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What if Your State Doesn’t Allow You to Mark Up Medications and Labs?

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There are some laws in some states (New York and Arizona to name a couple) that restrict the nurse practitioner entrepreneur from being able to mark up labs and medications in their practice. It is absolutely ridiculous, but it is what it is. There is no point in trying to fight it… Just accept it and continue business as usual. Luckily, there are ways around these laws, and I wanted to touch on that in this article. But first, lets put some background to this topic.

If you have taken any of The Elite Nurse Practitioner courses or followed us for a time, you know that I advocate for operating cash practices as it is the truest and most free form of advanced practice. When you don’t have to deal with all the headaches of accepting insurance, then you have more autonomous practice and less headaches. Not having to deal with billing and preauthorization’s are just a couple of the benefits of operating a cash practice. Now, when you operate a cash only practice you must figure out ways to maximize your revenue so you can keep the doors open and to generate a healthy living. If you can’t, then there is no point in going through the process of starting and operating a niche practice.

With that said, one way to generate income through a cash-based practice is by marking up the cost of labs and medications. Many of you already know this, but for those that don’t I will explain. When you order labs through a company like Access Medical Lab (who we negotiated discount labs through) they will charge your clinic a set fee for a laboratory panel. For simplicity purposes, let us say it is $100. So, they will bill YOU $100 for a certain lab panel and then you can bill the patient whatever you want, but that is typically in the 1.5-2x range so you can generate a profit.

The same goes with medications you can order through a compounding pharmacy. Let’s say you order a medication that costs YOU $100. The pharmacy will fill the order and bill your clinic $100, then the medication is dispensed to the patient. You can then bill the patient whatever you want, but that amount is typically in the 2-4x range, so you generate a nice profit.

The great thing about this strategy is that most patients never even know what it actually costs you for these services/products. That is just business as you don’t know how much Walmart pays for certain things that they sell you right? There is no difference for a cash-based niche practice. As long as patients find value out of the product and service and it is affordable in nature to them, then it is a win win all around.

The above process is fine in MOST states, but there are a handful of states out there that restrict doing this. I cannot tell you which states those are, so don’t email me asking, but it should be easy to Google. Simply search for “anti-markup rule” or “direct billing law”, your state, and the word either “labs” or “medications” and you should be able to find out your state’s stance on this. If you can’t find anything, then it is safe to presume your state doesn’t have any rules pertaining to this so don’t worry about it. If your state does have rules about this, then do not fear as I am here to teach you how to legally get around these dumb laws that restrict patients from obtaining affordable and convenient medical services.

First, you need to understand that you are NEVER billing for labs or medications. When I say NEVER, I mean NEVER. What you are billing for is the SERVICE you are providing patients that ALSO INCLUDES the labs or the medications. It is as simple as that folks.

Example:

You provide cash-based men’s health services. You want to charge patients cash for labs and the testosterone replacement therapy but live in a state that has anti-markup rules. As an astute nurse practitioner entrepreneur, you don’t worry about this because your subscription-based program is $200 a month and includes the visits, concierge services, the medication, and the labs. Therefore, you are good to go!

This is applicable to ANY cash-based niche service and is perfectly legal. Most cash-based clinics in these states do this without any issue, and to be frank: no one really cares.

So, if you plan on starting or if you are already operating a cash-based niche clinic that offers services such as weight loss, men’s health, female HRT, and so forth, be sure to check what your states laws are on marking up medications and labs. The good news is that most states don’t have regulations surrounding this, so it really isn’t a big deal, but for those that live in these states, simply transition to a subscription-based model that includes everything and don’t worry about it!

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