There are exceptions to the one field rule, notably in the Moscone Knox Professional Corporations Act, which allows some licensed healthcare professionals to be directors, employees, or shareholders in another professional corporation. For example, what if the telemedicine or digital health venture or mobile app guides the user (aka patient) to a specific pathway of diagnostic tests and/or treatments? a competing practice of medicine with Dr. Parikh . 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. A version of this article was published in The Daily Record on September 8, 2015.. If state law requires the stockholder to have beneficial as well as legal title to the stock, the PSC will probably not qualify for exemption. The corporate practice of medicine (CPM) is a legal doctrine that prohibits companies from profiting from the practice of medicine or directly employing a physician to provide professional medical services. Georgia Dental Law. Title 31, Chapter 33 addresses health records. Private equity and other non-doctor investment in U.S. healthcare has grown significantly over the past decade thanks to investors who have been keen on getting into a large market with potentially high returns. Professional Medical Corporation/ Practicing Physician has no duty to consult with the MSO, even on an informal basis. 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. PSC obtains managers approval of its compensation agreements with physicians. ), is rooted in the Pennsylvania Supreme Court's decision in Neill v. Gimbel Brothers, Inc., 199 A. 4 Although meeting the integral part test suffices for the operating test, traditionally applicants have also provided or been asked to provide information to establish that they also meet the flexible community benefit standard" derived from Rev. Crafting the right plan takes legal experience as well as knowledge of the corporate practice of medicine, anti-kickback and fee-splitting, and other legal pitfalls that can ensnare the healthcare venture. Business Law and Corporate Practice of Medicine . Developing internal policies and procedures, communication materials, job descriptions, and related internal compliance materials regarding compliance with state laws, including corporate practice and the proper role of a management organization. This is not something that should be undertaken casually. Selection, hiring/firing (as it relates to clinical competency or proficiency) of physicians, allied health staff and medical assistants. 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. ME-P Publishing. These documents should have established adequate control by the exempt parent. Section 33-18-17, a statute that deals with nonprofit medical service corporations, states that this statute shall not be construed as authorizing the corporate practice of medicine.. This is typically accomplished by a management services agreement between the Professional Medical Corporation and MSO. As we noted, whenever you find Corporate Practice of Medicine concerns, youre likely to also find state law prohibitions against fee-splitting, kickbacks, conflict of interest, patient exploitation, and so on. In terms of risk mitigation, here some key legal strategies the healthcare venture can bake into its operational plan: Your healthcare lawyer can provide nuanced advice as what is good for business, often is fodder for enforcement; and conversely, what is most compliant, is often neither efficient nor profitable. Broadly speaking, the Corporate Practice doctrine provides that a non-licensed person (or company) should not own or control a professional practice (such as a physician or dental practice), while fee-splitting laws prohibit professionals from sharing or dividing their fees with a non-professional in return for a referral of patients or customers. Although most prohibit it, some have no regulatory statute at all. The corporate practice of medicine doctrine is a medical practice act aimed at protecting patients from deceptive behavior that might come with the private ownership of medical corporations by non-licensed individuals including: The commercialization of the practice of medicine The imbalance between patient obligations and stakeholder obligations Interference of a physicians medical judgment due to outside influences. do permit Professional Service Corporations -- a special type of corporation which must be owned by physicians -- to do so. A majority of states restrict the practice of medicine and dentistry by entities that are not owned and controlled by the relevant licensed professionals. Do not hold themselves out to the public generally as being authorized to engage in the practice of the profession for which the . Similar arrangements are happening in the dental space as well. Guidelines for analyzing professional service corporation cases involving the Corporate Practice of Medicine (CPOM). And our healthcare lawyers have seen a thousand variations. In this way, the Medical Board of California pulls together the various pieces of legislation. For example, a hypothetical Professional Medical Corporation named Occupational Therapists For Everyone a Professional Medical Corporation