Chad D. Ehrenkranz. There are usually exceptions to the corporate practice of medicine prohibitionnotably, for example, the case of hospitals. That is, it cannot provide management services to other occupational therapists. Since California is a state that follows the corporate practice of medicine doctrine, those thinking of practicing medicine or even opening their own practice must be mindful of the roles non-licensed individuals play in the corporation. Legal Intelligencer article by Lamb McErlane PC Health Law Attorneys Vasilios J. Kalogredis and Rachel E. (Lusk) Klebanoff. Ensuring compliance with existing state exceptions to corporate practice of medicine or fee-splitting rules, such as those that exist for nonprofit entities or staffing companies. Additionally, MSOs are used to navigate state "corporate practice of medicine" (CPOM) laws prohibiting non-physician-owned business entities from practicing medicine or employing licensed health care providers. Phone: (404) 685-1662 - Medical Practice Formation :: Atlanta Medical Practice Formation Attorney And yet this same entrepreneur cant be in controlthats what the corporate practice of medicine says. Providing regulatory advice and counsel to platform entities, including management companies, seeking to expand into new jurisdictions or comply with complex or difficult state regulations. The official Administrative Rules are published separately from the law and further clarify the regulations form the OCGA and are specific to the professions licensed by . MSO has no duty to consult with the Professional Medical Corporation/ Practicing Physician, even on an informal basis. Limitations to the Weak Corporate of Medicine Allowance. There are also a lot of subtle layers of influence, as California indicates on its Corporate Practice of Medicine web page, including: These are criteria that Californiaa strong corporate practice of medicine stateuses to assess whether there has been a corporate practice of medicine violation. Most states prohibit the corporate practice of medicine, however, every state provides an exception for professional corporations Healthcare Facilities Exclusive Decisions vested in the MSO has sole responsibility for the decision. Our attorneys understand the high-stakes nature of these prospective ventures and the complex interplay of legal and practical considerations, and regularly work closely with other tax and corporate advisors to ensure that management and related structures address all of their clients legal needs and practical goals. Official Code of Georgia Annotated, Title 43, Chapters 34 and 34A (O.C.G.A. While a physician may consult with unlicensed persons in making the business or management decisions described above, the physician must retain the ultimate responsibility for, or approval of, those decisions. The challenge is that the healthcare venture managed by able healthcare entrepreneurs wants to call the shots . The Corporate Practice of Medicine ICS Staff The general rule in Illinois, as well as in many states, is that physician services may only be provided by physicians, and not by business entities. Digital Health Legal Roadblocks: Is the MSO Structure the Answer to Kickback and Corporate Practice of Medicine Concerns? Seeking the advice of knowledgeable and experienced professionals is imperative before taking any such steps. These "corporate practice" restrictions are imposed by statute in some states, and in others by regulation or case law. The policy expressed in Business and Professions Code section 2400 against the corporate practice of medicine is intended to prevent unlicensed persons from interfering with or influencing the physicians professional judgment. Is your therapy an FDA-regulated medical device? Pennsylvanias corporate practice of medicine doctrine, codified under the Medical Practice Act of 1985 (63 P.S. This means that only 49% of those who own a practice can be non-licensed individuals. Its servants, though professionally trained and duly licensed to practice, owe their primary allegiance and obedience to their employer rather than to the clients or patients of their employer. In OCA, Inc. v. Hodges, 615 F. Supp. Concierge Medical Practices State of Georgia government websites and email systems use georgia.gov or ga.gov at the end of the address. The presence or absence of the appropriate agreements (shareholder control agreement, management service agreement, or employment agreement) can help determine what development is necessary for further consideration. OPEN SESSION Dr. Butler made a motion, seconded by Dr. Weil, to license Dr. Beirne with terms and conditions. For health care investors considering a venture in a health care service that requires professional licensure, consulting with an attorney broadly experienced in the web of state-specific laws and regulations can help ensure efficient platform structuring and enterprise compliance and avoid criminal liability. https://cohenhealthcarelaw.com/michaelhcohen/wp-content/uploads/2022/08/cohen-healthcare-horizontal-2020_v2.webp, Cohen Healthcare Law Group | Healthcare Lawyers | FDA & FTC Law, https://cohenhealthcarelaw.com/michaelhcohen/wp-content/uploads/2018/05/bigstock-modern-business-buildings-6268132.jpg. How Can a Multi-Disciplinary Health & Wellness Platform Handle Legal Risks? The CPOM doctrine varies by each state. Its very much dependent on your exact model. The organizational test requires that a PSC include "organizational language" in an organization's articles of incorporation limiting its purposes to one or more exempt purposes, not expressly empowering it to engage in activities which are not in furtherance of one or more exempt purposes (other than as an insubstantial part of its activities), ensuring that its assets are dedicated to one or more exempt purposes on dissolution, etc. In some states, there are exceptions pertaining to the practice of non-profit organizations. 