Minnesota Management Services Agreement Guide: Governance, Fee Division and the Bill That Would Change Everything
Minnesota's Professional Firms Act bars delegating decisions requiring professional judgment to a non-licensee, and a bill that would have capped MSO pay at fair market value and barred income-based pay was not enacted but may return.
Key Highlights
- Governance authority must rest with licensed professionals, and decisions requiring professional judgment cannot be delegated to a non-licensee.
- The discipline statute covers fee division with another physician or a professional corporation and referral remuneration, and we found no authority squarely addressing a lay MSO's percentage fee.
- Profit on dispensed drugs, as with peptides, GLP-1s or hormones, requires disclosure of the physician's own profit interest.
- The Minnesota Health Care Accountability Act would have barred MSO compensation based on practice income and capped it at fair market value, and it was not enacted.
How to Price the Management Fee
The discipline statute covers paying or receiving a commission or remuneration primarily for referral of patients or prescribing, dividing fees with another physician or a professional corporation unless in proportion to services and responsibility with disclosure, undisclosed financial interest referrals and dispensing for profit without disclosure. The fee-division language names another physician or professional corporation and not a lay management company, and we found no authority squarely addressing percentage MSO fees. The failed bill would have barred compensation based on practice income or volume and capped MSO compensation at fair market value, and a flat, fair-market, invoiced fee already matches that direction.
What the Practice Must Keep
The practice keeps every function the failed bill listed: hiring and firing, revenue disbursement, staffing, coding, pricing and payer contracts, plus decisions requiring professional judgment, which the Professional Firms Act says cannot be delegated to a non-licensee.
Terms to Avoid
Avoid compensation based on the practice's income or volume of care, MSO control of hiring, revenue, pricing or payer contracts, and the same person managing both a practice and an MSO. A 2026 amendment to the medical practice act says it is unlawful for a person who is not a natural person to practice medicine.
Term, Records and Departing Clinicians
Minnesota voids non-competes, with exceptions only for sale of a business and dissolution of an entity, and the definition of employee includes independent contractors with no health care carve-out, for agreements on or after July 1, 2023.
Filings, Notices and Watch Items
The health care transaction law's notice requirement applies only at $80 million or more in average annual revenue, and its competition-lessening prohibition has no revenue threshold. The accountability act failed in 2025 and was laid over in a House committee in March 2026, and may return in 2027.
Drafting Checklist
- Fee: flat, fair market, invoiced, not based on income or volume.
- Judgment: decisions requiring professional judgment stay with licensees.
- Functions: hiring, revenue, staffing, coding, pricing and payer contracts stay with the practice.
- Dispensing: disclose the physician's profit interest.
- Non-competes: none.
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.