Structuring an MSO the Right Way: Avoiding Fee-Splitting and Anti-Kickback Risks

Medical practices can benefit from the help that a management services organization can provide in many ways. A management services organization lawyer at Innova Health Law can assist either party to an agreement.

When you are entering into an MSO agreement, there are a number of risks involved. From the provider’s perspective, they run the risk of being found in violation of the law through a fee splitting arrangement or kickbacks. The MSO itself could possibly be cited for unauthorized practice of medicine if it goes beyond its permitted role. It is crucial that the agreement protects both parties from such potential risks.

Schedule an appointment with an experienced management services organization attorney at Innova Health Law to begin to get the legal advice that you need when negotiating and executing this agreement. Otherwise, you could end up in unanticipated legal jeopardy because the agreement has not fully protected you.

Professional medical revenue cannot be split with parties who are not licensed physicians. Those who violate the rules can face the loss of their professional license, steep fines, and even potential criminal charges. However, physicians have the ability to seek administrative and other types of support to allow them to focus on the patient care aspects of their business. They would do this through a Management Services Organization agreement (MSO). It is crucial that this agreement is structured properly to protect physicians from enforcement action. If there are any errors with the agreement, participants may even face charges for paying or taking kickbacks.

Red Flags to Avoid in an MSO Agreement

The increasing entry of private equity into the healthcare space means that MSOs are becoming even more common. This means that there is even more regulatory scrutiny of existing agreements, leading to a greater enforcement risk. When you are structuring an MSO, you need to be mindful of certain red flags that could draw attention from the government or a medical board. These triggers include the following:

• An agreement that gives any non-physician a say in patient care
• When a non-physician has control over hiring doctors
• A non-physician receives a percentage of revenues from an agreement, or they have an uncapped fee
• A provision that pays the MSO before doctors are compensated

Key Factors in Structuring an MSO Agreement

Between the provisions that are needed to protect both parties, and the need to structure any agreement in a way that avoids regulatory scrutiny, it can be quite difficult to negotiate a suitable MSO. You need to pay very close attention to the financial aspects of the agreement, so the end result is not a situation in which there is fee splitting or kickbacks. An experienced management services organizations attorney can help you do this.

The overarching key to the MSO agreement is that it needs to be a flat fee for services that are rendered, as opposed to any arrangement in which the MSO has a direct financial stake in the overall success of the medical practice. The payment to the MSO must be a fixed amount that is not tied to the revenues of the practice. There is a small amount of leeway because the parties can agree to a fixed amount with an additional percentage applied to it.

Any fees in an MSO agreement must be firmly rooted in the reality of the situation. The amount should be supported by a fair market valuation of the services that the MSO is providing. Any type of percentages that are related to the actual revenues of the practice, or increased patient volume, should be strictly avoided.

Further, the parties must be very careful about any role that an MSO would play in financial relationships with patients. To be clear, an MSO is allowed to participate in billing in certain ways. However, the MSO must charge the physician a set rate for its services in this area. The MSO cannot be paid more money based on the success of collections or the amount of revenue that the practice collects. Any control that the MSO has over billing cannot be used to dictate medical recommendations and decisions that the physician makes when treating patients. Preferably, any patient payment should go directly to the practice and not to the MSO for it to be paid off the top. If that is the case, there is a significant risk of a finding of a fee-splitting arrangement.

Contact a Management Services Organization Law Firm

Whether you are a medical practice, or an entity that is seeking to provide services to one, you need legal assistance from an experienced management services organization lawyer to stay on the right side of the law. Speak to an experienced management services organization attorney at Innova Health Law about your particular situation by filling out an online contact form or by calling us today at (281) 936-9904.