§ 676.555 — Management services organizations; prohibitions; exemptions; contracts; violations

Oregon § 676.555

• Jurisdiction: Oregon
• Vol.: 17
• Title 52: Occupations and Professions
• Ch. 676: Health Professions Generally

Text

(1) As used in this section:
(a) “Affiliate” means a person that controls, is controlled by or is under common control with another person.
(b) “Management services” means services for or on behalf of a professional medical entity that include:
(A) Payroll;
(B) Human resources;
(C) Employment screening;
(D) Employee relations; or
(E) Any other administrative or business services that support or enable a professional medical entity’s medical purpose but that do not constitute:
(i) Practicing medicine, as described in ORS 677.085;
(ii) Physicians, physician associates and nurse practitioners jointly rendering professional health care services; or
(iii) Practicing naturopathic medicine.
(c) “Management services organization” means an entity that under a written agreement, and in return for monetary compensation, provides management services to a professional medical entity.
(d) “Medical licensee” means an individual who is licensed in this state:
(A) To practice medicine under ORS 677.110;
(B) As a nurse practitioner under ORS 678.375;
(C) As a physician associate under ORS 677.512; or
(D) To practice naturopathic medicine under ORS 685.100.
(e) “Medical purpose” means, as appropriate:
(A) The purpose of practicing medicine, as described in ORS 677.085;
(B) The purpose of enabling physicians, physician associates and nurse practitioners to jointly render professional health care services; or
(C) The purpose of practicing naturopathic medicine.
(f) “Professional medical entity” means:
(A) A professional corporation, as defined in ORS 58.500;
(B) A professional corporation, as defined in ORS 58.503;
(C) A professional corporation, as defined in ORS 58.506;
(D) A limited liability company or foreign limited liability company with authority to transact business in this state that is organized for a medical purpose;
(E) A partnership or foreign partnership with authority to transact business in this state, or a limited liability partnership or foreign limited liability partnership with authority to transact business in this state, that is organized for a medical purpose; or
(F) A limited partnership or foreign limited partnership with authority to transact business in this state that is organized for a medical purpose.
(2)(a) Except as provided in subsection (3) of this section, a management services organization or a shareholder, director, member, manager, officer, employee or contractor of a management services organization may not:
(A) Own or control individually, or in combination with the management services organization or any other shareholder, director, member, manager, officer, employee or contractor of the management services organization, a majority of shares in a professional medical entity with which the management services organization has a contract for management services, even if the other shareholder, director, member, manager, officer, employee or contractor qualifies for an exemption under subsection (3)(a) of this section;
(B) Exercise a proxy or take or exercise on behalf of another person a right or power to vote the shares of a professional medical entity with which the management services organization has a contract for management services;
(C) Control or enter into an agreement to control or restrict the sale or transfer of a professional medical entity’s shares, interest or assets, or otherwise permit a person other than a medical licensee to control or restrict the sale or transfer of the professional medical entity’s shares, interest or assets, except as provided in paragraph (b) of this subsection;
(D) Issue shares of stock, or cause a professional medical entity to issue shares of stock, in the professional medical entity, in a subsidiary of the professional medical entity or in an affiliate of the professional medical entity;
(E) Pay dividends from shares or an ownership interest in a professional medical entity;
(F) Acquire or finance the acquisition of the majority of the shares of a professional medical entity; or
(G) Exercise de facto control over administrative, business or clinical operations of a professional medical entity in a manner that affects the professional medical entity’s clinical decision-making or the nature or quality of medical care that the professional medical entity delivers, which de facto control includes, but is not limited to, exercising ultimate decision-making authority over:
(i) Hiring or terminating, setting work schedules or compensation for, or otherwise specifying terms of employment of medical licensees;
(ii) Setting clinical staffing levels, or specifying the period of time a medical licensee may see a patient, for any location that serves patients;
(iii) Making diagnostic coding decisions;
(iv) Setting clinical standards or policies;
(v) Setting policies for patient, client or customer billing and collection;
(vi) Advertising a professional medical entity’s services under the name of an entity that is not a professional medical entity;
(vii) Setting the prices, rates or amounts the professional medical entity charges for a medical licensee’s services; or
(viii) Negotiating, executing, performing, enforcing or terminating contracts with third-party payors or persons that are not employees of the professional medical entity.
(b) Conditions under which a professional medical entity may enter into an agreement with a shareholder of the professional medical entity and a management services organization to control or restrict a transfer or sale of the professional medical entity’s stock, interest or assets include:
(A) The suspension or revocation of a shareholder’s or member’s professional license in this or another state if the shareholder or member is a medical licensee;
(B) A shareholder’s or member’s disqualification from holding stock or an interest in the professional medical entity;
(C) A shareholder’s or member’s exclusion, debarment or suspension from a federal health care program or an investigation that could result in the shareholder’s or member’s exclusion, debarment or suspension if the shareholder or member is a medical licensee;
(D) A shareholder’s or member’s indictment for a felony or another crime that involves fraud or moral turpitude;
(E) The professional medical entity’s breach of a contract for management services with a management services organization or a shareholder’s or member’s breach of the contract for management services with the professional medical entity or a management services organization on behalf of the professional medical entity; or
(F) The death, disability or permanent incapacity of a shareholder or member who is a medical licensee.
(c) The activities described in paragraph (a) of this subsection do not prohibit:
(A) A management services organization from:
(i) Providing services to assist in carrying out the activities described in paragraph (a) of this subsection if the services the management services organization provides do not constitute an exercise of de facto control over the administrative, business or clinical operations of a professional medical entity in a manner that affects the professional medical entity’s clinical decision-making or the nature or quality of medical care that the professional medical entity delivers;
