On September 16, 2026, Congress introduced the Stop Corporate Takeovers of Physicians Act of 2026 (the “Act”), legislation that, if enacted, would establish a federal prohibition on certain corporate ownership and control of medical practices. The proposed legislation would also impose significant restrictions on management services organizations (“MSOs”), potentially requiring changes to existing physician practice ownership, governance, and management arrangements.
This article builds on our earlier analysis of the bill’s core provisions and the California enforcement actions, and focuses on what the proposal could mean for MSO, telehealth, and investor-backed practice structures.
Key Takeaways
- The Act would create a federal corporate practice of medicine (“CPOM”) standard that focuses on actual and contractual control, not ownership alone.
- Common PC-MSO features, including succession rights, MSO decision-making authority, and overlapping leadership, could face new scrutiny.
- Multi-state telehealth companies and investor-backed practices face open questions about physician-owner licensure, presence, and engagement.
- The Act would generally take effect one year after enactment, and it would operate alongside stricter state CPOM laws.
Why the Federal CPOM Proposal Matters Now
CPOM restrictions have historically been governed primarily by state law, with requirements varying considerably across jurisdictions. More than thirty states currently restrict corporate ownership or control of medical practices in some form.
In states with CPOM restrictions, businesses commonly utilize a professional corporation (“PC”)-MSO structure, under which a licensed physician owns and controls the medical practice while an MSO provides non-clinical administrative services such as billing, payroll, technology, and scheduling.
The Act would establish a federal baseline for physician practice ownership and MSO arrangements, potentially affecting structures that are currently permissible under state law. Modeled in part on Oregon’s SB 951, the Act would preserve state laws imposing equal or more stringent requirements. Multi-state organizations could therefore face overlapping federal and state compliance obligations, and arrangements permissible in states with less restrictive CPOM laws could be affected.
The Proposed Act at a Glance
Our earlier article details the bill’s provisions. In short, the Act would restrict MSO ownership, financing, and control of medical practices, require arm’s length MSO agreements with fair market value compensation, limit noncompetes and other restrictive covenants, and authorize enforcement by the Federal Trade Commission (“FTC”), state attorneys general, and private plaintiffs. The requirements would generally take effect one year after enactment.
What Could The Act Mean for Existing PC-MSO Structures?
The Act focuses on actual and contractual control, not ownership alone. As a result, arrangements that appear compliant under existing state CPOM laws could face additional scrutiny under the proposed federal framework.
Several common features of PC-MSO arrangements warrant particular attention:
Ownership Transfers and Succession Rights.
Stock transfer restriction agreements, succession arrangements, and other contractual mechanisms that allow an MSO or investor to influence who owns a medical practice could implicate the Act’s restrictions on controlling practice ownership and transfers. These arrangements are frequently used to maintain continuity when a physician-owner retires, departs, or becomes disqualified. The California Attorney General’s settlement with Carbon Health targeted this type of arrangement, where the MSO could replace the physician-owner but the owner could not replace the MSO.
MSO Governance and Decision-Making Authority.
Overlapping leadership positions and management services agreements (“MSAs”) granting an MSO final authority over budgets, staffing, compensation, pricing, or payor contracting could raise concerns. Although MSOs may continue providing permissible administrative support, the Act would require careful consideration of where ultimate decision-making authority resides.
Multi-State Telehealth Operations.
Telehealth platforms frequently operate through multiple physician-owned professional entities supported by a centralized MSO. The Act’s requirements concerning physician-owner licensure, presence, and substantial engagement in patient care could complicate arrangements involving owners who supervise operations remotely or oversee practices across multiple jurisdictions. The Act’s reference to presence in “a State” where services are furnished also leaves questions regarding its application to multi-state telehealth practices. Although the Act as drafted applies to medical practices and not dental practices, the Aspen Dental complaint, which alleged that the dentist-owner was licensed in California but neither practiced nor resided there, shows how regulators may view remote or nominal ownership.
Investor and Affiliate Relationships.
Private equity investors, pharmacy-affiliated businesses, and other entities that finance or maintain contractual relationships with physician practices would need to evaluate whether their rights constitute prohibited ownership, control, or participation in practice management. Even where investors hold no direct equity in the professional entity, financing arrangements, governance rights, and contractual restrictions could warrant review.
