The Role of the Management Services Agreement (MSA) in CPOM Compliance
Healthcare is a highly regulated industry, and healthcare business leaders must navigate the complexities of the Corporate Practice of Medicine (CPOM) doctrine.
For Professional Corporations, the Management Services Agreement (MSA) plays a pivotal role in structuring collaborations between healthcare professionals and business entities, ensuring that legal boundaries are respected while maintaining operational efficiency.
This blog explores the importance of MSAs in CPOM compliance, their key components, and best practices for drafting effective agreements that support sustainable and compliant healthcare operations.
Understanding CPOM and Its Implications
The Corporate Practice of Medicine (CPOM) doctrine is a legal framework that prohibits non-physicians or corporate entities from owning or controlling medical practices. Its purpose is to preserve the integrity of medical decisions, ensuring they are made by licensed professionals based on patient wellbeing rather than financial incentives.
CPOM laws vary by state, but they generally restrict non-physicians from directly employing physicians or influencing clinical judgment. For healthcare businesses looking to partner with physicians, these regulations necessitate careful planning to avoid violations that could result in hefty fines, license revocations, or business shutdowns.
This is where the Management Service Agreement (MSA) becomes important. It allows a non-physician business entity to provide operational support to a medical practice while ensuring that the physician retains full control over clinical decisions, thus adhering to CPOM laws.
What Is a Management Service Agreement (MSA)?
A Management Services Agreement is a legally binding contract that outlines the relationship between a Professional Corporation (PC) owned by a licensed physician and a Management Services Organization (MSO) or other business entity.
The MSA ensures that while the business entity handles operational aspects, the PC retains autonomy over all clinical matters.
What Is a Management Services Organization (MSO)?
A Management Services Organization (MSO) is a business entity designed to provide non-clinical administrative and management services to healthcare providers, practices, or facilities. By handling essential functions such as billing, human resources, IT, marketing, compliance management, and financial planning, MSOs allow healthcare providers to focus on delivering quality patient care.
MSOs are particularly valuable in navigating complex regulatory landscapes, ensuring operations run smoothly, and scaling healthcare services. While the MSO supports the business side, the clinical decisions remain solely under the healthcare providers' control. MSOs streamline operations and drive sustainable growth.
Under an MSA, the MSO provides non-clinical administrative and operational support, such as:
Billing and coding
Human resources and staffing
Marketing and public relations
Facility management
Procurement of equipment and supplies
IT support, including electronic health records (EHR) systems
Financial management and reporting
This delineation of responsibilities is crucial for CPOM compliance.
The Importance of MSAs in CPOM Compliance
1. Preserving Physician Autonomy
One of the primary goals of CPOM laws is to protect the doctor-patient relationship by ensuring that clinical decisions are made solely by licensed physicians. An MSA explicitly separates clinical and non-clinical responsibilities, making it clear that the MSO cannot interfere with medical judgment or patient care protocols.
2. Ensuring Legal Compliance
An MSA serves as a safeguard against potential CPOM violations. By clearly outlining the roles and responsibilities of both the PC and the MSO, the agreement ensures that the partnership operates within the boundaries of state-specific CPOM laws.
3. Facilitating Collaboration
MSAs provide a structured framework for collaboration, allowing physicians to benefit from professional business management while maintaining control over their practice. This not only supports compliance but also enhances operational efficiency.
4. Reducing Risks
Without an MSA, informal arrangements between PCs and business entities could lead to ambiguities, increasing the risk of legal scrutiny. A well-drafted MSA minimizes such risks by providing clear terms and accountability.
Key Components of an Effective MSA
To ensure that an MSA supports CPOM compliance and operational success, it should include the following elements:
1. Scope of Services
The agreement should detail the non-clinical services provided by the MSO, such as billing, marketing, and facilities management. This ensures clarity and prevents overreach into clinical matters.
2. Separation of Responsibilities
Clearly define the separation of clinical and non-clinical responsibilities. Specify that the PC retains sole authority over medical decisions, including hiring physicians, setting clinical protocols, and determining patient care strategies.
3. Compensation Structure
Outline the financial terms of the agreement, including how the MSO will be compensated for its services. The structure should comply with fair market value to avoid regulatory scrutiny.
4. Compliance Provisions
Include clauses that require adherence to all applicable healthcare laws, including CPOM, HIPAA, and billing regulations. Regular audits or compliance reviews may also be stipulated.
5. Dispute Resolution
Establish a process for resolving disputes that may arise between the PC and the MSO. This can include mediation, arbitration, or other methods to avoid costly litigation.
6. Termination Clauses
Define the conditions under which either party can terminate the agreement, as well as the steps to ensure a smooth transition if the partnership ends.
Best Practices for Drafting MSAs
To ensure that an MSA is both effective and compliant, follow these best practices:
1. Engage Legal Experts
Healthcare regulations are complex and vary by state. Work with legal professionals experienced in CPOM compliance to draft or review your MSA.
2. Conduct Regular Reviews
Healthcare laws and business needs evolve. Periodically review and update the MSA to ensure it remains compliant and aligned with the practice’s goals.
3. Focus on Transparency
Both parties should have a clear understanding of their roles, responsibilities, and expectations. Avoid ambiguous language that could lead to misunderstandings or disputes.
4. Document Everything
Maintain thorough records of the MSA and any amendments or communications related to the agreement. This documentation can be invaluable in the event of legal scrutiny.
5. Create Mutual Trust
A successful MSA relies on a strong partnership between the PC and the MSO. Open communication, shared goals, and mutual respect are essential.
MSAs: A Win-Win Solution
Management Service Agreements are a critical element of effective collaboration between physicians and healthcare businesses. By enabling non-physician entities to provide operational support while ensuring physicians retain clinical control, MSAs strike a balance that respects both regulatory requirements and business needs.
For healthcare businesses, an MSA offers a safe way to comply with CPOM laws. For physicians, it provides the freedom to focus on patient care, knowing that operational demands are being expertly managed.
At Zivian Health, we specialize in helping healthcare providers and businesses structure compliant and effective partnerships. Whether you’re a physician exploring PC ownership or a business seeking to navigate CPOM regulations, we’re here to guide you.
Contact Zivian Health today to learn more about how PC ownership can transform your practice and help you build in healthcare.
