New Jersey Management Services Agreement Guide: Drafting to the Board's Non-Professional Services Rule

How to Price the Management Fee

The kickback regulation bars any fee, commission, rebate, bonus or other compensation however denominated, from a licensed or unlicensed source, for referrals or to promote referrals, and construes the ban broadly. It bars remuneration from a health care entity on any basis other than return on monetary investment. A space or equipment lease with a licensed professional to whom patients are referred must be a fixed fee set in advance at fair market value or less. Percentage management fees are neither expressly prohibited nor approved in the text we read, and the risk comes from the referral rule and the Northfield analysis, so a fixed fair-market fee is the safe design.

What the Practice Must Keep

The Board's rule allows the MSO's non-professional services to be office management, non-professional staffing, space and equipment, and billing, on the conditions that a licensed professional sets all medical care policies and keeps sole discretion over patient fees including waivers, and that the business corporation does not represent itself to the public as offering services requiring licensure. The agreement should list the services in those categories and say the practice sets policies and fees.

Terms to Avoid

Avoid interlocking leases and management contracts, a large break fee, undated resignation letters, any payment tied to referrals, MSO control over medical policy or patient fees, and branding that suggests the MSO provides medical services. In Allstate v. Northfield Medical Center (N.J. 2017), those features were evidence of a sham, and the Board's 1995 position is that management contracts should be separate and without interlocking features.

Term, Records and Departing Clinicians

Physician non-competes are enforceable if reasonable under Community Hospital Group v. More (N.J. 2005), as we saw in a search result, and a 2026 bill that would void physician geographic restrictions was not enacted. Records remain with the practice under the Board's records rules.

Filings, Notices and Watch Items

We found no general New Jersey transaction notice law for physician practices, and a 2022 law on change of control of licensed health care entities may or may not reach physician practices or MSO agreements. Advertising rules require fees stated as a fixed amount or range, a 90-day usual price for reduced fees, and filing of free or discounted service ads with the Board within 30 days. We could not locate a Board certificate of registration for a physician corporation.

Drafting Checklist

• Services: limited to the Board's non-professional list.
• Policies and fees: set by a licensed professional with sole discretion over patient fees.
• Fee: fixed fair-market amount, no referral-linked pay.
• Leases: fixed fee set in advance at or below fair market value.
• No interlocks: separate leases and contracts, no break fee, no undated resignations.
• Branding: does not present the MSO as offering licensed services.

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.