Unpacking the Corporate Practice of Medicine: A State-by-State Guide for Telehealth and Multi-State Practices in 2025-2026

By Shannon Smith, DNP, APRN, FNP-C, PMHNP-BC, PMHNP-C · 2026-04-18

The Corporate Practice of Medicine (CPOM) doctrine remains a formidable regulatory hurdle for healthcare businesses, particularly those operating across state lines or leveraging telehealth. This deep dive dissects the varying state approaches to CPOM, offering actionable insights for telehealth founders, multi-state practice owners, and compliance officers navigating this complex landscape.

The healthcare industry is experiencing unprecedented growth and innovation, driven largely by advancements in telehealth and the expansion of direct-to-consumer (DTC) models. Yet, beneath this dynamic surface lies a bedrock of regulatory complexity, none more impactful than the Corporate Practice of Medicine (CPOM) doctrine. For telehealth founders, multi-state practice owners, and compliance officers, understanding and meticulously adhering to CPOM rules is not merely good practice—it is existential.

> For more on this topic, see our analysis: [The CPOM Gauntlet: Navigating Corporate Practice of Medicine for Multi-State Telehealth and Medspa Expansion in 2025-2026](/blog/cpom-gauntlet-multi-state-telehealth-medspa).

In 2025-2026, the enforcement landscape for CPOM is intensifying, with states like New York maintaining stringent prohibitions, while others like Nevada offer more nuanced flexibility. This article serves as your definitive guide to navigating the intricate, state-specific requirements of CPOM, ensuring your business models are not only innovative but also legally resilient.

The Enduring Principle of CPOM: Physician Autonomy Above All

At its core, the Corporate Practice of Medicine doctrine prohibits corporations or other non-professional entities from employing physicians or otherwise controlling the practice of medicine. The rationale is deeply rooted in public policy: to safeguard patient welfare by preventing commercial interests from influencing clinical judgment, maintaining the sanctity of the patient-physician relationship, and upholding professional ethics. This doctrine ensures that medical decisions are made by licensed professionals, free from the dictates of a corporate employer motivated by profit.

While the underlying principle is consistent, its application and enforcement vary dramatically from state to state, creating a patchwork of regulations that can confound even seasoned legal teams. For businesses operating nationally, this necessitates a granular, state-by-state compliance strategy.

Deconstructing State-Specific CPOM Approaches

Let's examine how different states interpret and enforce CPOM, highlighting the critical distinctions that impact telehealth and multi-state operations.

Strict Enforcement States: New York and California

States like New York and California are often cited as having the most stringent CPOM doctrines. In these jurisdictions, the prohibition against corporate control over medical practice is rigorously enforced. For telehealth companies, medspas, and other healthcare entities, this means direct employment of physicians by a non-professional entity is generally forbidden.

New York (NYSED Office of Professional Discipline): New York's approach is unyielding. As highlighted in recent intelligence, "New York's stringent Corporate Practice of Medicine (CPOM) doctrine presents significant challenges for telehealth companies... Unlike many states that have relaxed CPOM enforcement or adopted exceptions, New York remains steadfast in its prohibition against corporate entities practicing medicine or employing licensed professionals to deliver clinical services." This necessitates a robust Physician-Controlled Management Services Organization (PC-MSO) structure. The professional entity (PE) must be truly physician-owned and controlled, retaining complete clinical autonomy. The MSO's role is strictly limited to providing non-clinical administrative and technical services. Any perceived influence by the MSO over clinical aspects, or fee structures that could be construed as illegal fee-splitting, can trigger severe penalties from the New York State Education Department (NYSED) Office of Professional Discipline (OPD) or the Office of the Attorney General.

California (Medical Board of California): California's CPOM doctrine is equally strict, prohibiting non-physician entities from employing physicians or otherwise practicing medicine. This includes prohibitions on fee-splitting, where a non-physician entity shares in professional fees. Telehealth platforms and medspas must implement similar MSO models, ensuring that the professional medical corporation (PC) is owned by licensed California physicians and maintains absolute control over clinical decisions, employment of clinical staff, and patient care. The California Medical Board actively investigates and prosecutes violations, with significant fines and license revocations as potential outcomes.

Nuanced or Flexible Enforcement States: Nevada

Some states, while maintaining a CPOM doctrine, exhibit a more flexible enforcement posture, often accommodating well-structured MSO models.

