After you sign it, all we can do is read it to you, and tell you what you have done to yourself. 

Do not be swayed by promises of cost savings.

For every business need, there is a solution that is cheaper, quicker, and has disaster written all over it. Large, well-capitalized companies often offer the best services or products but cost more than smaller competitors and are less likely to negotiate contracts. This leaves plenty of room for startups of all stripes to attempt to undercut the industry leader. Smaller companies may negotiate but are more likely to present a “C” contract, because they are undercapitalized and can’t afford liability when things go wrong. So, they write liability out of the contract.

Beta testing is code for “we don’t know what we are doing but are hoping for the best.”

Watch out for signs a startup or small vendor is trying their product to see if it works. It means they don’t really know and can’t really say if it works. This also means you are the test case. Ask for references and check them.     

Beware lockout provisions.

When you sign a contract for billing and EHR systems, in a very real sense, the vendor controls your access to the life blood of your practice. Many software as a service (SaaS) agreements often allow for a “lockout” if you don’t pay, for any reason. You must make sure that you have a right to your data in a usable form no matter why the contract is terminated. 

Keep bona fide purchasers in mind.

In many cases, you, the simple purchaser, may be asked to sign more than just an SaaS contract. The vendor may produce a finance contract, which is a type of negotiable instrument, called a “promissory note.”  Under the promissory note, you become not only a purchaser, but also a debtor, who promises to pay the payee the total obligation under the SaaS contract. This can have very negative consequences because you may be required to pay the note, even if the SaaS doesn’t work. Even if the SaaS vendor is the payee, the note will usually be sold to a bank or finance company unrelated to the vendor.  When that happens, the bank or finance company is considered a bona fide purchaser if it pays value to purchase the note without knowledge of any defenses or reasons why the note might not be owed, such as the product is defective. This means you still must pay the bona fide purchaser note even if the product failed, the same as if you had paid cash up front. Your only recourse is against the vendor. And that is where the “disclaimer of warranties” in a “C” contract will become a real problem.  

In conclusion, no matter how well the sales presentation might have gone, always remember these final words, “I need to see the contract before I decide,” and you are well on your way to successfully negotiating the entire transaction. 

Martin Merritt, JD, is the executive director of the Texas Health Lawyers Association and a health lawyer at Friedman & Feiger, LLP.

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Physicians Practice contributor Martin Merritt, JD, the executive director of the Texas Health Lawyers Association and a health lawyer at Friedman & Feiger, LLP, sat down with Angela Miller, CHC, CMC, a payer claim auditing specialist and founder and president of Medical Auditing Solutions, LLC, to discuss how to prepare and manage payer audits.

MM: Angela, what guidance can you provide to physician practice personnel in dealing with payer audits?

AM: First, providers need to understand the difference between an audit and prepayment additional documentation request (ADR).

An audit is post-payment review of the claim to determine compliance with any of a number of payer requirements. An ADR is a prepayment request and usually relates to high-dollar, frequently abused, or high-volume procedures. The ADR seeks chart notes and other documentation reflecting medical necessity, before the claim can be paid. An audit will have defined deadlines for response while an ADR will suspend altogether the deadlines for payment under many prompt-payment statutes. 

MM: What triggers an audit or ADR?

AM: Payers use algorithms to identify high-utilization practices, or those practices which stand out as either ordering more procedures than their peers, or those ordering more high-cost procedures than their peers. Although payers are careful to state that they do not interfere with medical judgment, if actual utilization trips an algorithm, payers have at their disposal a number of remedies, increasing in severity from least to most severe. First, payers may send a warning letter that utilization is higher than a provider’s peers. No action is taken, other than a warning to modify prescribing behavior. Second, payers may place a practice on pre-payment review where payment is withheld until documentation is provided supporting the claim. Third, a recoupment demand may be made for claims already paid. Fourth, network participation may be terminated. Fifth, a complaint to a licensing board may be made especially for out of network/balance billing. Finally, in only the most egregious cases, a criminal complaint may be filed with the FBI or state prosecutor.

MM: What is the first thing providers need to do when receiving an ADR or post pay audit request?

AM: First, make sure the person in charge of mail knows the importance of these documents. Time is critical. A failure to respond timely will result in denial or 100% failed audit. This can result in a provider being put on “prepayment audit” or “document hold,” under which no practice can survive for very long.

Second, make it easy for the auditor to review the materials provided. Documentation that is hard to read won’t be read. Transcribe any handwritten notes on a copy of the chart note. Gather all documents requested and organize them in the exact same way for each patient and claim. Review the packet for any missing documents. Some systems store test results and the physician electronic interpretation and notes in two different spots in the EHR. All documents and all clinical assessment of said documents must be provided.

What you want to avoid is antagonizing the auditor. This is the second most common mistake, second only to missing deadlines, that I see.  If the documents are disorganized, or illegible, you invite denials. 

MM: I know some audits are small and providers are tempted to cut a check and be done, do you have an opinion on this?

AM: Number one, never cut a check without thoroughly reviewing the claims data, verifying the reason for the overpayment. Payers can make mistakes just like providers–an example being not applying the correct policy based on date of service. Some audit results can be extrapolated. A recoupment involving 30 claims can sometimes be extrapolated over the entire universe of claims. 

Second, it may be a good investment to employ a healthcare attorney to draw up a settlement agreement which releases all recoupment claims, known or unknown, through the date of the payment. Of course, this would not apply if the recoupment is sought because the claim was paid twice, for example. But in larger recoupment payments, it is good to attempt to obtain a release to prevent future recoupment claims.

