Could an unregistered for-profit corporation bill patients or payers as the medical-service provider in Arkansas?

Plain-English summary

Senator Cecile Bledsoe asked whether a for-profit corporation that was not registered with the Arkansas State Medical Board could use several arrangements to provide medical or research services and bill as the provider. The examples involved employed or contracted physicians, a physician investigator, advanced practice nurses supervised by physicians, and a foreign corporation qualified to conduct business in Arkansas. The AG answered no to all six questions as framed.

The AG said the Medical Corporation Act requires Board registration before a corporation opens, operates or maintains an establishment for the medical purposes identified in the Act. Each proposed arrangement contemplated the corporation itself billing and seeking payment as the provider. In her view, that provider role triggered the Act regardless of whether the person rendering services was an employee or contractor. She expected a court to conclude that a corporation paid as the provider would need registration as a medical corporation.

The AG distinguished ancillary billing and collection work for a registered Arkansas medical corporation. Such services did not themselves fall under the Medical Corporation Act or Medical Practices Act. The questions before her instead assumed the unregistered corporation would bill patients or third-party payers as the provider.

For the foreign-corporation question, the AG interpreted "qualified to conduct business in Arkansas" to mean a foreign medical corporation otherwise eligible for Board registration but without the required Board certificate. She said the same registration rule applied to that corporation. The opinion did not interpret the phrase as proof of a separate Secretary of State filing, did not impose a two-registration test, and did not decide every possible foreign-corporation business arrangement.

What this means for you

Medical businesses and clinicians

The distinction in this opinion is whose name and legal role appear as the provider seeking payment. The six unregistered-corporation arrangements were rejected as framed. A billing vendor that merely handles accounts for a registered medical corporation was treated separately. The AG did not assess an individual company's documents or enforcement consequences.

Currency note

This opinion was issued in 2015. Check current medical-corporation law and Board rules before structuring an arrangement.

Common questions

Did using an independent-contractor physician change the answer? No. The AG answered no where an unregistered corporation hired a physician contractor and billed as the provider of the physician's services.

Did the opinion bar all billing vendors?
No. It distinguished businesses providing ancillary billing and collection for a registered Arkansas medical corporation from corporations billing as the medical provider.

What about supervised advanced practice nurses? That was one of the proposed arrangements. The AG answered no where the unregistered corporation would bill as provider for their services.

What did the AG assume about a foreign corporation? She treated it as a foreign medical corporation eligible to seek Board registration but without a Board certificate. Her no answer applied to that assumed situation.

Did she require registration with the Secretary of State too? The opinion did not analyze a separate Secretary of State registration step. Its conclusion concerned the missing Arkansas State Medical Board certificate.

Background and statutory framework

The AG quoted the Medical Corporation Act's bar on operating an establishment for specified medical purposes without Board registration. She connected that rule to the corporation's role as the entity billing and seeking payment as the provider. She also noted that a later enactment allowed eligible out-of-state medical corporations to register with the Board, subject to physician licensure of their owners, officers and directors in the state of incorporation and compliance with the Act.

Source

• Landing page: https://arkansasag.gov/divisions/opinions-foia/attorney-general-opinions-search/

Original opinion text

Opinion No. 2014-118
March 10, 2015
STATE OF ARKANSAS
THE ATTORNEY GENERAL
LESLIE RUTLEDGE
The Honorable Cecile Bledsoe
State Senator
Post Office Box 2457
Rogers, Arkansas 72757-2457
Dear Senator Bledsoe:

This is in response to your request for my opinion on the following questions:

In the State of Arkansas, can a for-profit corporation that has not been registered with the Arkansas State Medical Board as a medical corporation:

Question 1: Employ a physician so that the corporation may bill as the provider of services to third party payers and patients? Question 2: Contract with a physician and use the physician's license to obtain Health Department approval to operate and subsequently bill third party payers and patients as the provider of medical services pursuant to that physician's license? Question 3: Hire a physician as an employee to perform professional services as a principal investigator in human research so that the corporation may contract with others as the entity being paid to perform human research? Question 4: Hire a physician as an independent contractor and the corporation bills third party payers and patients as the provider of professional services rendered by the physician contractor? Question 5: Hire advanced practice nurses, who are supervised by physicians, and bill third party payers and patients as the provider of professional services rendered by the advanced practice nurses? Question 6: Would the answers to questions 1-5 above change if the for-profit corporation is a foreign corporation that is qualified to conduct business in Arkansas?

