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Domestic and International Healthcare Arbitrations Print E-mail
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Thursday, 14 June 2012 00:00

Health care companies are increasingly resorting to arbitration, instead of courtroom litigation, to settle their disputes. Both the number and diversity of matters going to arbitration are on the upswing. From provider-payor issues, to licensing disputes, to M&A deals, sophisticated parties elect arbitration with the expectation that they can resolve their differences in confidence with less expense. This article provides practical advice to health care companies on whether to choose to arbitrate, how to draft arbitration agreements and how to conduct arbitrations. It addresses both U.S. and cross-border arbitrations. This article was featured in the March 25, 2012 issue of Health Lawyers Weekly.

Click here to read the full article.

Last Updated on Friday, 15 June 2012 11:14
Alcohol Abuse vs. Dependence: Is it Fraudulent to Knowingly Soft-Pedal a Diagnosis? Print E-mail
Written by M. Alexandra Johnson, FACHE and Wilma N. Torres, CPC   
Sunday, 03 June 2012 00:00

Do you think a provider would chart heart disease for a patient with - say - hypertrophic cardiomyopathy because it's a 'warmer, fuzzier' diagnosis? Or try to scare a patient with metabolic disorder into losing weight by diagnosing her prematurely with diabetes?  You're probably shaking your head in disbelief, yet some providers do just this when it comes to charting dependence on a substance, such as alcohol or other drugs. Their ambivalence leads to documentation of 'use' or 'abuse' as they fear "stigmatizing" the patient with a diagnosis of addiction, and somehow 'use' and 'abuse' seem less negative. 

Clinicians are ethically mandated to use their medical knowledge and judgment to diagnose a patient's condition and then to chart it completely and accurately.  So if our hypothetical provider charts in this fashion, is he, in a sense, committing fraud?  Fraud has several definitions:  deceit, trickery, sharp practice, or breach of confidence, perpetrated for profit or to gain some unfair or dishonest advantage; any deception, trickery, or humbug.

While soft-pedaling a diagnosis hardly results in profit or gain, it is dishonest, and in keeping with the definition above, deceitful. It begs the question of where exactly is the line between accurate reality and a little white lie. Knowingly charting less than accurately is deceptive and fraudulent.

 Click here to read more.

About the authors:  M. Alexandra Johnson, FACHE and Wilma N. Torres, CPC are principals at Coleman Consulting Group. The firm's services include:

-Risk Adjusted Reimbursement (MRA)             
-Coding & Billing
-ICD-10-CM Consulting & Training                   
-EMR/Meaningful Use Attestation
-Credentialing & Contracting

For additional information about the firm or to request a complimentary no-obligation consultation, please call 954.578.3331 or email

Last Updated on Monday, 04 June 2012 08:51
Give the Government Their Own Medicine: Make Up for Declining Reimbursements with Financial Efficiency & Tax Savings Print E-mail
Written by Carole C. Foos, CPA & David B. Mandell, JD, MBA   
Sunday, 29 April 2012 00:00

Recent Medicare cuts in reimbursements for most physicians and coming changes from the healthcare overhaul are making it more difficult for physicians to prosper. There are "top line" tactics for procedures and billing that can increase revenues. However, this article will address "bottom line" strategies, how the practice produces wealth for the doctor-owner. Specifically, two strategies to save in taxes what may be lost in reimbursement will be covered.

Using the Ideal Corporate Structure

Choosing the form and structure of one's medical practice is an important decision that can have a direct impact on financial efficiency and the state and federal tax burdens. Several issues to consider are:
  • Utilize a Partnership or Proprietorship. While these entities are asset protection nightmares and can be tax traps for physicians, they present a tremendous opportunity to recoup some reimbursement losses through lower taxes.
  • Do Not Treat an "S" Corporation as a "C" Corporation.   Approximately 60%-70% of all medical practices are estimated to be "S" corporations. Unfortunately, inefficient compensation structures can completely erase the tax benefits of having the "S" corporation.
  • Implement a "C" Corporation. This corporate structure has declined for medical practices, likely due to the "double tax" problem of corporate and individual taxes. While this is crucial to the proper use of a "C" corporation, there are tax-deductible benefit plans available only to "C" corporations that could counter many of the proposed reimbursement cuts.
  • Use Multiple Entities. Very few medical practices use more than one entity for the operation of the practice. Successful practices can often benefit from a superior practice structure that includes both an "S" and a "C" corporation to reap both tax reduction and asset protection benefits.
Maximizing Tax-Deductible Benefits for Doctors in a Practice

Benefit planning can help reduce taxes, but inefficient plans that are deductible to the practice may be too costly for the doctor-owners. To create an efficient benefit plan, physicians need to combine qualified retirement plans (QRPs), non-qualified plans and "hybrid plans." QRPs include 401(k) s, profit-sharing plans, money purchase plans, defined benefit plans, 403(b) s, SEP or SIMPLE IRAs, and other variations. While contributions to these plans are typically 100% tax deductible and the funds are afforded excellent asset protection, many QRPs are outdated and are only one piece of puzzle.

The Pension Protection Act recently improved the QRP options for many doctors, allowing additional contributions and deductions. Maximizing QRP options under the new rules could increase deductions significantly for a tax year. Additionally, fringe benefit plans, non-qualified plans and "hybrid plans" enjoy favorable short-term and long-term tax treatment.