(ii) Purchasing, leasing or taking an assignment of a right to possess the assets of a professional medical entity in an arm’s-length transaction with a willing seller, lessor or assignor;
(iii) Providing support, advice and consultation on all matters related to a professional medical entity’s business operations, such as accounting, budgeting, personnel management, real estate and facilities management and compliance with applicable laws, rules and regulations; or
(iv) Advising and providing direction concerning a professional medical entity’s participation in value-based contracts, payor arrangements or contracts with suppliers and vendors;
(B) Collection of quality metrics as required by law or in accordance with an agreement to which a professional medical entity is a party; or
(C) Setting criteria for reimbursement under a contract between a professional medical entity and an insurer.
(3) Subsection (2) of this section does not apply to:
(a) An individual who provides medical services or health care services for or on behalf of a professional medical entity if the individual:
(A) Does not own or control more than 10 percent of the total shares of or interest in the professional medical entity; and
(B) Is compensated at the market rate for the medical services or health care services and the individual’s employment and services that the individual provides to the management services organization are entirely consistent with the individual’s professional obligations, ethics and duties to the professional medical entity and the individual’s patients;
(b) An individual who owns shares or an interest in a professional medical entity and a management services organization with which the professional medical entity has a contract for management services if the individual’s ownership of shares or an interest in the management services organization is incidental and without relation to the individual’s compensation as a shareholder, director, member, manager, officer or employee of, or contractor with, the management services organization;
(c) A professional medical entity and the shareholders, directors, members, managers, officers or employees of the professional medical entity if the professional medical entity functions as a management services organization or owns a majority of the shares of or interest in the management services organization;
(d) A physician who serves as a director or officer of a management services organization with which a professional medical entity has a contract for management services and who owns less than 25 percent of the ownership interest in, and is a director or officer of, the professional medical entity if:
(A) The professional medical entity owns less than 49 percent of the ownership interest that has voting rights in the management services organization;
(B) The physician does not receive compensation from the management services organization for serving as a director or officer of the management services organization;
(C) An action of the management services organization that materially affects the professional, ownership or governance interests of minority owners in the management services organization requires a vote of more than a majority of the shares of the management services organization that are entitled to vote, including the shares held by professional medical entities with voting rights in the management services organization;
(D) The management services organization and all of the professional medical entities that have voting rights in the management services organization were incorporated or organized, and entered into agreements for the provision of medical services, before January 1, 2024; and
(E) The physician, all of the professional medical entities with voting rights in the management services organization and the actions of the management services organization complied with the requirements set forth in subparagraphs (A) to (D) of this paragraph before, on and after January 1, 2024; or
(e) A management services organization that has a contract for management services with a professional medical entity if the professional medical entity is solely and exclusively:
(A) A PACE organization or engaged in providing professional health care services to a PACE organization, as defined in 42 C.F.R. 460.6, as in effect on June 9, 2025, and authorized in this state as a PACE organization;
(B) A mental health or substance use disorder crisis line provider;
(C) An urban Indian health program in this state that is funded under 25 U.S.C. 1601 et seq., as in effect on June 9, 2025;
(D) A recipient of a Tribal Behavioral Health or Native Connections program grant from the federal Substance Abuse and Mental Health Services Administration;
(E) An entity that:
(i) Provides behavioral health care, other than a hospital, that the Oregon Health Authority has certified to provide behavioral health care;
(ii) Has a contract for management services with an entity described in sub-subparagraph (i) of this subparagraph that is a nonprofit entity; or
(iii) Is a licensed opioid treatment program, a licensed medical provider that primarily provides office-based or medication-assisted treatment services, a provider of withdrawal management services or a sobering center;
(F) A hospital, as defined in ORS 442.015, or a hospital-affiliated clinic, as defined in ORS 442.612;
(G) A long term care facility, as defined in ORS 442.015, or an affiliate of a long term care facility; or
(H) A residential care facility, as defined in ORS 443.400, or an affiliate of a residential care facility.
(4) Subsection (2)(a)(A) and (B) of this section does not apply to:
(a) An entity that is engaged in the practice of telemedicine, as defined in ORS 677.494, and does not have a physical location where patients receive clinical services in this state other than a physical location that would be necessary to comply with 21 U.S.C. 829(e), as in effect on June 9, 2025; and
(b) A coordinated care organization, as defined in ORS 414.025, that before January 1, 2026, owned or controlled shares or an interest in a professional medical entity or had the power to manage or direct the management of the professional medical entity by contract or otherwise.
(5)(a) In any contract or other agreement between a management services organization and a professional medical entity or a medical licensee, a provision that authorizes or implements, or purports to authorize or implement, an act or practice that violates a prohibition set forth in subsection (2)(a) of this section is void and unenforceable.
(b) A medical licensee or professional medical entity that suffers an ascertainable loss of money or property as a result of a violation of a prohibition set forth in subsection (2)(a) of this section may bring an action against a management services organization with which the medical licensee or professional medical entity has a contract for management services, or a shareholder, director, member, manager, officer or employee of the management services organization, in a circuit court of this state to obtain:
(A) Actual damages equivalent to the medical licensee’s or professional medical entity’s loss;
(B) An injunction against an act or practice that violates the prohibition; and
(C) Other equitable relief the court deems appropriate.
(c) The trier of fact in an action under paragraph (b) of this subsection may award punitive damages.
(d) A court may award attorney fees and costs to a plaintiff that prevails in an action under paragraph (b) of this subsection.

Legislative History

2025 c.295 §1; 2025 c.572 §1