Nevada (Nevada State Board of Medical Examiners): "Nevada maintains a Corporate Practice of Medicine (CPOM) doctrine, generally prohibiting corporations from employing physicians or controlling medical practice. However, enforcement in Nevada is often considered more flexible, allowing for management services organization (MSO) models, particularly for telehealth and medspa businesses, provided specific guidelines are followed to preserve physician autonomy." This flexibility, however, does not equate to permissiveness. The MSO model must be meticulously structured to delineate clear boundaries between administrative support and clinical autonomy. The PC must retain full control over medical judgments, hiring/firing of clinical staff, and setting professional fees. Any arrangement appearing to dictate patient care or improperly share professional fees could be challenged.

States with Exceptions or Less Stringent Rules

Other states may have statutory exceptions for certain entities (e.g., hospitals, non-profits) or simply have less active enforcement of CPOM, though the underlying principle often remains. It is crucial to remember that a lack of aggressive enforcement does not mean an absence of the doctrine; rather, it indicates a lower immediate risk, which can change rapidly with new regulatory interpretations or enforcement priorities.

The PC-MSO Model: Your Primary Compliance Framework

For most telehealth brands and multi-state practices, the Professional Corporation (PC) - Management Services Organization (MSO) model is the cornerstone of CPOM compliance. This structure legally separates the clinical delivery of healthcare from the administrative and business operations.

The Professional Corporation (PC): This entity is owned by licensed physicians (or other licensed professionals, depending on the service and state law, e.g., dentists, chiropractors). The PC directly employs or contracts with the healthcare providers (physicians, NPs, PAs, etc.) who deliver clinical services. The PC retains absolute control over all medical decisions, patient care, hiring and firing of clinical staff, and professional fees.

The Management Services Organization (MSO): This entity, which can be owned by non-physicians, provides non-clinical administrative and business support services to the PC. These services typically include billing, marketing, IT, real estate, equipment, human resources (for non-clinical staff), and other back-office functions. The MSO charges the PC a fee for these services, which must be at fair market value (FMV) and not tied to patient volume or revenue in a way that could be construed as illegal fee-splitting or an inducement for referrals.

Critical Elements of a Compliant PC-MSO Structure:

1. Physician Ownership and Control of PC: The PC must be genuinely owned and controlled by licensed professionals. Any attempt to circumvent this through nominee owners or undue influence by the MSO will be scrutinized. 2. Clinical Autonomy of PC: The PC, and by extension its employed providers, must have complete and unfettered control over all clinical decisions, treatment protocols, and patient care. The MSO cannot dictate medical judgment. 3. Fair Market Value (FMV) for MSO Services: The management services agreement (MSA) between the MSO and PC must stipulate fees that are consistent with FMV for the services rendered. These fees should not be contingent on the volume or value of referrals or revenue generated by the PC. 4. No Fee-Splitting: The MSO cannot share in the professional fees earned by the PC for clinical services. The MSO's compensation must be for administrative services, not a percentage of the clinical revenue. 5. Clear Delineation of Responsibilities: The MSA must meticulously define the roles and responsibilities of both the MSO and the PC, explicitly stating that the PC retains all clinical authority. 6. Provider Employment: Clinical providers must be employed by or contracted directly with the PC, not the MSO.

CPOM Implications for Specific Healthcare Business Models

Telehealth Brands (DTC Weight Loss, Mental Health, Sexual Health, etc.)

Direct-to-Consumer (DTC) telehealth brands, particularly those in high-growth areas like weight loss, mental health, and sexual wellness, are under intense scrutiny. As noted in recent intelligence, "For DTC telehealth weight loss brands, understanding and adhering to CPOM regulations is paramount to operational legality and sustainability." The challenge lies in the tension between the corporate structure of a DTC platform and the requirement for physician autonomy. Any model where a platform dictates specific treatments or formularies without independent physician judgment, or where revenue-sharing models are tied to prescription volume, is at high risk of violating CPOM and anti-kickback statutes.

Actionable Insight: Implement a robust PC-MSO model. Ensure physician employment agreements explicitly state clinical independence. Audit all financial arrangements with vendors, pharmacies, and lead generators to ensure FMV and no illegal inducements.

Medspas

Medspas often operate in a grey area, blending medical procedures with aesthetic services. The CPOM doctrine applies fully to the medical components of a medspa's offerings (e.g., injectables, laser treatments, prescription skincare). While some states have specific carve-outs or more relaxed interpretations for certain aesthetic services, the general rule is that medical procedures must be performed under the direction of, or by, a licensed medical professional employed by a professional entity.