may only provide occupational therapy services. In simple terms, the CPOM doctrine generally prohibits non-licensed persons, including individuals and business entities, from employing physicians to practice medicine (or dentists to practice dentistry) on their behalf. Gen. Va. 147. However, given the structural complexity of many such medical entities, including MSOs, it is vital to ensure that any corporate/business arrangements comply with the requirements of the CPOM doctrine. As business opportunities abound for both licensed physicians and non-licensed entrepreneurs and investors, in the ownership and operation of ambulatory care facilities, drug treatment facilities, and diagnostic testing facilities, physicians, licensed practitioners, and businesspersons must ensure that the structure of their business complies with the Corporate Practice of Medicine (CPOM . The applicant must ensure that the PSC operates in a charitable manner and remains an integral part of the exempt parent holding beneficial title. 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. The issue of noncompliant ownership structure is state driven. Generally speaking, each provider submits its own claims and is paid separately for those . By Steve Polyakov June 28, 2021, 5:57 PM EDT. The corporate practice of medicine, or CPOM, is a doctrine that's enshrined in many states' laws, either by statute, which is the laws on the books, or by judge-made law case law. California corporate practice of medicine strict prohibition. v. OCA, Inc., 592 F.Supp.2d 906 (E.D. the corporate practice of medicine doctrine. The Parent limits its stock value to a nominal amount. in your telemedicine venture? However, two more recent cases applying Pennsylvania law (albeit by non-Pennsylvania courts), further caution about the structure of these private equity (or other non-licensed entities or people) and medical and dental arrangements. Cannabis Ventures Corporate practice of medicine laws prohibit an entity from providing medical services or employing physicians if non-physicians own it. Ask the Parent of the applicant to provide the following written representations: The Parent's SCA with the physician shareholder is enforceable at law and in equity., The Parent will not suffer or permit the physician shareholder (together with all successors, heirs and assigns of the physician shareholder and all subsequent designees holding the corporation's stock) to financially benefit in any manner, directly or indirectly, from the physician shareholder's legal ownership of the stock of the corporation as the designee and fiduciary of the Parent., The Parent will expeditiously and vigorously enforce all its rights in the shareholder control agreement and will pursue all legal and equitable remedies to protect its interest in the assets and stock of the corporation., Carefully review all organizational documents. Because unlicensed and corporate practice of medicine are considered crimes, its important before starting up any healthcare venture to consult alaw firm that knows the ins and outs of the corporate practice of medicine doctrine. Republish Biotechnology & Life Sciences The statutes require that all of the ultimate beneficial owners of these entities be licensed persons. The corporate practice of medicine doctrine has been shaped over the years by state statutes, regulations, court decisions, attorney general opinions and actions by state medical licensing boards. The crime is designated a felony, punished by a fine of $1,000 per violation or by imprisonment for two to five years, or both. Our state licensure and corporate practice attorneys have counseled clients on a number of aspects of state law, including matters related to: Representation in Joining a Practice Management Platform, Epstein Becker Green Successfully Advises on Regulatory Issues for Mental Health Platform, Epstein Becker Green Announces 2023 Promotions, Epstein Becker Greens Lasting Support of AHLA Recognized in 2022 Top Honors and New Leadership Positions, Sarah Hall, Elena Quattrone Quoted in Conflicting State Laws and Unpredictable Enforcement Await Providers in Post-, Anjana Patel Quoted in How Group Practices Can Plan for Partial Retirements, Epstein Becker Green Welcomes Glenn Prives, Health Care and Corporate Attorney, Health Care & Corporate Law Attorney Glenn P. Prives Joins Epstein Becker Green. "Georgia has formally prohibited corporations from employing such licensed practitioners as orthodontists under a corporate practice of medicine, or dentistry, . How Can a Multi-Disciplinary Health & Wellness Platform Handle Legal Risks? legally may provide medical services except under the supervision, control and responsibility of a licensed physician. Rul. However, they can own a management entity which can serve as an administrative and non-medical, management services organization (MSO) for the clinic or medical practice, which is frequently organized as a professional medical corporation (Professional Medical Corporation). Cases can be interpreted as limited to its facts, or otherwise legally ambiguous; so much depends on the overall situation and what harms the State perceives in the arrangement