The burgeoning medical spa industry presents unique challenges regarding who can perform what treatments. As medical aesthetic practices evolve beyond the traditional medical model, the lines between medical and spa treatments often blur. In Ohio, and specifically concerning physician assistants (PAs) offering spa services in Cleveland, it's crucial to understand the legal landscape governing medical procedures, delegation, and scope of practice.
Understanding the Landscape
The legality of a physician assistant offering spa services in Cleveland, Ohio, hinges on several factors, primarily state laws defining scope of practice, delegation rules, and the Corporate Practice of Medicine (CPOM) doctrine. It is essential to recognize that while certain procedures are considered medical in most states, exemptions exist. For instance, some states' cosmetology boards permit aestheticians and cosmetologists to perform microdermabrasion and dermaplaning, provided the procedures do not penetrate the dermal layer of the skin.
Scope of Practice and Delegation
Physicians have the broadest authority and frequently serve as owners or medical directors in medical spas. However, the roles of Nurse Practitioners (NPs), Registered Nurses (RNs), Licensed Practical Nurses (LPNs), and Physician Assistants (PAs) are more nuanced.
Physician Assistants (PAs): In most states, NPs practice in collaboration with a physician. Depending on the state's laws, collaboration commonly follows written protocols (e.g., a list of delegated medical tasks, restrictions or limitations, prescriptive authority and level of supervision).
Registered Nurses (RNs): The scope of practice of an RN is more limited and subject to stricter delegation and supervision than that of an NP or PA. Unless state law dictates otherwise, a qualified physician or independent practice NP may delegate medical tasks to RNs, as long as the procedure is within their scope of practice and competency has been verified. If required, written protocols are delineated and appropriate supervision provided.
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Licensed Practical Nurses (LPNs)/Licensed Vocational Nurses (LVNs): The scope of practice of LPNs/LVNs is more limited and subject to stricter delegation and supervision than an NP, PA or RN. State laws generally dictate the medical tasks that a qualified physician or independent practice NP can delegate to LPNs/LVNs, whether written protocols are required, and the appropriate level of supervision.
Unlicensed Personnel
It is important to distinguish between licensed and unlicensed personnel. Aestheticians, cosmetologists, and medical assistants (MAs) are typically considered unlicensed personnel by medical standards, even though aestheticians and cosmetologists are licensed by cosmetology boards. These staff members generally cannot perform medical or invasive procedures due to their limited medical training. Even if state law allows delegation, it often requires that the delegating practitioner provide onsite direct supervision during procedures.
Corporate Practice of Medicine (CPOM) in Ohio
Ohio is a Corporate Practice of Medicine (CPOM) state. In CPOM states, entrepreneurs who are unlicensed individuals and desire to organize a med spa typically do so through a corporate structure that is often referred to as a “friendly physician,” “friendly PC,” “captive PC” or “MSO” model. This model permits non-physicians to indirectly invest in physician practices when the state law prohibits non-physicians from directly investing. In such an MSO model, the professional entity employs or contracts with physicians and other licensed healthcare professionals and is the direct provider of medical services to patients. The patients pay the professional entity for the services rendered.
The management entity may have both physician and non-physician owners. The management entity often provides a turn-key operation to the professional entity. In exchange for the management services provided, the professional entity pays the management entity a management fee. The management fee must be carefully structured in accordance with applicable rebate, fee-splitting and kickback prohibitions. Common safeguards to mitigate regulatory risk include ensuring that the management fee is (a) within the range of fair market value for bona fide services actually provided, (b) is not a percentage-based fee or other fee that varies based upon the volume or value of services provided to patients, and (c) is set in advance and not changed more than once a year. In any MSO arrangement, non-physician owners of the management entity will want to protect their investment. One way to do that is through buy-sell provisions providing that non-physician investors can essentially replace the friendly physician owner of the professional entity with another licensed physician in various circumstances.
Med spas are most commonly formed as a professional limited liability company (“PLLC”) or a professional corporation (“PC”) in corporate practice of medicine states. Depending upon the form of entity that has been selected, the potential tax election filing options may include, for example, a disregarded entity, partnership, S Corp or C Corp. The IRS does not recognize LLCs as a classification for tax purposes. Many med spas elect to be taxed as a S corporation by filing IRS Form 2848. It is also imperative to ensure that workforce members are properly classified as W-2 employees or 1099 independent contractors.
