Improving regulation of health care centers: in context

Recent sanctions applied to health care centers. In a recent decision, the French Assurance Maladie (French Public Health Insurance) announced that two dental and ophthalmological health care centers located in the Yvelines and Seine-Saint-Denis regions would be withdrawn for a period of five years due to fraudulent practices. The withdrawal implies that the Assurance Maladie will only reimburse the cost of the treatments provided in these centers on a very low basis, at a rate known as the authority rate. For example, for an ophthalmological consultation charged 30 euros, the Public Health Insurance will only reimburse 1.22 euros.

With this decision, the Assurance Maladie has demonstrated its mobilization to actively fight against fraudulent practices related to the reimbursement of health care. The press release announcing the decision to impose sanctions indicates that “88 dental healthcare centers and 44 ophthalmological healthcare centers are currently being inspected”. The organization also informs that it is continuing its controls in conjunction with the justice, police, and gendarmerie services to identify the implementation of abusive or fraudulent practices within health care centers with ophthalmological or dental activities.

It was in the context of one of these investigations that the Assurance Maladie confirmed the fraudulent practices of these two health care centers, which not only established false invoices for medical procedures actually performed, but also invoiced fictitious medical procedures, with resultant financial damage suffered by the Assurance Maladie amounting to nearly 1.5 million euros.

A growing fear due to a still fragmented regulation. These decisions are also in line with growing concern about oversight of health care centers and echo the observations made over the years by the Inspection Générale des Affaires Sociales (IGAS, French General Inspectorate of Social Affairs), particularly in the context of the Dentexia scandal, where many patients suffered as a result of fraudulent dental services.

The central point of the authorities’ concerns is the economic model of these health care centers. French Public Health Code currently sets several limits including:

• limitation in terms of governance: the French Public Health Code restricts the entities that can manage health care centers by authorizing only primarily non-profit organizations. These organizations include departments, municipalities or their groupings, public health institutions, legal entities managing private health institutions, whether non-profit or lucrative or cooperative societies of collective interest, provided that they have as partners only the entities mentioned above;
• limitation in terms of profit distribution: the French Public Health Code prohibits the profits distribution from the exploitation of a health care center, and requires that they be allocated to the reserve or reinvested for the benefit of the health care center, one or several other health care centers or another non-profit structure managed by the same management entity.

As a result, structures emerged whereby the head of the health care center management bodies, had direct or indirect links of interest with private companies supplying products or services to the health care centers, creating a lucrative arrangement. As health care centers have largely developed in medical deserts, fraudulent practices have emerged, particularly in the dental sector with the Dentexia (2015) and Proxidentaire (2021) scandals, which have brought to light abuses that have an impact on the quality, safety and relevance of the care provided to patients.

Key contributions of the bill

Within this context, the current bill to improve the supervision of health care centers is being proposed. The text was unanimously adopted on first reading by the National Assembly on 30 November 2022, and has just been unanimously adopted by the Senate on 14 February 2023 with some modifications.

Ophthalmological or dental activities considered at risk. This bill focuses mainly on health care centers with ophthalmological or dental activities and is therefore of limited scope.

Prevention of conflicts of interests. In addition, among the proposed measures, a new restriction appears, with the clearly stated objective of countering the excesses of certain economic models currently structuring health care centers. The bill requires that a new article be included in the French Public Health Code, according to which “a healthcare center’s director may not exercise a management function within the management structure when he or she has a direct or indirect interest in private companies providing paid services to the management structure” .

The purpose is clear, and although the notion of direct or indirect interest is vague and likely to cover a large number of factual situations, the prohibition in fact remains limited. The prohibition only applies to health care center directors, and only prevents them from taking on a management position within the management structure, and only in the event that the health care center directors have links with companies providing remunerated services to the management structure. The heads of the management structures are not covered by the prohibition, nor are the other functions within the health care centers. Finally, only links with companies (i) providing remunerated services (ii) to the management structure are considered to be at risk.