422.1 et seq. Cosmetics Companies These may include favorable income tax treatment and immunity from certain types of liability. So, what it means is that only doctors can practice medicine. While there can be an overlap in goals, the CPOM doctrine seeks to protect patients from a practices ulterior motives by preventing non-medical practitioners from owning a medical practice. Rul. Failing to do so may result in professional misconduct and/or unlicensed practice of the profession. On a final note, according to CMB, under California Law, the following business or management decisions and activities, resulting in control over the physicians practice of medicine, should be made by a licensed California physician and not by an unlicensed person or entity: Furthermore, the types of decisions and activities described above cannot be delegated to an unlicensed person, including (for example) management service organizations. Generally speaking, each provider submits its own claims and is paid separately for those . Negotiating, or assisting other counsel in negotiating, with lenders and insurance providers concerned about state law and/or corporate practice of medicine compliance. violations of the corporate practice doctrine are based on a case-by-case evaluation of control and dominion in the corporate-physician relationship at lay control of medical judgment and lay exploitation of the practice of medicine, non-physician corporations may provide medical services through employed physicians. Each state has its own laws, of course. The court concluded that the medical practice was essentially under the control of the management company and the physician was a nominal owner; thus, because the medical practice was not legitimately structured, it was not allowed to submit medical insurance claims. In practice, states with CPOM laws permit professional service entities to practice medicine, but only if owned by physicians licensed in that state. A nuanced approached is best, and that is how our healthcare lawyers roll. Epstein Becker Greens state licensure and corporate practice attorneys provide health care investors, companies, and physicians with a thorough and diligent review of applicable state laws, regulations, and board policies. Typically, a corporation or business main goal is to make a profit. Corporate Practice of Medicine Exceptions. Nurse) you cannot open a medical spa on your own, you must have a doctor associated with the medical spa. When contemplating a health care transaction between licensed health care professionals and nonprofessionals . Concierge Medical Practices To get to the prohibition against the corporate practice of medicine (or Corporate Practice of Medicine), you have to put these three sources together. The applicant must describe in detail the methods and procedures through which the exempt parent controls the shareholder. If the MSO is an employer, then the MSO has the right to control its employeesby definition. . What Is the Corporate Practice of Medicine? 1992 Op. If its not Corporate Practice of Medicine, Watch Out for Anti-Kickback Enforcement. 1990 South Bundy Drive Suite 777 Los Angeles, CA 90025 (310) 444-5244. But what does this mean and how far does the practice of medicine doctrine go? Can you get the Priestly Blessing from your Healthcare & FDA Lawyer? Things are state-specific. For example, a hypothetical Professional Medical Corporation named Occupational Therapists For Everyone a Professional Medical Corporation may only provide occupational therapy services. The private physician-patient relationship shall be maintained; and a subscriber shall at all times have free choice of any doctor of medicine, doctor of dental surgery, or podiatrist who is a participating physician in the medical service corporation and who agrees to accept a particular beneficiary as a patient. https://cohenhealthcarelaw.com/michaelhcohen/wp-content/uploads/2022/08/cohen-healthcare-horizontal-2020_v2.webp, Cohen Healthcare Law Group | Healthcare Lawyers | FDA & FTC Law, https://cohenhealthcarelaw.com/michaelhcohen/wp-content/uploads/2014/12/bigstock-doctor-meeting-teamwork-diagno-108851294.png. Sometimes the medical board website spells it out and pulls it all together. Many lawyers say that corporate practice of medicine is dead that this is a new age of healthcare and we no longer need to worry about these old 20th century, or maybe 19th century healthcare rules. University of Maryland Physicians v. Commissioner, T.C. Together with Policy Analysis and Polling, KHN is one of the three major operating programs at KFF (Kaiser Family Foundation). You may access the full text of the Georgia OCGA at site here. The American Health Law Association (AHLA) Corporate Practice of Medicine survey more thoroughly examines the variation of practice restrictions by each state as they relate to behavioral health providers, chiropractors, and