Tips about Taking Tips

Posted By Madilyn Moeller, Tuesday, December 14, 2021

Money in a jar on a solid surface

By Patrick O'Brien, JD, Legal Coordinator, American Med Spa Association

The custom of tipping or giving a gratuity is common in many areas of business. Most people are aware of where tipping is expected, including restaurants, taxis, barbershops and salons. But what about medical spas? They may have the feeling of other personal services businesses that welcome tipping, such as salons. However, most medical spas are regulated as medical practices, and there certainly isn't an expectation to give your doctor or nurse a tip when you go in for a checkup. So, does this mean it is illegal, prohibited or just simply not customary? This article will highlight several possible issues surrounding tipping in a medical spa setting.

There are limitless possible hypotheticals about tipping in medical spas, and the applicable laws vary in each state. So, for the purposes of this article, we will assume we are talking about a made-up medical spa where a physician or independent nurse practitioner has examined the patient and orders for a registered nurse (RN) to perform the procedure. The RN is licensed to implement treatment orders from a licensed prescriber but is not licensed to provide the medical procedure on their own. In this case, the patient wants to give a tip to the nurse.

License to Practice

In every state, it is illegal for a person to practice medicine unless they have obtained a medical license. This usually includes prohibiting holding oneself out as practicing medicine and accepting compensation for medical services. In most states, physicians can utilize and direct others to assist them in providing medical services. This is generally true for independent nurse practitioners (NPs) as well. These assistants, whether they are nurses or medical assistants, are not practicing medicine themselves—they are only performing tasks authorized by physician or NPs.

To complicate matters, because tipping isn't a common expectation in medical settings, the RN will probably want to signal in some way that tips are accepted or appreciated. Does putting out a "tip jar" or adding a gratuity line to the credit card receipt mean the RN is soliciting or holding themselves out as accepting payment for medical procedures without a medical license?

Professional Conduct

Physicians and other licensed health care providers are held to ethical practices and codes of professional conduct. They can be disciplined or have their licenses suspended or revoked by medical boards for violating these standards. The specific tenets of these codes vary from state to state, but they usually require the person to use their best professional judgement in their care and treatment of patients, and overcharging or charging an "inappropriate fee" might violate these tenets. Of course, neither the patient or the medical personnel may feel there was anything shady or untoward about giving or receiving the tip, but the issue is how it might look from the outside to an investigator or the disciplinary panel of a medical or nursing board, especially when the practice of tipping is not common in medicine.

Kickbacks and Split Fees

Many states also prohibit certain payment practices that constitute medical kickbacks, fee-splitting or payment for referrals. What exactly qualifies as a prohibited kickback or fee-splitting depends on the language of the state's rules and the specific situation. However, generally, these rules are designed to stop practices that are seen as unethical or clouding the physician's judgment with monetary incentives. These rules are usually written very broadly, so, in addition to stopping direct payments such as a gift card for each patient referred, they also prohibit indirect payments and transfers of non-cash value or benefits. AmSpa members will know this often interferes with bonus and commission programs in medical spas. It is unclear if tipping would also run afoul of these restrictions.

If, after reading this article, you think there seems to be a lot of uncertainty about whether tipping is legal, you would be right. Direct statements, opinions or case decisions from the licensing boards are extremely rare, both because even the possibility of the idea of tipping is very recent and because most medical spas are hesitant to risk being their state's "example case." This hesitancy may also be due to the way the risks and benefits fall. For a medical spa or the supervising practitioner, the decision to allow the employees to solicit and accept tips poses disciplinary risks to their license. They are the ones who would be fined and/or whose licenses would be sanctioned or suspended for violating professional conduct standards or fee-splitting rules.

Unfortunately, the decision to accept tips is not as simple for a medical spa as it is for a barbershop or nail salon. There are many issues and concerns that a medical spa would need to resolve before implementing any type of compensation plan. If you believe your practice may benefit from some sort of incentive compensation plan—such as bonuses, commissions or tips—you will definitely want to consult with an attorney familiar with this area.

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