How to Work with Healthcare Management Services Agreements

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A management services agreement (MSA) is a contract between two parties for the management of one entity by another. MSAs are more common in the business world than in healthcare. 

A healthcare management services agreement is similar to a business relationship where one company hires another company to manage its employees, finances, and other aspects of its organization. For example, an attorney might hire an accountant to handle their finances or an entrepreneur might hire a marketing firm to promote their products online. In both cases, the person who hires someone else to manage them expects that this other party will provide value.

What is a management services agreement?

A management services agreement is a contract between two parties. The first party (or “Provider”) will provide certain services to the second party (or “customer”). Those services include leadership, governance, administrative support, and strategic planning—basically everything it takes to run a healthcare organization or group including administrative services.

A management services agreement could be used in any setting where one entity needs help managing its operations. For example:

  • A healthcare organization might hire an outside company to provide day-to-day management of its operations. The provider would then have control over all aspects of running the organization: human resources, facilities maintenance and construction, budgeting for supplies and equipment purchases…you name it!
  • A physician practice might use a management service agreement if they want another entity’s expertise in handling billing procedures or hiring employees without having them on payroll at all times. This can help prevent situations where physicians get sued by patients who allege that their medical bills weren’t paid correctly because no physician was technically responsible for them during treatment.”

Do you need a management services agreement?

  • Do you need a management services agreement?
  • If so, what are the benefits of having one?
  • How can you minimize the risk of not having one?

These are important questions for healthcare facilities to consider. Whether or not to work with an outside provider for management services depends on several factors including: your current needs and resources, how much time is required to manage your facilities, and if there are any legal requirements in place that mandate such arrangements. The best way to determine whether it would be beneficial for you is by understanding what types of agreements exist and how they can benefit your organization for any MSO.

What should a management services agreement include?

A management services agreement should be a written contract between the parties. It should contain the names and addresses of all parties, as well as a statement of the scope of services to be provided by each party.

Healthcare Management Services Agreement Checklist:

  • Make sure you have a contract.
  • Make sure the contract is signed by both parties.
  • Make sure the contract is written in plain language that any layperson can understand, not just lawyers and other professionals.
  • Don’t make it too long or too short—the longer, the better (but don’t go overboard).
  • Don’t use legalese or unfamiliar terms that might confuse your readers, especially if they’re not familiar with legal documents, as a rule of thumb.

What are the risks of having a management services agreement?

  • Violation of The Stark Law. Compliance with the Stark Law is a requirement for participating providers to receive reimbursement from Medicare and Medicaid. It prohibits improper referrals of patients between an investor-owned hospital that offers services reimbursed by Medicare or Medicaid, such as physical therapy, nursing home care, or physician services; and an entity providing those same services (such as a management company).
  • Violation of The Federal Anti-Kickback Statute. This law prohibits paying kickbacks in exchange for receiving business referrals from healthcare facilities in order to induce patient referrals for medical services paid for by a federal health program such as Medicare or Medicaid.
  • Violation of The False Claims Act. This law allows whistleblowers who report fraud against the government to collect monetary rewards if their allegations are proven correct through legal action taken by the U.S Department of Justice (DOJ) or other federal agencies investigating fraud committed against them that resulted in monetary damages paid out by taxpayers through public funds used on behalf of beneficiaries within these programs.
  • Violations Of The Anti Kickback Statute: A violation occurs when someone provides something valuable (such as an incentive) in return for receiving referrals from physicians practicing at an HMA facility where they provide medical services under contract during time periods when those physicians are not permitted under state law due to a conflict of interest laws governing patient care decisions made within hospitals run by corporate owners which often result when businesses operate both privately owned facilities while also managing smaller ones owned publicly through contracts awarded based on qualifications alone rather than qualification plus experience
Young Asia female doctor in white medical uniform using clipboard is delivering great news talk discuss results or symptoms with male patient sitting at desk in health clinic or hospital office.

What are the five most common violations under Stark Law?

If you’re unfamiliar with the Stark Law, it was enacted in 1989 to prevent healthcare providers from referring patients for services in which they have a financial interest.

The law takes its name from former Rep. Pete Stark (D-CA), who authored the legislation and originally introduced it in 1981 as part of his omnibus Health Care Finance Reform bill. The main purpose of this law is to ensure that doctors are referring patients based on merit rather than their own personal gain or self-interests. This includes:

  • Kickbacks – Providers should not accept anything of value from vendors or suppliers; this includes gifts and money
  • SelfReferrals – Doctors may only refer themselves for services if they are participating in clinical trials, which must be approved by an IRB; or if they are working at an institution where no other physicians are available (emergency care) in certain health systems.

When are medical services below fair market value or free medical services illegal?

There are a few instances where medical services may be considered illegal.

  • If the value of the service is below fair market value, this might mean that it doesn’t provide adequate compensation to the provider for their time and effort. The patient can still pay for the service, but their payment must cover both the cost of providing care and at least some profit for the doctor or hospital.
  • If a doctor provides treatment without receiving any compensation from any source (such as insurance), that would be considered illegal because doctors aren’t allowed to give away healthcare services under federal law.
  • And finally, if a doctor accepts something else as compensation in exchange for their medical expertise—for example, an item worth less than $50—then they might be in violation of federal law because giving away services in exchange for something else is also prohibited by law under 42 U.S C § 1320a-7b(b)(3).

When can you provide free medical services legally?

You can provide free medical services legally if:

  • The patient is in a medically underserved area.
  • The patient is part of a medically underserved population according to abuse laws.

Get a Medical Management Agreement

The medical management services agreement is an essential part of any healthcare management service arrangement in physician groups. These agreements can be complex, but they’re also vital to make sure everyone involved knows what they’re getting into and how the relationship will work out in practice. Make sure that you have one in place before you begin working with any outside organization—and keep it up-to-date as your business grows!