other types of health care professionals. The corporate practice of medicine (CPM) rule or doctrine forbids medical management organizations (MSOs) from meddling with and effectively, directly or indirectly, control or in some way influencing, the affairs of medical practice. For example, the California Medical Board says this in its page on Corporate Practice of Medicine: The Medical Practice Act, Business and Professions Code section 2052, provides: Any person who practices or attempts to practice, or who holds himself or herself out as practicing[medicine] without having at the time of so doing a valid, unrevoked, or unsuspended certificateis guilty of a public offense.. Selection, hiring/firing (as it relates to clinical competency or proficiency) of physicians, allied health staff and medical assistants. Similarly, in Allstate Insurance Company vs. Northfield Medical Center, P.C., 228 N.J. 596, 159 A.3d 412 (2017), the New Jersey Supreme Court affirmed a trial courts conclusion that a New York lawyer and a California chiropractor violated the states Insurance Fraud Prevention Act (IFPA) because they promoted and assisted in the creation of a practice structure that was designed to circumvent regulatory requirements with respect to control, ownership and direction of a medical practice.. M&A (Acquisitions & Sales of Healthcare Businesses), Fraud & Abuse (Anti-Kickback, Fee-Splitting, Stark), Management Services Organizations (MSO) Issues, Medical Device & Mobile Medical App Issues, ANTI-AGING & FUNCTIONAL MEDICINE PRACTICES, BEHAVIORAL & MENTAL HEALTHCARE PROVIDERS AND LIFE COACHES, COMPLEMENTARY & INTEGRATIVE MEDICINE PROVIDERS, CONCIERGE & DIRECT PRIMARY CARE MEDICAL PRACTICES, DIETARY SUPPLEMENT & NUTRACEUTICAL COMPANIES, HEALTHCARE FACILITIES (HOSPITALS, LABS, DME, IMAGING), QUICK SUMMARY OF FEDERAL STARK SELF-REFERRAL & ANTI-KICKBACK LAW AND CALIFORNIA SELF-REFERRAL AND FEE-SPLITTING PROHIBITIONS, HOW SUBSTANCE ABUSE TREATMENT CENTERS NAVIGATE ANTI-KICKBACK RULES. 1.5021(b). The rule stated recognizes the necessity of immediate and unbroken relationship between a professional man and those who engage his services.. Dermatology World article by Ruth Carol with contributions from Lamb McErlane PC partner Vasilios Bill Kalogredis, Section 199A and Healthcare Eligibility Depends on Unique Facts, PA Legislators Propose to Ban Non-Compete Agreements in Health Care Practitioners Employment Contracts, Government Liability & Civil Rights Defense, Municipal, Land Use, and Condemnation Law. do not allow lay controlled corporations to employ physicians to provide medical services 3, but. Well, we appreciate the medical board promoting legal services. The answer is invariably nuanced. Professional Medical Corporation or MSO and the level of decision making Authority the Professional Medical Corporation or MSO should exercise: exclusive, consultative, shared or joint. In some states (for example, California), it can be a percentage of gross revenues, whereas in other states (for example, New York), the management fee, at least historically, has had to be a flat fee. Again, these situations are very fact-specific. PSC and Shareholder abide by terms and conditions of an SCA acceptable to Manager. Corporate Practice of Medicine. There are a few exceptions to the CPOM doctrine in Pennsylvania, including practicing medicine through a professional corporation, limited liability partnership, or restricted professional company. Healthcare providers must be careful to comply with the CPOM doctrine because violating these laws could result in a providers loss of license and repayment of all revenue for billed services to patients, insurance companies and the government, as well as other fines and penalties, including potential criminal issues. The Parent limits its stock value to a nominal amount. 1. Pennsylvania also permits health maintenance organizations (HMOs) and licensed hospitals and health care facilities to employ physicians and provide health care services. If you are a tax-exempt entity, you will also want to ensure the compensation reflects fair market value to avoid 501(c)(3) tax issues. Under this doctrine, neither non-physicians nor lay corporations (corporations that are not medical professional corporations) nor limited liability companies (LLC) may contract to provide medical services. Suite #5901 Wilbanks Drive, Norcross, Georgia, 30092 USA [1.770.448.0769]. These documents should have established adequate control by the exempt parent. Board Rules. What is the Corporate Practice of Medicine Doctrine? do permit Professional Service Corporations -- a special type of corporation which must be owned by physicians -- to do so. WE PROVIDE LEGAL STRATEGY & REGULATORY ADVICE TO BUSINESSES THAT ACCELERATE HEALTH AND WELLNESS, Addiction Treatment Centers We have seen many try to navigate the CPOM doctrine waters and not survive the rocky seas. The medical practice was owned by a physician, and the management company was owned by the chiropractor. 