With the current and upcoming reimbursement cuts, tax and efficiency planning must be a priority.

The authors welcome your questions and can be contacted at (877) 656-4362 or through the website  David Mandell, JD, MBA is an attorney, author of 5 books for doctors, and principal of the financial consulting firm OJM Group, where Carole Foos, CPA works as a CPA and tax consultant. They can be reached at  Please click HERE to read important disclosures.
Last Updated on Sunday, 27 May 2012 15:58
What does it mean to be “at risk”? Print E-mail
Written by M. Alexandra Johnson, FACHE   
Friday, 13 April 2012 16:48

The concept of being "at risk" has to do with the level of financial risk the entity has in funding the care its patients receive. As profit-oriented enterprises, insurance companies generally assess the insured's risk and base the premium on the anticipated cost of care with the ultimate goal of minimizing that risk. MedicareAdvantage plans are insurance companies, in a sense, that are paid a capitation by the Centers for Medicare and Medicaid Services (CMS) for each enrolled member. In exchange for that capitation payment, the Plan is financially liable for all the care given to the patient (e.g., all medications, surgical procedures, office visits, etc.) by any provider.

Depending on the plan's business model, it may contract with physicians operating as Independent Practice Associations (IPAs) or with groups that own or manage multiple physician offices under a Management Services Organization (MSO). In many cases, the plan's risk is passed onto the IPA or MSO. Click here to read more.

About the author:  M. Alexandra Johnson, FACHE (click to view author's bio)

Last Updated on Friday, 13 April 2012 16:54
Avoid Financial Gridlock When Partners Disagree Print E-mail
Written by David B. Mandell, JD, MBA & Jason M. O’Dell, MS, CWM   
Friday, 30 March 2012 00:00

Financial Planning Gridlock

In our practice, we have addressed potential strategies that doctors can use to reduce income taxes, increase benefits, or build retirement savings.  We have also had the opportunity to consult with hundreds of medical groups on how to implement these strategies for their practices.  However, the outcomes of such consultations can occasionally be less than fruitful because of office politics related to the age-related perspectives of practice partners.

Generally, the younger members of medical practices are very motivated to reduce their income taxes, while the older doctors may have other priorities.  The result of such situations can be practice planning gridlock.  The long-term costs of these gridlocks can be significant, causing younger physicians to have to work more years to reach the same retirement goals as their older partners.  Within this new world of medical practice, more creative methods of practice planning and asset growth are necessary, as are alternatives for managing planning gridlock.

Hybrid Benefit Plans

Hybrid benefit plans, in addition to traditional qualified plans (e.g., 401(k), profit-sharing plan, defined benefit plan), are good options because each physician can choose the amount of money to contribute in the plan formula.  This amount can vary from $150 to $100,000 per year, and because participation levels can be individualized, hybrid plans can be successfully implemented in larger medical groups.  Other benefits to this type of plan include:

·         The plan can be utilized with a qualified plan such as pension, profit-sharing plan/401(k) or SEP IRA;

·         Contributions can qualify for current tax deductions.

·         The plan acts as an ideal “tax hedge” technique against future income and capital gains tax increases.

·         Balances can grow in a top asset protected environment.

·         Employee participation requires a minimal funding outlay.

·         There are no minimum age requirements for withdrawing income (no early withdrawal penalties).

Flexible Corporate Structures

Another way to address gridlock is to alter the practice’s legal structure so that it accommodates planning flexibility on the part of individual physicians.  In the typical medical group structure, there is one legal entity – a corporation, LLC, or professional association (PA).  Physicians are either owners of the entity (informally referring to themselves as partners) or non-owner employees. In all such cases, the physicians have no ability to separate themselves from the central legal entity.  If the central entity does not adopt a planning strategy, no individual doctor has any flexibility to adopt one on his or her own.

An alternative structure is a central entity that is neither owned by, nor the employer of, the doctors directly.  Rather, it is structured through individual professional corporations (PCs) or PAs.  In this way, the central entity pays the physicians’ PCs as 1099 independent contractors after it receives payments.

From a tax standpoint, there is almost no downside to the central entity or the doctors who are not motivated to engage in any additional planning.  However, the physicians who want to implement planning strategies may do so through their individual PCs, leaving the central entity unchanged.  This structure can avert conflict with partners, as well as enable individual physicians to save $10,000-$50,000 more for retirement each year.

Outside Consultants

Many practices that rely on internal resources to tackle financial gridlocks will end up identifying no solution to their dilemma.  In such situations, outside consultants can help physicians realize their financial planning goals.  Outside consultants with expertise in the fields of taxation, accounting, benefits planning, or corporate law can present additional information to facilitate more productive discussions that can help practice members reach more informed group decisions. 


If your practice is grappling with financial gridlock and difficulties with advanced planning options, it may be that the differential needs of the various partners are at odds with each other.  This article has presented some basic methods for dealing with such gridlock.  Nothing can take the place of a professional with experience in the fine points of financial planning for physicians.  The authors welcome your questions, and can be contacted at (877) 656-4362 or at

David Mandell is an attorney, lecturer, and author of five books for physicians.  Jason O’Dell is a financial consultant, lecturer and author of two books for physicians. They are both principals of the financial consulting firm OJM Group.

Please click HERE to read important disclosures.

Last Updated on Monday, 30 April 2012 06:11
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