Key Considerations for IV Hydration Businesses
The webinar series "The Path to Success: Overcoming Obstacles in the IV Hydration and Medical Spa Business" highlights several key considerations for IV hydration businesses, which are relevant to the broader medical spa context:
Ownership Requirements: Ownership requirements depend on state laws. In states with Corporate Practice of Medicine (CPOM) laws, a licensed physician may be required to own the medical practice.
Legal Guidance: It is crucial to seek legal guidance early in the business journey to ensure compliance with corporate practice of medicine laws, scope of practice rules, and proper medical agreements.
Good Faith Exam: A good faith exam (GFE) is an evaluation performed by a qualified provider (MD, DO, NP, or PA) to assess the patient's suitability for IV hydration therapy.
Essential Documents: Key legal documents include articles of incorporation, operating agreements, management services agreements (MSAs), medical director agreements, and patient consent forms.
Medical Director Responsibilities: In IV hydration businesses, the clinic side of the business is typically physician-owned or affiliated, with the medical director overseeing clinical protocols.
Business Entity Structures: Depending on the state, business entities can include LLCs, professional corporations, or professional limited liability companies.
Management Services Organization (MSO): An MSO allows non-physicians to have potential ownership and benefit from the business relationship in a compliant manner.
Specific Scenarios and Examples
To illustrate the complexities, consider a few specific scenarios:
Nurse Ownership: A nurse can own a Management Services Organization (MSO) that provides non-clinical administrative services to a professional corporation in Ohio. The MSO can handle marketing, billing, facility leasing, and staffing.
Texas Regulations: In Texas, regulations vary widely on who can own or oversee IV clinics, what licenses are required for practitioners, and what level of monitoring or physician oversight is required. The Texas Medical Board has emphasized the need for medically licensed or experienced staff in med spas.
IV Therapy Risks: The risks of IV therapy and hydration can be obscured by social media marketing. Clear medical protocols must be in place, and providers must be properly licensed and adhere to their scope of practice.
Ensuring Compliance and Safety
Given the potential dangers and regulatory complexities, medical spas must prioritize compliance and patient safety. This includes:
Proper Licensing and Authorization: Ensuring that all team members are properly licensed and authorized, with scopes of practice clearly defined by state law.
Compliance Programs: Implementing strong compliance programs with policies and procedures that focus on data privacy and security. Before and after photos are considered part of the medical record and the confidentiality of such images must be respected.
Insurance Coverage: Obtaining appropriate insurance coverage, including product liability insurance for private label skin creams, and ensuring that both the professional entity and any affiliated MSO have adequate coverage.
OSHA Compliance: Ensuring the facility conforms to OSHA’s many standards so please contact your local OSHA office for notifications that must be posted at your medical practice and the exposure control plan to have in place. In general responsibilities include use of medical equipment and tools safely, maintain procedure policies (including a bloodborne pathogen plan and laser safety plan), and provide employee safety training for workplace hazards, injury and illness and injury prevention.
Establishing a Patient-Provider Relationship: Establishing a clear patient-provider relationship, ensuring that patients are not simply selecting treatments from a menu without proper evaluation.
Recent Legislative and Regulatory Updates
Staying informed about recent legislative and regulatory updates is crucial for medical spas. Some recent developments include:
Ohio House Bill 96: Ohio has passed House Bill 96, introducing a provider nondiscrimination provision that requires health plans to reimburse certified registered nurse anesthetists (CRNAs) at the same rate as physicians for the same services. The law aims to improve patient access to care by eliminating payment discrimination against CRNAs and will take effect on September 30, 2025.
Ohio Board of Pharmacy Rule Changes: The Ohio Board of Pharmacy (“BOP”) recently posted notices of Ohio Administrative Code rule changes related to record keeping and the sale and distribution of certain ephedrine-containing products.
Federal Budget Changes: The 2025 federal budget introduces significant changes for health care providers and Medicaid recipients, including new cost-sharing requirements, work eligibility mandates, rural health grants, and a pause on minimum staffing rules.
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