Kentucky Management Services Agreement Guide: The Fee Carve-Out Does Not Cover a Lay MSO
Kentucky's fee-splitting carve-out covers division among licensees in a professional service corporation, not payments to a lay MSO, so the MSO's fee rests on being compensation for its own services and not for referrals.
Key Highlights
- The discipline statute covers compensation for referring patients or for professional services not personally rendered, with a carve-out for pooling fees within a partnership or professional service corporation.
- That carve-out does not obviously cover payments to a lay MSO, and we found no direct Kentucky authority on percentage fees.
- The corporate practice position is unsettled, with old case law, a reportedly lenient board and no recent authority.
- A 2023 Board opinion says a physician who drifts into another specialty is held to that specialty's standard.
How to Price the Management Fee
Kentucky's discipline statute covers giving or receiving any fee, commission, rebate or other compensation for sending, referring or inducing a person to communicate with a licensee, or for professional services not actually and personally rendered. It carves out practice in a partnership or professional service corporation and pooling or dividing fees under its policies. A percentage management fee therefore rests on the reading that it pays for the MSO's own services and not for referrals, with no direct Kentucky authority we could find, so we use a fixed fee for defined services.
What the Practice Must Keep
The practice keeps clinical decisions, delegation and supervision, and a medical director whose specialty matches the services offered. The Board's laser opinion says the supervising physician should be physically present on site and immediately available, with an exception for laser hair removal.
Terms to Avoid
Avoid any payment for referrals, any arrangement that lets the MSO control medical decisions and a medical director whose specialty does not match cosmetic services. The Board of Nursing's statement that an advanced practice nurse may own a med spa could not be reconciled with the corporation statute, so we do not rely on it.
Term, Records and Departing Clinicians
A 2026 act amended the fee statute and we could not read its text. We found no recent physician non-compete legislation and no MSO-specific rule on control, staffing or records, and we do not use non-competes for employed clinicians.
Filings, Notices and Watch Items
We found no Kentucky transaction notice law. The Board of Pharmacy issued a compounded GLP-1 alert in November 2025.
Drafting Checklist
- Fee: fixed for the MSO's own defined services.
- No referral pay: nothing for sending or referring patients.
- Control: clinical decisions with the practice.
- Director: specialty matches the services.
- Non-competes: none for employed clinicians.
How We Draft It
Patients pay the physician-owned practice, the practice pays the management company a fixed monthly fee under the agreement, and the management company pays MedGrid a fixed monthly retainer for consulting. The management company never practices medicine, and the agreement never moves a clinical decision to it. Our template follows the same flat-fee design in every state, with the state-specific limits below layered on top.
Disclaimer
This article is general educational information, not legal advice. Management agreement rules change and differ by state, and this summary draws on our published state guide, parts of which rest on secondary sources, so have health care counsel in the state review any agreement before you sign.
MedGrid MSO provides management services to independently owned practices; it does not practise medicine and does not direct clinical decisions. Requirements vary by state and by service, and change over time — nothing on this page is legal or medical advice. Talk to us or your own counsel before making a structural decision for your clinic.