The hardest question in MSO structuring is not whether the management company may exist. It is where management ends and control of the practice of medicine begins. Most states leave that boundary to case law and inference.
Vermont’s § 9772, enacted by H.583, draws it. The section’s stated purpose is to ensure that clinical decision making and treatment decisions are exclusively in the hands of health care providers, and to safeguard against non-licensed individuals or entities exerting influence or control over health care delivery. It then lists what a private equity group or hedge fund involved with a Vermont health care facility may not do.
Interference with provider judgment
A covered entity may not interfere with the judgment of health care providers in making health care decisions, including:
- determining which diagnostic tests are appropriate for a particular condition;
- determining the need for referrals to or consultation with another provider;
- determining the patient’s care plan, including the treatment options available to the patient;
- determining how many patients a provider shall see in any given period, or how many hours a provider shall work.
That fourth item is the one that surprises people. Throughput and scheduling targets are usually filed under operations. Vermont files them under clinical judgment.
Controls that may not be exercised or delegated
Nor may a covered entity exercise control over, or be delegated the power to do, any of the following:
- setting clinical standards or policies, including clinical staffing levels;
- controlling or otherwise determining the content of patient medical records;
- hiring or firing health care providers, clinical staff or medical assistants based in whole or in part on clinical competency or proficiency;
- setting the parameters for contracting with third-party payers;
- setting the prices, rates or amounts charged for a provider’s services;
- setting the clinical competency parameters for contracting with other providers;
- making decisions regarding the coding and billing of diagnoses and procedures;
- selecting or approving the selection of medical equipment and supplies.
Why use this list outside Vermont
Because it is the clearest published articulation of what regulators mean by improper control, and because most of the items are things a typical management agreement quietly grants. Coding and billing decisions, equipment selection and price setting are on nearly every MSO’s services schedule.
That does not make those agreements unlawful elsewhere. It does mean that if your structure would fail Vermont’s list, you should know that deliberately rather than by accident — and you should expect other states to keep moving in this direction. Oregon and California already have.
A practical exercise
Take your management services agreement, put the fourteen items above beside it, and mark each one: granted, silent, or expressly reserved to the clinical entity. The “silent” column is where the work is, because silence in an agreement tends to resolve in favour of whoever is actually doing the thing.
Then check the result against your 1 March 2027 Green Mountain Care Board filing, since the two arrive together.
Related reading
Frequently asked questions
What does Vermont § 9772 prohibit?
Interference by a private equity group or hedge fund with providers’ health care decisions, and the exercise or delegation of a list of enumerated operational controls.
Does it apply to all MSOs?
Section 9772 is directed at private equity groups and hedge funds involved with health care facilities. The enumerated list is nonetheless a useful benchmark for any management agreement.
Are scheduling targets covered?
Yes. Determining how many patients a provider sees in a period, or how many hours they work, is listed as interference with provider judgment.
Is equipment selection covered?
Yes. Selecting or approving the selection of medical equipment and supplies is on the prohibited-control list.
General information about Vermont law, not legal advice. Confirm your obligations with counsel licensed in Vermont.