Management Services Agreement – Critical Insights
When you need to negotiate a management services agreement, you need the help of an experienced attorney to ensure that the document is legally compliant. An experienced Management Services Organization attorney at Innova Health Law can help.
While a business entity may be able to provide crucial services and capital to a medical practice, there are strict legal requirements that govern how they may do so. Specifically, they cannot receive money based on the revenues or profits of the practice. However, it is crucial that you get the agreement right because you may face legal consequences if you are found to have engaged in illegal fee splitting.
Speak to a Management Services Organizations lawyer at Innova Health Law for legal representation in drafting or negotiating this document. We can point out the crucial factors that you need to consider along the way.
Why You Need a Management Services Agreement
A core legal principle of a medical practice is that a non-physician is not allowed to profit from the practice of medicine. It does not mean that there cannot be outside owners of medical practices in any way. However, it does mean that you need a specialized agreement to make this legally possible. A management services agreement (MSA) divides responsibilities between a business entity and a physician-owned practice. The agreement is structured in a way that avoids any issues with the prohibited corporate practice of medicine. Here are some considerations that you need to take into account when negotiating and agreeing to an MSA.
Know Whether You Need an MSA
Typically, both parties to an MSA would know that they need an agreement in place to allow for their relationship. However, there may be gray areas that could make it questionable about whether you need this type of agreement. Any time that two entities, one a physician and one not, are considering any type of business agreement, chances are that you would need an MSA. If you have any doubt, you should consult with a management services agreement attorney to learn whether this document is necessary.
Division of Profits Needs to Be Properly Structured
How your MSA is structured can determine whether you have potential legal issues with improper fee-splitting arrangements. A non-physician cannot directly receive profits from the services provided by a doctor because it may impact decision making. Typically, the legal Arrangement requires some type of management fee for the business entity. This management fee cannot be dependent on the actual revenues of the practice. The management fee would be based on the services that the business entity provides to the practice. Usually, this would either be a flat fee or a cost-plus arrangement.
The Exact Services Need to Be Clearly Defined
The non-physician party to the agreement cannot be providing any medical services themselves. What they do must be limited to management and business type services. There can be no ambiguity or doubt from the agreement as to the exact role that they are playing. The MSA also needs to avoid the topic of clinical services because that can raise red flags for regulators. Further, you need to specify performance metrics, and reporting requirements to lend credence to the legitimacy of the agreement between the two entities.
Know the Risks of Your Particular Arrangement
You cannot enter into a generic MSA that does not account for the specifics of your situation because you could potentially be running afoul of CPOM (corporate practice of medicine rules). The key thing is that you need safeguards in the MSA to ensure that nothing can interfere with the physician’s medical judgment and how they provide the appropriate level of care to their patients.
The actual arrangement that you reach could put you in jeopardy of violating state and federal laws. For example, you may end up with an agreement that could lead to an improper kickback for a referral. You also need to be conscious of the presence of unlicensed individuals, who could potentially lead to closer scrutiny from regulators.
You should always hire an experienced attorney to draft or review an MSA. Not only can your lawyer work to protect your interest, but they could also contribute to the structure of the agreement in a way that reduces your own legal exposure.
Contact Our Management Services Organizations (MSO) Law Firm Today
You can schedule a free discovery call with a management services agreement lawyer at Innova Health Law to discuss your specific circumstances and learn how we can help you. Speak to an MSO lawyer by filling out an online contact form or by calling us today at (281) 936-9904.