As Georgia MSA healthcare attorneys, we are frequently asked about management services agreements, or “MSAs,” as a way to address compliance or business needs. Outside the healthcare sector, there are many contexts in which a management company also known as a “Management Services Organization,” or “MSO,” may provide services to a business under a management services agreement.
Georgia-based Corporate Practice of Medicine Law Firm
The most common reason we encounter discussions about MSAs in the healthcare sector is concern over the potential application of the corporate practice of medicine (CPOM) doctrine to healthcare service models involving non-physician ownership. Many inquiries to our firm stem from what individuals have heard at seminars or from colleagues, rather than from a thorough review of the relevant legal issues.
As with most compliance matters, discussions around MSAs do not typically yield quick or straightforward answers. Instead, management services agreements should be approached with careful consideration of all relevant details, appropriate legal research, and a comprehensive analysis of the associated legal and business risks.
Getting the Conversation Started: A Few MSA Considerations
For those interested in owning or benefiting from a healthcare services business, the need for an MSA often hinges on three key factors: 1) which state’s law applies; 2) the specific services provided; and 3) the business objectives and risk tolerance of the individual or entity seeking guidance. While legal risks can vary by state, many significant issues stem from corporate practice of medicine (CPOM) laws or principles embedded in other compliance regulations that may not explicitly reference CPOM. Examples include anti-kickback laws, fee-splitting laws, and relevant medical practice acts.
Specific facts and the details of applicable laws are crucial. Generally, however, the analysis begins with a fundamental question that underpins many of these laws: Does the arrangement involve commercial incentives that may unduly influence or interfere with medical judgment? The public policy goal of promoting high-quality healthcare drives most CPOM principles. If a business model or arrangement improperly incentivizes medical services in a way that creates an unreasonable risk of overutilization or interferes with a licensed healthcare provider’s independent clinical judgment, a medical board is likely to view it unfavorably. In such cases, if a model or arrangement fails the compliance “smell test,” it may be wise to recalibrate and seek a more compliant approach.
While the application of these laws can sometimes be clear-cut, there is often a considerable amount of gray area involved. Ultimately, your healthcare counsel should provide you with options and a risk assessment, enabling you to make informed business decisions.
Which State’s Law Applies?
Generally speaking, the law of the State in which the services are delivered will be implicated and should apply. Expanding services into multiple states or utilizing telehealth services can raise complex issues under various state laws, necessitating a careful analysis of each jurisdiction’s regulations. It is essential to review CPOM laws in any state where services are being offered. The first step is to determine if a state has a CPOM law or statute. However, the analysis doesn’t stop there. Some states, such as Georgia, may embed CPOM principles within various statutes that do not explicitly reference the term “corporate practice of medicine.”
In reviewing state law, the analysis is not for a “yes” or “no” type answer; instead, the goal is to determine whether—and under what circumstances—a non-licensed individual or entity can own an interest in or profit from a medical practice, clinic, or healthcare services business Sometimes, what appears to be a, “Can I do this?” question should be reframed as, “How can I do this properly?” That is where the MSA typically comes into play, as it can, in many states, provide a compliant way for a non-physician to indirectly share the economic enterprise of a medical practice via a management services organization established with an MSA. Various considerations under state law are discussed in this blog post.
What Services Are Provided?
With the determination of crafting an MSA to address CPOM concerns, it’s important to consider the specific services provided by the business, the licensure of the professionals delivering those services, the scope of practice for those professionals, and the appropriate supervisory role of the MD overseeing the arrangement.
A properly designed MSA will take into account those elements in memorializing a compliant arrangement that squares with applicable state law’s CPOM rules and considerations. The classic MSA arrangement is of course for the non-licensed person/entities to have an ownership interest in the MSO and the clinic or practice to be owned by one or more MDs. In setting up this arrangement, it is crucial to understand that documents other than an MSA may be necessary to properly structure the model. This subject is more fully discussed on our MSO healthcare page.
What Are the Business Objectives and Risk Tolerance of the Person or Entity Who Seeks the Answer?
As with any business decision, specific objectives are crucial. As mentioned earlier, we often find that MSAs are brought to our attention because clients have heard various opinions at seminars. As a result, they perceive they must have an MSA/MSO arrangement. The starting point should always be to answer this question: “Why do you want an MSA?” The specific business objectives of a client should guide a health law attorney’s advice about whether or how an MSA should be utilized.
As to risk tolerance, where the application of the law to specific factual details is clear and in black and white, it is easier to make business decisions. Unfortunately, the CPOM doctrine and all the potential tentacles of its application may, when applied to unique facts and circumstances, land in the gray zone. In an ideal world, the desire for compliance would guarantee a risk-free environment. However, the path to compliance is often complicated. Ultimately, only the business owner can determine what constitutes an acceptable level of business or compliance risk. An honest assessment of one’s own risk tolerance is essential in this decision-making process.
We have advised hundreds of individuals and businesses about maintenance services agreements. Our Georgia healthcare legal practice is multi-jurisdictional and exclusively focused on representing healthcare providers. To schedule a confidential consultation, please email us at info@littlehealthlaw.com or call us at our Atlanta office (404.685.1662) or at our Augusta office (706.722.7886).