Regulations
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The Corporate Practice of Medicine (CPOM) doctrine is a critical legal consideration for clinicians opening or operating a healthcare practice. CPOM laws protect patient care by ensuring that licensed medical professionals—not corporations or business partners—have control over clinical decisions. For clinicians aiming to open or manage a practice, understanding and adhering to CPOM laws is essential to prevent regulatory risks and safeguard patient trust. This guide provides a practical, nuanced approach to CPOM compliance and explains what clinicians, especially non-physician clinicians, need to know.
Disclaimer: This is for educational purposes only and does not constitute legal advice. For personalized guidance on CPOM compliance, consult with a qualified attorney familiar with healthcare law and regulations in your state.
1. Corporate Practice of Medicine (CPOM): CPOM laws restrict non-licensed individuals and corporations from owning or controlling medical practices to ensure that only licensed healthcare providers can make medical decisions.
2. Management Services Organization (MSO): An MSO is a separate business entity that handles non-clinical tasks (e.g., billing, HR, marketing) for a medical practice. It allows clinicians to focus on patient care while MSOs handle the business side without influencing clinical decisions.
3. Clinical vs. Non-Clinical Decisions: Clinical decisions directly relate to patient treatment and outcomes and should be made solely by licensed providers. Non-clinical decisions involve administrative tasks like marketing, scheduling, and finances.
4. Ownership Structure: The legal structure of a practice—often requiring that licensed physicians are the primary owners to comply with CPOM.
5. Practice Authority Laws: These state-specific laws determine whether non-physician clinicians, like Nurse Practitioners (NPs) or Physician Assistants (PAs), can own a practice or must operate under a physician’s supervision.
How CPOM Applies to Nurses and Practices
For clinicians—whether you’re a physician, NP, or PA—CPOM compliance shapes how you structure, own, and operate your practice. Compliance requirements vary by state but generally focus on:
Understanding these requirements—and ensuring that your practice is set up accordingly—can protect your license, maintain patient trust, and prevent costly legal consequences.
A Checklist for CPOM
This compliance checklist guides clinicians through the essential steps to achieve and maintain CPOM compliance. Each step is designed to help you avoid common pitfalls and establish a legally sound practice.
1. Check State CPOM and Practice Authority Laws
2. Verify Your Practice’s Ownership Structure
3. Consider Using an MSO for Non-Clinical Tasks
4. Set Up Clear Boundaries Between Clinical and Non-Clinical Tasks
5. Structure Your MSA for Compliance
6. Separate Financial and Clinical Authority
7. Create Defined, Non-Clinical Roles for Administrative Staff
8. Retain Physician Oversight in All Agreements
9. Keep Thorough Documentation of Compliance Steps
10. Secure HIPAA-Compliant Data Storage for Patient Records
11. Define Clinical vs. Non-Clinical Decision-Making Protocols
12. Keep Business Interests Separate from Patient Care
13. Use Transparent Management Agreements
14. Regularly Update Your CPOM Compliance Policies
15. Educate Staff on CPOM Compliance
16. Write Detailed Protocols for Staff Roles
17. Restrict Non-Physician Executives to Business Roles
18. Prioritize CPOM Compliance in Your Policies
19. Conduct Regular CPOM Audits
20. Maintain Physician-Led Clinical Care
1. What is the 51% rule in CPOM compliance?
The 51% rule in some CPOM states requires that a licensed physician (or group of physicians) own at least 51% of a medical practice, ensuring they hold majority control. This rule helps keep clinical decision-making in the hands of medical professionals rather than business partners or corporations.
2. Do I need an attorney to create a Professional Corporation (PC) agreement?
It’s highly recommended to consult with an attorney familiar with healthcare law and CPOM regulations to create a PC agreement. Here are some options:
3. What’s the role of an MSO in CPOM compliance?
An MSO can handle non-clinical aspects of a practice, such as billing or HR, helping to keep clinical decisions separate from business interests. This separation supports CPOM compliance.
4. Do CPOM regulations vary by state?
Yes, CPOM regulations vary widely. Some states have strict CPOM rules, while others have more flexibility, especially for non-physician clinicians like NPs.
5. Why is documentation important for CPOM compliance?
Thorough documentation helps protect your practice by showing proof of compliance and may serve as evidence if your clinic faces an audit.
To ensure your clinic remains CPOM-compliant, here are the top questions to ask yourself and your team:
Here are more resources to help you as you learn more about CPOM.