Branding and Patient-Facing Operations.
Telehealth and direct-to-consumer businesses that market professional services under an MSO-owned brand should evaluate whether their advertising, patient communications, and operational workflows accurately distinguish the MSO’s administrative functions from the medical practice’s clinical responsibilities.
Employment and Restrictive Covenants.
Existing agreements with licensed healthcare professionals may require revision, particularly where noncompete, confidentiality, or nondisparagement provisions conflict with the Act’s proposed protections.
Taken together, these restrictions could require more than revisions to an MSA. Organizations may need to reassess their broader corporate structures, including ownership agreements, financing arrangements, governance documents, and operational practices.
Steps MSOs, Telehealth Companies, and Investors Should Consider
Although the Act remains proposed legislation, several of its restrictions reflect requirements already imposed by states with stringent CPOM laws. Accordingly, MSOs, telehealth companies, and investors should consider structuring their arrangements now to comply with existing state requirements while accounting for the proposed federal framework. Doing so may reduce current regulatory exposure and minimize the need for costly restructuring if the Act is enacted. Key considerations include:
Evaluate ownership and governance structures.
Review ownership agreements, succession arrangements, financing documents, and overlapping management roles to identify potential MSO or investor control over professional entities.
Review MSAs and operational authority.
Assess whether contractual provisions or actual business practices grant an MSO ultimate authority over staffing, compensation, billing, pricing, payor contracting, or other practice functions.
Assess physician-owner involvement.
Confirm that physician-owners satisfy applicable licensure requirements, meaningfully participate in patient care, and exercise genuine authority over their practices.
Examine multi-state telehealth arrangements.
Evaluate whether centralized administrative structures and physician ownership arrangements could present issues under the proposed federal requirements.
Review compensation and restrictive covenants.
Assess whether management fees reflect fair market value, agreements are negotiated independently, and restrictive covenants comply with applicable requirements.
Evaluate branding and clinical workflows.
Confirm that marketing materials, patient-facing communications, and operational policies appropriately distinguish administrative support from clinical decision-making.
Frequently Asked Questions About the Proposed Federal CPOM Ban
What is the Stop Corporate Takeovers of Physicians Act of 2026?
The Stop Corporate Takeovers of Physicians Act of 2026 is proposed federal legislation, introduced on September 16, 2026, that would establish a federal prohibition on certain corporate ownership and control of medical practices. It would also restrict MSOs from holding ownership interests in medical practices, financing the acquisition of those interests, or exercising ultimate decision-making authority over key clinical and operational functions. The Act draws substantially from Oregon’s SB 951. It is not currently law. If enacted, its requirements would generally take effect one year later.
Would the Act replace state corporate practice of medicine laws?
No. The Act would establish a federal baseline and preserve state laws that impose equal or more stringent requirements. MSOs, telehealth companies, and investors operating in multiple states would need to comply with both the federal framework and each applicable state’s CPOM restrictions.
How could the Act affect MSOs, telehealth companies, and investors?
The Act focuses on actual and contractual control, not ownership alone, so arrangements that appear compliant under current state law could face additional scrutiny. Areas to review include succession and stock transfer rights, MSA provisions that give an MSO final authority over budgets, staffing, compensation, or payor contracting, overlapping leadership roles, physician-owner licensure, presence, and engagement in multi-state telehealth operations, and investor financing and governance rights. Organizations should also review management fees, restrictive covenants, and patient-facing branding.
How Frier Levitt Can Help
Although the Stop Corporate Takeovers of Physicians Act of 2026 remains proposed legislation, many of its restrictions reflect existing state CPOM requirements. Proactively structuring PC-MSO arrangements to comply with applicable strict CPOM state laws while accounting for potential federal requirements can help organizations mitigate regulatory exposure and minimize the need for costly restructuring if the Act is enacted.
Frier Levitt advises physician practices, MSOs, telehealth companies, and investors on CPOM compliance, corporate structuring, management agreements, and healthcare regulatory matters. To evaluate existing arrangements or develop compliant structures that anticipate evolving federal and state requirements, contact Frier Levitt to speak with experienced regulatory counsel.
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Proposed Federal Legislation Targeting Corporate Ownership and Control of Physician Practices
