Could Groupons spell trouble for doctors and patients?

The saying "There is no such thing as a free lunch" has been popular for decades. But in the case of physicians using Groupons, there may be another applicable saying, "There is no such thing as a good deal." From both the patient and physician perspective, offering daily deals for medical procedures can be risky.

Groupon and other daily deal sites became popular several years ago as buyers saw benefit in buying a coupon that would allow them to pay for services at typically half the retail cost. While most daily deals are offered for restaurants, haircuts, and vacations, some physicians, particularly plastic surgeons, have offered deals for noninvasive procedures.

In a typical Groupon transaction, a business (or medical practice) agrees to sell its product or service at a discount to the public and Groupon offers the discounted product or service through online media. Individuals pay Groupon directly, and Groupon reimburses the business half of the amount it collects. The discounted service is typically 50 percent off retail to begin with, which means that a plastic surgery practice that participates in Groupon receives about 25 percent of its normal retail charges.

While offering discounts for procedures like Botox and microdermabrasion may seem harmless, the behavior actually raises a variety of legal and ethical concerns.

Federal law prohibits physicians from paying another person or entity in exchange for patient referrals, if Medicare or Medicaid covers any of the services that the patient receives. It is possible that physicians' use of Groupon violates this prohibition. By selling the service and giving the physician half the amount, Groupon is essentially making referrals to the physician through the online offer. In exchange, it gets compensation equal to half of the physician's discounted professional fee. The amount that Groupon makes depends on the number of Groupons sold, which is equivalent to the number of referrals made.

Some states, including California, Florida, Illinois, and New York, also have specific prohibitions on physicians offering or accepting a discount, rebate, or fee-splitting arrangement to induce referrals. In offering a Groupon, a physician is doing just that. He or she is participating in a discount and fee-splitting program to encourage referrals from Groupon.

Physician use of Groupons may also violate professional codes of ethics. For example, the American Society of Plastic Surgery prohibits members from paying referral fees or accepting rebates in exchange for referring patients unless the arrangement is disclosed to the patient and not prohibited by state law.

So what does this mean for you?

Both physicians and daily deal buyers should proceed with caution. Consider what the physician is sacrificing financially to offer a Groupon. He or she receives only 25 percent of the normal fee. Think to yourself, "Why is this physician offering such a significant discount? Does he or she not have enough patients without it?"

When you are allowing a physician to perform a medical procedure, even a non-invasive one, on your body, you should strongly consider the quality of their work. Do your research. Google the doctor, check out reviews, and ask around. While it may seem like a good deal at the time, it's not a good deal if the procedure is botched and you are left injured, or if you are required to pay another physician to fix the problem.

So a word of advice to physicians and patients: be careful. If it seems too good to be true, it probably is.