and immediate facts, and, there is always enforcement discretion. The rule stated recognizes the necessity of immediate and unbroken relationship between a professional man and those who engage his services.. There can, and the heart of a CPOM case is a demonstration that the PSCs physician shareholder or shareholders are subject to stringent restrictions on their activity to the point where a separate 501(c)(3) exempt organization exercises effective control in all respects over the PSC. Partner | Another risk is fee-splitting, which many states prohibit to reduce the likelihood that unnecessary medical services will be provided to maximize income. Neither Party May Solely Make Ultimate Decision Both the Professional Medical Corporation/ Practicing Physician and the MSO must agree when making a decision. If its not Corporate Practice of Medicine, Watch Out for Anti-Kickback Enforcement. The corporate practice of medicine doctrine (CPOM) is a complex ruling that can easily result in legal problems if not followed accordingly. What Is the Corporate Practice of Medicine? Title 32 32-1454, 1455 (authorizing injunction against practice of medicine by one not licensed to practice or not exempt from licensing requirements) A.R.S. Navigating New York Laws On Corporate Practice Of Medicine. Concierge Medical Practices COPM is an antiquated doctrine that has no sound basis in public policy, no firm basis in Idaho law, and has been widely . billing and collecting on behalf of the Professional Medical Corporation. Providing advice to management companies and related platforms regarding state limitations on covenants not to compete and other professional employment considerations. Performing pre-investment evaluation and due diligence, and, where necessary, amending or restating all documents related to Friendly PC or Captive PC arrangements, including entity formation documents, management agreements, continuity agreements, employment agreements, and lending or leasing agreements. objects in mirror may be closer mandela effect . So, what it means is that only doctors can practice medicine. The "corporate practice of medicine" doctrine restricts the types of healthcare businesses non-physicians can own, but with MSO agreements and appropriate legal guidance, entrepreneurs have an . 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. These criteria also show the slippery slope and how enforcement in other states can potentially look to find intrusion by the MSO or healthcare venture into the medical doctors domain. Contact us online or call us today for more information on how the CPOM Doctrine impacts your existing or emerging practice. It is important that practices are informed of these regulations from the start of their business operations to ensure they are not engaging in fraud or other illegal activities. (Bill) Kalogredis, Esq. Medicare/Medi-Cal Audits, Appeals and Overpayment Disputes, Moscone-Knox Professional Corporation Act, majority of the shareholders must be licensed. Biotechnology & Life Sciences Rul. Call 1-800-GEORGIA to verify that a website is an official website of the State of Georgia. KHN (Kaiser Health News) is a national newsroom that produces in-depth journalism about health issues. An official website of the State of Georgia. Digital Health Legal Roadblocks: Is the MSO Structure the Answer to Kickback and Corporate Practice of Medicine Concerns? 1. Nurse) you cannot open a medical spa on your own, you must have a doctor associated with the medical spa. 422.1 et seq. The MSO is paid a fee for providing these services to the medical practice, which should be fair market value and commercially reasonable for the services provided. Official Code of Georgia Annotated, Title 43, Chapters 34 and 34A (O.C.G.A. MSO has no duty to consult with the Professional Medical Corporation/ Practicing Physician, even on an informal basis. Medical Management (MSOs) 2010 Georgia Code TITLE 43 - PROFESSIONS AND BUSINESSES CHAPTER 11 - DENTISTS, DENTAL HYGIENISTS, AND DENTAL ASSISTANTS . InNeill, the Pennsylvania Supreme Court ruled that a corporation is prohibited from engaging in the practice of optometry and may not employ optometrists for the rendering of such services to the public. (42 USC 1320a-7a(b)(1); 42 CFR 1003.102). The decisions described below are examples of some of the types of behaviors and subtle controls that the corporate practice doctrine is intended to prevent. While California law does allow a percentage of gross revenues under certain conditions, generally, percentages raise enforcement issues. Corporate Practice of Medicine Exceptions. There are many benefits to operating a business in a corporate form. 3. A corporation entering into a transaction for a physician's services should fully explain that any existing quality assurance, utilization review, capitation/bonus arrangement, or similar plan should not be interpreted to impede or interfere with the independent medical judgment of the physician in treating patients. Board Rules. The challenge is that the healthcare venture managed by able healthcare entrepreneurs wants to call the shots . The state-level laws governing the conduct of licensed professionals