Management Services Agreements

Management Services Agreements

Texas Healthcare Lawyers Serving Medical Providers Nationwide

Management services agreements (MSAs) offer healthcare providers many benefits, including streamlined efficiency and more time for physicians to focus on practicing medicine, while giving non-physicians an opportunity to participate in the booming healthcare market.

Physician and contractor relationships can also introduce unique issues when it comes to state and federal healthcare laws, including prohibitions against self-referrals and fee splitting and Texas' corporate practice of medicine doctrine.

Because violations of healthcare laws can jeopardize the futures of medical professionals and practices – from creating exposure to costly and time-consuming audits to high-stakes matters involving fraud investigations and license investigations – ensuring regulatory compliance in any management services agreement is of the utmost importance.

Need to discuss a management services agreement or another health or medical law issue? Call (713) 909-7323 to speak with our award-winning attorneys at Hendershot Cowart P.C. during an initial consultation.

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What Is a Management Services Agreement?

A management services agreement, or medical services agreement, is a legal agreement between a physician-owned healthcare company and a management services provider, commonly referred to as a management services organization. 

While the healthcare entity provides medical care to its patients, the management services organization agrees to provide non-medical services to the physician group. The goal of an MSA is to enhance the operational efficiency, financial performance, and overall success of the healthcare organization through specialized management expertise and support.

What Is the Difference Between a Management Services Agreement and Management Services Organization?

A management services agreement is a legal contract. A management services organization is one of the two parties legally bound by the management services agreement. The other party is generally a physician practice. 

How Does a Management Services Agreement Work?

A management services agreement is an independent contractor arrangement between a physician practice and a management company or MSO. The physician practice – whether it’s a general practice, specialty group, or a med spa – controls the provision of medical care. The management services organization provides non-clinical back-office support. 

A management service agreement allows non-physicians to participate in the day-to-day operations of a medical clinic without violating Texas’ Prohibition against the Corporate Practice of Medicine, while the physician practice benefits from professional management services. 

Typical management services provided through a management services agreement may include:

  • Billing and collections
  • Financial management
  • Employment and management of non-clinical staff
  • Lease or sublease of a practice’s offices (for lease management, maintenance, or janitorial services)
  • Purchase of medical and office supplies
  • Branding and marketing – In many cases, the MSO will own the brand and license it to the physician practice. 
  • IT services
  • Regulatory compliance support

What Is the Typical Duration of a Management Services Agreement?

The typical duration of an MSA is one to two years with automatic one-year renewals, although the specific terms and scope of a management services agreement vary based on the needs and preferences of the parties involved. 

Here are a few common provisions you might find in a typical MSA in the healthcare industry:

  • Term and Termination: This provision specifies the duration of the agreement, including the start date and the end date or conditions for renewal. It also outlines the circumstances under which either party can terminate the agreement, such as breach of contract, non-performance, or mutual agreement.
  • Services and Responsibilities: This provision details the specific services that the MSO will provide to the healthcare organization.
  • Compensation and Payment: This provision addresses the financial aspect of the agreement. It specifies how the MSO will be compensated, whether it's a fixed fee, a percentage of revenue, or another agreed-upon structure. 
  • Confidentiality and Data Security: Given the sensitive nature of healthcare information, this provision ensures that the MSO maintains strict confidentiality and security standards for protected health information (PHI) and other proprietary data. It may include provisions for data breach notification, HIPAA compliance, and adherence to applicable privacy and security regulations.
  • Intellectual Property and Ownership: This provision clarifies the ownership of any intellectual property assets used or developed during the agreement. It may also include a licensing agreement granting use of the management’s company logo, trademark, and other brand elements.
  • Dispute Resolution: This provision establishes the mechanism for resolving disputes between the parties, such as mediation, arbitration, or litigation. It may also include provisions for governing law and jurisdiction.

Medical Management Services Agreements and Regulatory Implications

In a regulatory landscape as stringent, dense, and confusing as healthcare, ensuring compliance is one of the most important facets of any successful healthcare practice. This is especially true when it comes to the contractual relationships providers form with others and their compensation arrangements for paying them. These relationships can create implications which may subject providers to increased scrutiny, oversight, investigation, and even liability in relation to waste, fraud, and abuse.

  • Anti-Kickback Statute – Certain types of agreements between physicians and MSOs may violate the federal Anti-Kickback statute, which creates criminal liability for willfully and knowingly soliciting or receiving remuneration for referring services paid for by a federal or state healthcare program. In order to ensure any arrangement for medical management services are not subject to enforcement and penalties, providers need to ensure they fit within a “safe harbor,” or exception defined by law. Management services agreements, therefore, must meet all requirements of the relevant safe harbor in order for the exception to apply. This can include having written agreements that specify services to be provided, remain in effect for at least one year, sets compensation in advance based on fair market value, and not involve any services for promoting a business in violation of federal or state law, among other requirements.
  • Stark Law – The Stark Law, or self-referral law, prohibits referrals of designated health services to any entity with which a provider has a financial relationship. Because Stark Law violations can have substantial consequences for practitioners (including civil fines and provider exclusion), any agreements involving compensation arrangements (such as for management services) need to also fit within an exception defined by law, and providers must meet statutory definitions of a group practice.

Our firm assists clients in evaluating, drafting, negotiating, and implementing medical contracts involving management services and all other types of compensation arrangements and relationships so as to ensure regulatory compliance. Often, this requires a meticulous review of the circumstances, as well as ensuring arrangements meet all requirements of any applicable safe harbor or exception.

Comprehensive Counsel for Healthcare Providers

Hendershot Cowart P.C. has earned national recognition for our work in medical and healthcare law, and for providing the proactive counsel healthcare providers need when it comes to:

Our firm also leverages over 100 years of collective experience to provide responsive representation in time-sensitive matters when providers face audits, investigations, and potential penalties over alleged healthcare fraud. With our comprehensive approach to protecting the rights and futures of our clients, and our depth of experience and resources, we have become a law firm known for our ability to handle even the toughest and most challenging healthcare legal and regulatory issues.

To discuss your needs and our firm’s services, call (713) 909-7323 or contact us online today.

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