Currently, there is no federal prohibition on general business entities from employing physicians or for physicians to contract with other entities. The practice of medicine as well as the ownership of medical practices is traditionally left under state law. HR 10444 would create a national prohibition on non-healthcare providers from owning a majority interest in medical practices. These types of restrictions are commonly known as the “corporate practice of medicine” doctrine (CPOM). In states that have CPOM, a common and well-established way for non-physicians to work with medical practices is using a management services organization (MSO). MSOs are general business entities that specialize in providing the majority of business services to medical practices. These services can include accounting, payroll, HR, managing inventory, placing advertising, and other administrative functions. HR 10444 would also place substantial restrictions on how the owners and employees of an MSO may interact with the medical.

HR 10444, titled the “Stop Corporate Takeovers of Physicians Act of 2026” would require that all medical entities be majority owned and controlled by physicians. This includes any entities that practice medicine, own or control medical practices, or employ or contract for the professional services of physicians. Non-profits, public health providers, and hospitals are exempt from this requirement.

HR 10444 also provides protections for licensees and employees by banning entities from enforcing restrictive covenants or interfering in the professional judgement or clinical decision making of the licensee. In this case, restrictive covenants includes non-compete, non-disclosure, non-disparagement: these would all be void and unenforceable. These agreements could still be enforced against licensees who own at least 25% of the medical practice.

HR 10444 would also prohibit healthcare providers from being directly or indirectly punished, interfered with, or otherwise direct the professional judgment of clinical decisions. These prohibited actions include: 1) Setting time periods that a patient may be seen. 2) Determining the clinical status of a patient or if they should be admitted, kept in observation, or referred. 3) Specifying how quickly treatment should be initiated. 4) Controlling where patients are referred to on discharge. 5) Having final decision-making authority over diagnosis, terminology or codes that are used in the medical record. 6) Controlling or limiting the range or orders available to a licensee. 7) And any other action that the FTC and Secretary of Health and Human Services determines interferes with or controls the clinical judgment and decision making of the licensee.

HR 10444 also contains substantial restrictions on contracts between medical practices and MSOs. The bill bans straw ownership of medical practice. This means that the owners of medical practices must show meaningful ownership of the medical practice and be present in the state and substantially engaged in delivering medical care at the practice or managing the practice. The bill prohibits a shareholder, director, or officer of a MOS from:

• Controlling or restricting the sale or transfer of a medical practice’s shares, interest, or assets;
• Issuing share or other ownership interest in the medical practice;
• Paying dividends from shares of a medical practice;
• Owning, controlling shares, serving as a director, manager, or officer, being an employee of the medical practice or participating in its management;
• Acquiring share or other ownership interest in a medical practice;
• Entering a contract for management services unless it is an arm’s length transaction at fair market value;
• Advertising for medical services under a name that is not the medical practice.

MSOs may also not control the administration, business, or clinical operations of a medical practice in a way that affects nature or quality of care. This includes decision making authority over hiring, compensation, schedules, disbursement of revenues, negotiating with hospitals, setting staffing levels, or setting the amount of time a licensee can spend with a patient. They are also prohibited from making diagnostic coding decisions, setting clinical standards or policies, setting billing policies, setting prices or rates, or negotiating or performing contracts with third parties.

This bill will also require that the licensed owners of medical practices be both 1) licensed in the state where the entity sees patients and 2) substantially engaged in delivering medical care. In this case, licensees could be physicians as well as physician assistants or advanced practice registered nurses. HR 10444 is intended to set a base line but does not override where the state law is more restrictive. Enforcement of the provisions of HR 10444 would primarily be through the Federal Trade Commission with violations being considered unfair and deceptive acts. The bill also permits state attorney generals to sue under these term and provides a private right of action for anyone harmed by violations of these rules. The private right of action allows the plaintiff to recover treble damages (i.e. triple) and attorney’s fees and costs.

Many states, including Rhode Island, Washington, Vermont, Oregon and California, either had bills or passed laws regarding the scope of MSO practices. This federal bill shares much of the same language and structure as those recent efforts and may be part of a larger national campaign. Often with these types of bills, the restrictions can make it difficult or impossible for compliant MSOs to function effectively. This in turn can shift the administrative, compliance, and business burdens back onto the medical practice. If you would like additional information, to read the language of the bill or to contact the sponsors or committee, you can find the information you need through this link: HR 10444.