MM: Is it necessary to pull any of the payer policies and manuals when reviewing payer audits?

AM: That is the most important work that an auditing specialist can perform. It is important to look at the time period and the procedure codes being audited and pull all policies from the payer to cover all dates of service and all procedure codes in the audit sample. Practices are typically not equipped to do this kind of work. There are times when a payer audit will apply current policies to dates of service outside the current policy period. This can save thousands of dollars in recoupment claims.

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A non-compete agreement is a type of “restraint of trade,” which prevents a physician employee from leaving his employment and opening a competing clinic or joining an existing competing clinic. These agreements may also prevent soliciting the former employer’s patients or referral sources. 

Historically, physician non-compete agreements were considered unlawful, against public policy, and unenforceable. California Business and Professions Code § 16600 has been held to prevent enforcement of many such contracts altogether. Other states, such as Texas (Tex. Bus. & Com. Code 15.50), have passed statutes that permit reasonable non-compete contracts as long as they are limited in time, scope, and geography and have a buyout clause. For example, a non-compete agreement may be legal if it is restricted to 18 months in a 25-mile radius, limited to the type of work previously performed, and allows the physician to buy out of it for a set price. That much is settled. 

However, several state legislatures have begun passing Citizen Participation Acts or anti-SLAPP statutes. How these anti-SLAPP statues work is explained by Olivia Zimmerman Miller, JD, an associate of Weil, Gotshal & Manges LLP in Dallas, Texas. in her September 2017 online report:

“[The Texas Citizens Participation Act (TCPA)] is Texas’s version of an anti-SLAPP statute. “SLAPP” stands for “Strategic Lawsuit Against Public Participation” and is a lawsuit designed to chill protected speech by intimidating and censoring critics, often those who have spoken out against a government entity or on an issue of public interest, by requiring them to spend money to defend against a meritless suit. Anti-SLAPP legislation, enacted by over half of the states, protects persons who exercise their expression rights from such retaliatory lawsuits.” 

One of the rights protected by anti-SLAPP statutes is the right of “Freedom of Association,” which protects an individual’s right to join or leave groups voluntarily, the right of the group to take collective action in the interests of its members, and the right of an association to define its membership. These statutes were never meant to affect non-compete agreements, but literally written, these anti-SLAPP statues may do just that. 

In Elite Auto Body v. Autocraft, No. 03-15-00064 (Tex.App. Austin 5/5/2017), the Austin court held that the anti-SLAPP statute is strong enough to prevent enforcement of certain aspects of non-compete statutes.  This is true, even though the Texas legislature did not have this outcome in mind when it passed the TCPA.

The take-away is simply this: whether you are the employer seeking to enforce a non-compete or an employee threatened with the application of a non-compete, there may be additional statutory defenses under the anti-SLAPP statutes in over half the states. 

Therefore, it is important to retain counsel knowledgeable in this newly developing line of case law. 

Martin Merritt, JD, is the executive director of the Texas Health Lawyers Association and a health lawyer at Friedman & Feiger, LLP. 

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On May 27, Texas Governor Greg Abbott signed legislation, putting an end to the battle between the Texas Medical Board and companies wishing to expand the availability of telemedicine in Texas.  As I predicted in a 2015 Physicians Practice article, “Texas Medical Board Unplugs Telemedicine for Some.” the Medical board wasn’t so much wrong, but more on the wrong side of history and larger financial interests.

Telemedicine clearly offers a less expensive alternative to a traditional doctor’s visit, but also a potentially lower quality of care.  Don’t be confused. The Texas Medical Board didn’t lose the debate whether a doctor visit on a cell phone can deliver the same quality of care as a face-to-face encounter.  It can’t. The Texas Medical Board lost the battle over physician autonomy.

One concern might be, if a patient can see a doctor via telemedicine then the doctor could be anywhere; Texas, California, or in any country where people can talk to Americans fluently.  But that’s not the problem. State medical boards usually are able to limit the practice of medicine to doctors licensed in the patient’s state.

The concern is over the question, “who employs to doctor on the other end of the telemedicine visit?”  If the telemedicine doctor does not need to work in a traditional office, a few minutes from the patient’s home, the doctor could be employed by anyone, under any number of nightmarish, but economically efficient corporate conditions. And if that is true, how does the physician on main street stay in business?

That’s what worried the Texas Medical Board. And for good reason, if what happened to pharmacies is any example. There was a time when prescription medications were always dispensed by licensed local pharmacist.  But the need for a pharmacist/patient encounter declines, when the patient is receiving the same medication, month after month, without any problems that might require a pharmacist. In fact, the pharmacist could just “mail it in,” literally, if not figuratively.   And mail-order pharmacies were born.

But if there is no need for a pharmacy on main street, there is no need for a pharmacy at all. Insurance companies could go into the business of delivering mail-order prescriptions, in direct competition with local pharmacies. This is exactly what happened, but they didn’t stop there. Health insurance plans, major pharmacy chains and PPO pharmacy benefit management companies developed more and more efficient ways of delivering prescriptions, which will eventually relegate local pharmacies to the same fate as main street hardware stores.

So it was with this in mind, the Texas Medical Board passed a rule in 2015, requiring at least one face-to-face encounter, to establish a physician/patient relationship. After that, the encounter could be by telemedicine. As I wrote at the time, the money was on the other side. Legislation signed by Governor Abbott last week, ends a lengthy court battle between telemedicine companies and the Texas Medical Board.