The accumulation of criteria makes it possible to exclude from the scope of this prohibition a large number of cases, such as, for example, cross-shareholdings of companies providing remunerated services to different management structures, or links of interest with private companies supplying products or equipment to the management structures.

Prior approval by the ARS. Another notable measure in this same objective is the introduction of a mandatory prior approval request to the Agence régionale de santé (ARS, French Regional Health Agency) for the opening of health care centers or their branches with dental or ophthalmological activities, activities considered to be at risk. An application for approval must be submitted to the ARS and must include, in addition to the health project carried out by the center, a declaration of the links and conflicts of interest of all the members of the executive body of the management structure, as well as the contracts linking the management structure to third-party companies.

Existing health care centers would also have to obtain this approval within six months of the entry into force of this law for their dental and ophthalmological activities.

Once again, the objective of this restriction is clear, but it remains limited. The requirement to obtain approval covers only the dental or ophthalmological activities of health care centers. All other activities are exempted from the approval requirement and therefore from the declarations of links and conflicts of interest. A decree should also specify the content of the approval application and would probably specify the form in which these declarations of links and conflicts of interest should be established. The format and the level of detail expected will be decisive in measuring the scope of this declaration requirement and its real effectiveness. In the same way, for the declaration relating to contracts concluded with third-party companies by the management structures, one could anticipate that if the declaration were limited to mentioning the existence of contracts, this would not necessarily be sufficient to identify potential direct or indirect prohibited links.

Other proposed measures. Among the other measures proposed are:

• the introduction, for the purpose of obtaining the approval, of an obligation to send to the general director of the ARS and to the Departmental National Board of the concerned profession (for dental and ophthalmological centers), copies of the employment contracts of dental surgeons, dental assistants, ophthalmologists and orthoptists. The competent Departmental National Board must give an opinion on these documents.
• the establishment of a medical or dental committee composed of health care professionals practicing dental or ophthalmological activities in the center, with the aim of ensuring the quality, safety and relevance of the care provided in the center, as well as the continuing education of the health care professionals practicing in the center. The manager would also be obliged to display in a visible manner on any useful support, the identity of all the practicing doctors and surgeons. The health care professionals working in these centers must also be identified by a personal number distinct from the number identifying the structure where they carry out their activity.

Health care centers and their branches with ophthalmological activity shall not have more medical assistants than physicians, in order to ensure better medical care for patients.

• the description of the new prerogatives of the general director of the ARS:
• the general director of the ARS can refuse to approve a management structure, or the opening of a new center or branch when one of its centers or branches is already undergoing a suspension or closure procedure. The manager will therefore no longer be able to bypass the sanction relating to the closure of the health care center by creating a new structure;
• it receives from the managers of the health care centers the auditor’s certified accounts when they are subject to it.

• the prohibition on demanding full payment for care before it has been provided for all health care centers, regardless of their specialties.

• an increase in the penalties applicable to health care centers by the ARS when they detect breaches of their regulatory and legislative obligations. The general director of the ARS may impose an administrative fine of up to 500,000 euros, which may be accompanied by a daily penalty of 5,000 euros. These amounts were increased when the text was examined by the Senate.

This new bill of law demonstrates, once again, that health care is an industry unlike any other. Even if the legislator, following the practice and the evolution of innovation, progressively opens the door to a liberalization of certain activities, health regulators and other public authorities remain very attentive to the conditions of patient care, to controlling reimbursement of care by the Public Health Insurance, and to fighting potential abuses and fraudulent practices in the health care market. While health care regulation in France must necessarily adapt and follow the innovation and developments in the sector, particularly towards improving treatment opportunities for patients, this bill may only have a limited scope, notably with regard to the structuring of the economic model of certain health care centers.

Next steps

The text will have to be re-examined before the National Assembly shortly. We will continue to monitor the possible adjustments and evolutions of this bill.

Please contact the authors or the Hogan Lovells attorneys with whom you regularly work for guidance on this bill or on French regulations applicable to health care centers.

Authored by Mikael Salmela, Joséphine Pour, Julie Montel, and Théophile Tsimaratos.