and their investors or partners may appear in general laws, criminal laws, common or judge-made law, corporate formation requirements, Attorney General opinions, professional licensing laws or rules, or even in informal announcements or contested case determinations of applicable licensing boards. PSC ensures that all outstanding shares are at all times owned by a licensed physician employed by Manager or its affiliate. Memo 1981-23 (1981), Corporations that employ physicians to provide medical services are engaged in the corporate practice of medicine.1 Several states restrict the practice of medicine by lay controlled corporations.2 These CPOM states. And yet this same entrepreneur cant be in controlthats what the corporate practice of medicine says. So if you ask, if enforcement possible, the answer is, YES. 2016 BOM Decision. State law prohibitions against corporate practice of medicine come in to flavors: The distinction between the strong and weak versions can be particularly important when designing an MSO (management services organization) structure. Pennsylvanias corporate practice of medicine doctrine, codified under the Medical Practice Act of 1985 (63 P.S. Manager (i.e., Parent) exercises control of all business aspects of the PSCs operations. State licensure laws, including fee-splitting and the Corporate Practice doctrine, can complicate that collaboration. Subsequent case law is sparse and other authorities provide limited guidance on the applicability of the CPOM doctrine. The above are in the domain of the medical doctor and cannot be intruded upon by the MSO. The intent of the doctrine was to ensure that only licensed medical professionals delivered medical care and that lay persons and entities not influence treatment decisions. Washington, DC, Partner | The PSC and the Parent should have safeguards in place to ensure that compensation of physician employees is reasonable. Under the auspices of protecting the public, the American Medical Association (AMA) promulgated the initial version of the CPOM doctrine. KFF is an endowed nonprofit organization providing information on health issues to the nation. Carefully review the state law when performing a field examination of an entity that is engaged in CPOM. Reg. This ban on the corporate practice of medicine (CPM) . Exclusive Decisions vested in the MSO has sole responsibility for the decision. Pennsylvania also permits health maintenance organizations (HMOs) and licensed hospitals and health care facilities to employ physicians and provide health care services. . The management fee must be at fair market value. The roles played by these agreements may vary from applicant to applicant. However, court decisions and Attorney General Opinions have Are you handling corporate practice of medicine, licensing, fee-splitting . 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. Section 43-34-39 provides that the state medical board, in addition to any other remedy or criminal prosecution (emphasis added), may file a complaint to the superior court and seeking a restraining order and an injunction against any person, firm, company, partnership, association, or corporation or the agent, officer, or director of such firm, company, partnership, association, or corporation who is or has been violating any state law relating to the practice of medicine. Following a model known as Practice Perfect, a New Jersey chiropractor incorporated a management company and a medical practice. How Can a Multi-Disciplinary Health & Wellness Platform Handle Legal Risks? The corporate practice of medicine doctrine is a medical practice act aimed at protecting patients from deceptive behavior that might come with the private ownership of medical corporations by non-licensed individuals including: The answer is invariably nuanced. Search Georgia Code. rlusk@lambmcerlane.com. Again, these situations are very fact-specific. Digital & Mobile Health Companies Private equity and other nondoctor investment in U.S. health care has grown significantly over the past decade thanks to. Joshua Kaye. There are usually exceptions to the corporate practice of medicine prohibitionnotably, for example, the case of hospitals. In the eyes of the law, the services offered by a managed care company can blur the distinction between professional judgment and utilization review. The applicant must describe in detail the methods and procedures through which the exempt parent controls the shareholder. Strong v. Weak Corporate Practice of Medicine States. But even states that abide by the Corporate Practice of Medicine doctrine might have allowable exceptions. In fact, the legislative intent of each of these laws is to authorize only licensed persons to render professional services through these types of entities. Note, however, that this Issue Snapshot will focus on the Corporate Practice of Medicine by organizations formed as corporations. 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. With the rise of private equity investments, medical practices should be mindful of their business structure and the role those without a medical license are playing in it. 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