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3 Key Provisions of the Management Services Agreement (MSA) for CPOM-Conscious MSO Arrangements

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Picture of NursesOur healthcare and business law firm often represents medical practices, including primary care practices, specialty practices, and med spas, in the initial set up phase of their practice.  Whether a Management Services Organization (“MSO”) is necessary or advisable for your practice usually requires a detailed review of your business structure and state laws.  If an MSO is advisable for your practice based on the Corporate Practice of Medicine (“CPOM”) doctrine in your state, this post provides 3 key provisions that should be within your Management Services Agreement (“MSA”).  If you have medical practice set up or MSO questions or would like to discuss this blog post, you may contact our healthcare and business law firm at (404) 685-1662 (Atlanta) or (706) 722-7886 (Augusta), or by email, info@hamillittle.com. You may also learn more about our law firm by visiting www.hamillittle.com.

As discussed in previous blog posts, including 2 Facts About Management Services Organizations (MSOs) and Med Spas, Management Services Organizations can be useful in CPOM states to provide all non-medical functions of the business while contracting with the Physician Entity to provide all medical functions. The MSA that outlines this agreement is typically a lengthy and involved document, but here are three key provisions that should be contained within the agreement:

  1. The medical decision-making remains within the physicians at the practice.

This gets to the heart of the CPOM doctrine – states do not want non-physicians making medical decisions.  If your states’ CPOM doctrine makes it advisable to have an MSO, then it is key to ensure physicians are responsible for all medical decision making.  Our firm often advises our clients to go a step further by specifying that the Physician Entity may terminate the MSA at any time if the MSO attempts to interfere with medical decision making.  The Physician Entity may assign to the MSO the functions of paying employee wages, but the ultimate hiring and firing decisions should remain with the physician.

  1. Physicians should be responsible for hiring and firing all clinical staff.

This includes nurse practitioners, nurses, and medical assistants.  All clinical staff should be supervised by the physicians NOT the non-medical MSO.  As such, the MSA should provide that clinical hiring and firing falls under the Physician Entity’s authority.  There may be alternative approaches to this recommendation that may be appropriate in specific situations, but no matter what, the Physician Entity should maintain ultimate authority over who provides medical services.

  1. All revenue for medical services are paid to the medical practice.

Often the MSO arrangement when done for CPOM concerns specifies that all money is paid to the physician entity and then a certain percentage is then paid to the MSO for the functions provided by the MSO.  If the medical practice bills insurers for services, the medical practice generally will contract with the insurers directly.  In that situation, collections should come directly to the Physician Entity.  How the Physician Entity pays the MSO for its functions should be spelled out in the MSA and based on the services the MSO provides.  Furthermore, it is important that the amount paid to the MSO should be negotiated at arms length and represents fair market value.

Keep in mind that if all of these provisions are within the MSA but not actually carried out in practice, then your business may still be at risk of violating your state’s CPOM doctrine.  It is just as important to practice what’s in the MSA as to carefully craft the MSA.

If you have medical practice set up or MSO or would like to discuss this blog post, you may contact our healthcare and business law firm at (404) 685-1662 (Atlanta) or (706) 722-7886 (Augusta), or by email, info@hamillittle.com. You may also learn more about our law firm by visiting www.hamillittle.com.

 

 

*Disclaimer: Thoughts shared here do not constitute legal advice.

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