RESPONSE
For the reasons explained below, it is my opinion that the corporate arrangements set out above would not be permitted in the State of Arkansas without the corporations being registered as Arkansas medical corporations. Accordingly, the answer to each of these questions is "no," in my opinion.

DISCUSSION
As a threshold matter, I note that the crux of the inquiry in this instance seems to be not whether any of the above transactions or corporate arrangements can occur in the State of Arkansas, but rather whether any can occur in the State without the for-profit business being registered as a medical corporation by the Arkansas State Medical Board. It is with this understanding that I address the above questions.

The applicable law governing these questions is the Medical Corporation Act. That act states in part that "[n]o corporation shall open, operate, or maintain an establishment for any of the purposes set forth in § 4-29-305 without a certification of registration from the Arkansas State Medical Board." Thus, the issue to be resolved is whether the corporation in each of the posited scenarios is opening, operating, or maintaining an establishment for any of the purposes in § 4- 29-305.

Each scenario contemplates that the corporation itself would bill and seek to be paid as the provider of the medical services. In my opinion, the act of being paid or seeking to be paid as the provider of the medical services will trigger the application of the provisions of the Medical Corporation Act.

My immediate predecessor observed in an official opinion that a corporation "seeking to engage in 'the study, diagnosis, and treatment of human ailments and injuries . . .' within the State of Arkansas must be organized pursuant to the Arkansas Business Corporation Act of 1987, must engage in such activities through licensed Arkansas physicians and must be registered with the Board." A court would most likely conclude that a corporation wishing to be paid as the provider of medical services would be seeking to "open, operate, and maintain an establishment" for the purposes set out in § 4-29-305. It necessarily follows that the corporation in that instance would have to be registered as a medical corporation with the Arkansas State Medical Board pursuant to § 4-29-309.

Mere ancillary services, such as the handling of billings and collections for a registered Arkansas medical corporation, do not fall under the Medical Corporation Act or the Medical Practices Act. However, the questions set out above presuppose that the corporations will not simply be handling billing or collections for Arkansas licensed physicians but will be billing patients or third- party payors as the provider of the services.

Prior to 2013, out-of-state medical corporations could not be registered with the Arkansas State Medical Board at all for the purpose of practicing medicine in the State of Arkansas. The General Assembly enacted a measure that would allow medical corporations organized in another state to be registered with the Arkansas State Medical Board, so long as all of the owners, officers, and directors of such foreign medical corporations are licensed to practice medicine in the state where they are incorporated, and so long as the foreign medical corporations comply with all other aspects of the Medical Corporation Act.

Question 6 refers to a for-profit foreign corporation that is "qualified to conduct business in Arkansas." I interpret this as referring to a foreign medical corporation that would otherwise be eligible under the Medical Corporation Act to apply for and obtain a certificate of registration from the Arkansas State Medical Board but has not done so. In my opinion, the law applies to foreign corporations in the same way as it does to domestic ones. If the foreign medical corporation does not have a certificate of registration from the Arkansas State Medical Board, a reviewing court would most likely conclude that the foreign corporation may not "own, operate, and maintain an establishment for the study, diagnosis, and treatment of human ailments and injuries, whether physical or mental, and to promote medical, surgical, and scientific research and knowledge" in the State of Arkansas pursuant to the Medical Corporation Act.

Assistant Attorney General Ray Pierce prepared this opinion, which I hereby approve.

Sincerely,

Attorney General
LR/RP:cyh