The Corporate Practice of Medicine doctrine (“CPOM”) generally prohibits non-licensed individuals from practicing medicine or employing physicians to provide medical services. Although CPOM laws vary by state, a general strategy that allows non-physician entities to be involved in health care operations without violating CPOM is to form an MSO structure (sometimes also referred to as a Friendly PC structure), where a non-physician entity provides management services to a physician-owned professional corporation (“PC”). The entities generally institute safeguards to ensure all clinical functions are performed by the PC and only non-clinical services are performed by the management services organization (or “MSO”). In this article, we will refer to a PC/MSO arrangement as an “MSO Entity”.
Where two MSO Entities wish to engage in business with each other, the arrangement may implicate the federal Anti-Kickback Statute (“AKS”), which prohibits remuneration for referrals or the generation of business payable by federal health care programs.
Advisory Opinion 25-03 (“AO 25-03”)
On June 6, 2025, the OIG issued AO 25-03, opining on a proposed arrangement where an MSO Entity (the “Requestors”) would enter into an agreement with other MSO Entities comprised of “Platform MSOs” and “Platform PCs” (together, referred to as “Platform Entities”). The Requestors asserted that Platform PCs do not contract with enough health plans, reducing access to telehealth services from in-network providers, particularly in rural and underserved communities. Therefore, the Requestors proposed to enter into an arrangement where (i) Requestor PC would lease health care professionals (“HCPs”) from a Platform PC, and the leased HCPs would provide telehealth services to Platform patients covered by insurance plans with which Requestor PC maintains a contract; and (ii) a Platform MSO would provide certain administrative services to Requestor PC.
As consideration, Requestor PC would pay an hourly HCP lease fee based on the licensure type of each HCP (“Lease Fee”), as well as a fee for the non-clinical administrative services (“Administrative Fee”, and together with the Lease Fee, the “Service Fee”). Importantly, the OIG emphasized that the hourly HCP Lease Fee would be paid “regardless of whether Requestor PC is ultimately reimbursed by third-party payors for telehealth services…”
The Requestors made certain certifications, including that (i) the methodology for determining the Service Fee would be set in advance, consistent with fair market value, and would not be determined in a manner that takes into account the volume or value of any referrals or business otherwise generated between the parties; (ii) Requestors would not control or influence decisions regarding how to allocate patients that are covered by payor contracts held by both a Platform PC and Requestor PC; and (iii) that the arrangement would meet all elements of the safe harbor for personal services and management contracts and outcomes-based payment arrangements at 42 C.F.R. § 1001.952(d) (the “Safe Harbor”).
OIG’s Analysis
The proposed arrangement initially implicates the AKS because Requestor PC would pay remuneration to the Platform Entities for administrative services and leased employees. However, the OIG opined that the proposed arrangement would meet all conditions of the Safe Harbor. The OIG’s analysis was limited, and largely relied on the Requestors’ certifications that the arrangement would meet each applicable element of the Safe Harbor (e.g., the fees would be in writing and signed by the parties, the methodology for determining each fee would be set in advance and consistent with fair market value, etc.). The OIG noted that structuring the Lease Fee without respect to Requestor PC’s ultimate reimbursement by third-party payors “decreases the likelihood that the Service Fee would be determined in a manner that takes into account the volume or value of any referrals or business otherwise generated between the parties …”
Practical Takeaways
AO 25-03 approves a strategic approach for bridging care gaps through MSO Entity collaboration, and provides an example of how such arrangements, which can be complex involving multiple MSOs and provider entities as parties to leases and administrative services arrangements, can meet the Safe Harbor.
However, as with all OIG advisory opinions, AO 25-03 is specific to the facts of the Requestors’ proposed arrangement and certifications; entities should consult with legal counsel to determine if and how this opinion may be relied upon to assess AKS risk of a proposed arrangement.
For help in understanding the impact of this Advisory Opinion or guidance assessing AKS risk under other MSO arrangements, contact:
- Erin Drummy at 317-977-1414 or edrummy@hallrender.com;
- Chris Eades at (317) 977-1460 or ceades@hallrender.com;
- Michael Fiedler at (248) 457-7810 or mfiedler@hallrender.com; or
- Your primary Hall Render contact.
Special thanks to summer associate Wyatt Poer for his assistance in the preparation of this article.
Hall Render blog posts and articles are intended for informational purposes only. For ethical reasons, Hall Render attorneys cannot give legal advice outside of an attorney-client relationship.