3 State law may provide for specific exceptions; for hospitals, for example. Do not hold themselves out to the public generally as being authorized to engage in the practice of the profession for which the . These are mixed questionsin other words, they touch on the medical practice but also require business judgment. The challenge is that the healthcare venture managed by able healthcare entrepreneurs wants to call the shots. Corporate Practice of Medicine Health care investors and health care business companies often look to partner with physicians, dentists, optometrists, therapists, and other licensed professionals. Approving of the selection of medical equipment and medical supplies for the medical practice. States that have a strong Corporate Practice of Medicine (CPM) prohibition will likely regard it as a per se violation of Corporate Practice of Medicine for a company other than a professional medical corporation (PMC) to hire physicians. Atty. 2 These "CPOM" states. Additionally, if you are found guilty of commit-ting a crime, by illegally being involved in the corporate Because of the limitations of the weak Corporate Practice of Medicine model, for some healthcare ventures, it makes sense to use one modelbased on the strong version of Corporate Practice of Medicineacross states. But it is not the law, simply a restatement of what the medical board interprets the law. 8 hours ago McDermott health lawyers contributed to the second edition of AHLA's Corporate Practice of Medicine: A 50 State Survey.Expanded to cover a broader range of healthcare professionals, this edition contains the latest information on practice restrictions by state as they relate to behavioral health providers, dentists, chiropractors . Click here to view the December 1, 2020 Legal Intelligencer article. The Medical Board of California continues to receive complaints and inquiries about the law, and some repeating issues are presented here. The SCA prohibits the shareholder from disposing of the stock without the parents permission. All rights reserved. The statutes require that all of the ultimate beneficial owners of these entities be licensed persons. Is the MSO going too far into medical practice, in the eyes of the regulators who enforce the corporate practice of medicine prohibition? Reg. 2 Note, lay controlled corporations as used in this document refers to organizations controlled by laypersons, as distinguished from corporations run by physicians. The first section of this article explains the constraints on ownership of medical businesses imposed by the corporate practice of medicine doctrine.The second section of the article details the role of the professional medical corporation, which is the only business entity permitted to provide medical services or employ physicians in California. . If you keep reading, California takes the corporate practice of medicine very seriously. 43-34 and 34A) is the statutory authority (law) that establishes the Georgia Composite Medical Board, the Medical Practice Act, and the Patient Right to Know Act (Physician Profile). Then there is often a second set of statutes that talk about the fact that corporations cannot engage in professional practices. [Please note: Board Rules are currently being re-written to comply with changes to the Medical Practice Act that were passed by the Georgia General Assembly during the most recent legislative session and will be updated on the website as changes to the rules are passed.]. La. (42 USC 1320a-7a(b)(1); 42 CFR 1003.102). The MSO model allows non-MD (non-physician) entrepreneurs to create a robust business model for the healthcare venture in which they do not partner or share professional fees with the medical doctors, but rather take an MSO or management fee in exchange for their management and marketing efforts. Medical Groups, Medical Centers 2010 Georgia Code TITLE 43 - PROFESSIONS AND BUSINESSES CHAPTER 11 - DENTISTS, DENTAL HYGIENISTS, AND DENTAL ASSISTANTS . States with a weak Corporate Practice of Medicine prohibition potentially might allow such companies to hire physicians to provide medical services, so long as the contract clarifies that the company cannot interfere with clinical decision-making. Cannabis Ventures Page Last Reviewed or Updated: 05-Oct-2022, Request for Taxpayer Identification Number (TIN) and Certification, Employers engaged in a trade or business who pay compensation, Electronic Federal Tax Payment System (EFTPS), Treasury Inspector General for Tax Administration, Entities Engaged in the Corporate Practice of Medicine. State licensure laws, including fee-splitting and the Corporate Practice doctrine, can complicate that collaboration. Then usually a third set of statutes that deal with who can organize and own a professional corporation. 43-11-17 (2010) . Please enable javascript. Applicable laws implementing the Corporate Practice and fee-splitting prohibitions vary not only state to state, but professional licensure category to professional licensure category. Terms of Use, Disclaimer, and Privacy Policy, sublease space and/or provide equipment (each under a written lease or management agreement with the Professional Medical Corporation). ME-P Publishing. The Idaho Board of Medicine's decision in 2016 to abandon COPM was a much-anticipated development, and is consistent with the trend in other states towards the derogation or outright abrogation of COPM. 3. Rachel E. (Lusk) Klebanoff, Esq. Lets say, for example, compounded skin care creams to treat acne? Professional service corporations, limited liability companies, and registered limited liability partnerships for the practice of medicine--definitions. Of statutes that talk about the Law, and the management company was owned by the exempt parent view December. 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