Actionable Insight: Structure the medical side of the medspa as a PC, with the MSO handling the administrative and aesthetic (non-medical) business functions. Ensure all medical procedures are performed by licensed professionals under appropriate supervision (e.g., PA/NP supervision requirements, as seen in Washington State). Clearly separate the revenue streams for medical vs. non-medical services.

Dental and Chiropractic Practices

While dental and chiropractic practices fall under separate licensing boards, the underlying principle of preventing unlicensed entities from controlling professional practice generally applies. Many states have similar corporate practice prohibitions for these professions.

Actionable Insight: Similar to medical practices, if a non-professional entity seeks to manage a dental or chiropractic practice, an MSO model is typically required. The professional corporation (e.g., a dental PC or chiropractic PC) must be owned by licensed dentists or chiropractors, respectively, and retain full control over clinical decisions and professional fees.

The Interplay with Other Regulatory Challenges

CPOM does not exist in a vacuum. It frequently intersects with other critical compliance areas:

Anti-Kickback Statute (AKS) & Stark Law: Improperly structured MSO fees or revenue-sharing arrangements can easily trigger AKS violations, particularly if they are perceived as inducements for referrals. The DOJ's intensified enforcement against telehealth fraud and kickback schemes underscores this risk. "The DOJ is particularly vigilant about arrangements that incentivize referrals through illegal kickbacks, often disguised as marketing fees, administrative services, or consulting agreements."
Telehealth Prescribing & Patient-Provider Relationship: States often link the legitimacy of a telehealth encounter and subsequent prescribing to the existence of a valid patient-provider relationship, which can be undermined if a corporate entity is seen as controlling the medical interaction rather than the physician. This is particularly relevant for controlled substances, where federal (DEA Ryan Haight Act) and state rules are complex.
Billing and Coding: Non-compliant CPOM structures can lead to issues with billing and coding, as services may be deemed improperly rendered if the underlying corporate structure is illegal. This can lead to False Claims Act violations.

What This Means For Your Practice: A Compliance Checklist for 2025-2026

Navigating the CPOM landscape requires proactive and continuous vigilance. Here's an actionable checklist for telehealth founders, multi-state practice owners, and compliance officers:

1. State-Specific Legal Counsel: Engage legal counsel specializing in healthcare regulatory compliance in *every state* where you operate or plan to operate. A national approach to CPOM is a recipe for disaster. 2. Structure Review: Conduct a thorough audit of your current business structure against the CPOM laws of all relevant states. For multi-state operations, this often means establishing separate professional entities in each state where CPOM applies. 3. Robust PC-MSO Agreements: If utilizing an MSO model, ensure your Management Services Agreements (MSAs) are meticulously drafted. They must clearly delineate responsibilities, establish FMV for MSO services, and explicitly protect the PC's clinical autonomy. Review these agreements annually. 4. Physician Ownership Verification: Verify and document that your professional corporations are genuinely owned and controlled by licensed physicians (or other licensed professionals as appropriate) in accordance with state law. 5. Clinical Autonomy Protocols: Implement clear internal policies and training that reinforce physician clinical autonomy. Ensure that no corporate policies or incentives influence medical decision-making, treatment plans, or prescribing practices. 6. Fair Market Value Assessments: Obtain independent FMV assessments for all MSO services and any other financial arrangements (e.g., medical director agreements, referral fees) to mitigate Anti-Kickback Statute risks. 7. No Fee-Splitting: Scrutinize all financial flows to ensure that the MSO is compensated for administrative services at FMV, not through a percentage of professional fees or revenue generated by clinical services. 8. Documentation and Training: Maintain comprehensive documentation of your compliance efforts. Regularly train all staff, especially leadership and clinical personnel, on CPOM principles and your specific compliant structures. 9. Monitor Regulatory Changes: CPOM enforcement and interpretations can evolve. Implement a system to continuously monitor changes in state medical board rules, attorney general opinions, and enforcement actions.

The Corporate Practice of Medicine doctrine is not a relic of the past; it is a living, evolving regulatory force shaping the future of healthcare delivery. For those looking to innovate and scale in the telehealth and multi-state practice arenas, a deep understanding and rigorous adherence to CPOM compliance is not just a legal necessity—it's a strategic imperative for sustainable growth and long-term success. TrueEval stands ready to help you navigate these complexities, transforming regulatory challenges into competitive advantages.