The Corporate Practice of Medicine (CPOM) doctrine is a critical legal consideration for clinicians opening or operating a healthcare practice. CPOM laws protect patient care by ensuring that licensed medical professionals—not corporations or business partners—have control over clinical decisions. For clinicians aiming to open or manage a practice, understanding and adhering to CPOM laws is essential to prevent regulatory risks and safeguard patient trust. This guide provides a practical, nuanced approach to CPOM compliance and explains what clinicians, especially non-physician clinicians, need to know.
Disclaimer: This is for educational purposes only and does not constitute legal advice. For personalized guidance on CPOM compliance, consult with a qualified attorney familiar with healthcare law and regulations in your state.
1. Corporate Practice of Medicine (CPOM): CPOM laws restrict non-licensed individuals and corporations from owning or controlling medical practices to ensure that only licensed healthcare providers can make medical decisions.
2. Management Services Organization (MSO): An MSO is a separate business entity that handles non-clinical tasks (e.g., billing, HR, marketing) for a medical practice. It allows clinicians to focus on patient care while MSOs handle the business side without influencing clinical decisions.
3. Clinical vs. Non-Clinical Decisions: Clinical decisions directly relate to patient treatment and outcomes and should be made solely by licensed providers. Non-clinical decisions involve administrative tasks like marketing, scheduling, and finances.
4. Ownership Structure: The legal structure of a practice—often requiring that licensed physicians are the primary owners to comply with CPOM.
5. Practice Authority Laws: These state-specific laws determine whether non-physician clinicians, like Nurse Practitioners (NPs) or Physician Assistants (PAs), can own a practice or must operate under a physician’s supervision.
How CPOM Applies to Nurses and Practices
For clinicians—whether you’re a physician, NP, or PA—CPOM compliance shapes how you structure, own, and operate your practice. Compliance requirements vary by state but generally focus on:
Understanding these requirements—and ensuring that your practice is set up accordingly—can protect your license, maintain patient trust, and prevent costly legal consequences.
A Checklist for CPOM
This compliance checklist guides clinicians through the essential steps to achieve and maintain CPOM compliance. Each step is designed to help you avoid common pitfalls and establish a legally sound practice.
1. Check State CPOM and Practice Authority Laws
2. Verify Your Practice’s Ownership Structure
3. Consider Using an MSO for Non-Clinical Tasks
4. Set Up Clear Boundaries Between Clinical and Non-Clinical Tasks
5. Structure Your MSA for Compliance
6. Separate Financial and Clinical Authority
7. Create Defined, Non-Clinical Roles for Administrative Staff
8. Retain Physician Oversight in All Agreements
9. Keep Thorough Documentation of Compliance Steps
10. Secure HIPAA-Compliant Data Storage for Patient Records
11. Define Clinical vs. Non-Clinical Decision-Making Protocols
12. Keep Business Interests Separate from Patient Care
13. Use Transparent Management Agreements
14. Regularly Update Your CPOM Compliance Policies
15. Educate Staff on CPOM Compliance
16. Write Detailed Protocols for Staff Roles
17. Restrict Non-Physician Executives to Business Roles
18. Prioritize CPOM Compliance in Your Policies
19. Conduct Regular CPOM Audits
20. Maintain Physician-Led Clinical Care
1. What is the 51% rule in CPOM compliance?
The 51% rule in some CPOM states requires that a licensed physician (or group of physicians) own at least 51% of a medical practice, ensuring they hold majority control. This rule helps keep clinical decision-making in the hands of medical professionals rather than business partners or corporations.
2. Do I need an attorney to create a Professional Corporation (PC) agreement?
It’s highly recommended to consult with an attorney familiar with healthcare law and CPOM regulations to create a PC agreement. Here are some options:
3. What’s the role of an MSO in CPOM compliance?
An MSO can handle non-clinical aspects of a practice, such as billing or HR, helping to keep clinical decisions separate from business interests. This separation supports CPOM compliance.
4. Do CPOM regulations vary by state?
Yes, CPOM regulations vary widely. Some states have strict CPOM rules, while others have more flexibility, especially for non-physician clinicians like NPs.
5. Why is documentation important for CPOM compliance?
Thorough documentation helps protect your practice by showing proof of compliance and may serve as evidence if your clinic faces an audit.
To ensure your clinic remains CPOM-compliant, here are the top questions to ask yourself and your team:
Here are more resources to help you as you learn more about CPOM.
Fatima, MS, MBA, is a healthcare and tech leader specializing in clinical operations, health tech, and business strategy. She bridges the gap between clinical expertise and technology, empowering practitioners and physicians to collaborate seamlessly. With experience at Cleveland Clinic, she champions autonomy in healthcare, ensuring providers can deliver the best care while managing their own practices.
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