Texas Healthcare
Compliance Guide

Texas presents a complex and evolving regulatory landscape for healthcare companies, characterized by a strong emphasis on the Corporate Practice of Medicine (CPOM) doctrine, a generally favorable but specific approach to telehealth, and robust professional licensing requirements. The state's large and growing population makes it an attractive market, but compliance with its unique legal framework is paramount. Texas is generally considered a conservative regulatory environment, particularly concerning professional licensure and ownership of healthcare entities, which necessitates careful structuring. The Texas Medical Board (TMB) and the Texas Health and Human Services Commission (HHSC) are primary regulatory bodies, alongside various professional boards. Recent legislative actions, such as those stemming from the 88th Legislative Session (2023), have continued to refine telehealth regulations, particularly concerning prescribing and modality requirements. While Texas has embraced telehealth as a legitimate mode of care delivery, it maintains strict guardrails, especially for controlled substances and certain specialties. The state's CPOM doctrine is actively enforced, requiring sophisticated business structures to ensure physician control over clinical decision-making. Non-physician ownership of entities providing medical services is severely restricted, impacting medspas, dental practices, and wellness clinics significantly. Companies expanding into Texas must prioritize a deep understanding of these foundational principles, as missteps can lead to severe penalties, including license revocation and civil enforcement actions. The business climate, while dynamic, demands a proactive and expert-driven approach to regulatory compliance to navigate its intricacies successfully. Upcoming legislative sessions (e.g., 89th in 2025) are expected to further address areas such as scope of practice, behavioral health access, and potential refinements to telehealth parity laws, underscoring the need for continuous monitoring of regulatory developments.

Texas maintains one of the strictest Corporate Practice of Medicine (CPOM) doctrines in the United States, actively enforced by the Texas Medical Board (TMB). The legal basis for Texas's CPOM doctrine is primarily statutory, rooted in the Texas Medical Practice Act, specifically Texas Occupations Code § 155.001 and § 164.052(a)(17). These provisions prohibit the unlicensed practice of medicine and define what constitutes the practice of medicine, implicitly restricting non-physician control over medical services. The TMB's position is that only a physician or a professional entity owned by physicians can employ other physicians or control the delivery of medical services. This means that a business entity not owned by physicians cannot directly employ physicians or other licensed healthcare professionals (e.g., Physician Assistants, Advanced Practice Registered Nurses) to provide medical services to patients. Non-physician ownership of healthcare businesses that directly provide medical services is generally prohibited.

Permitted Ownership Structures:

• Physician-Owned Entities: Professional Associations (P.A.), Professional Corporations (P.C.), and Professional Limited Liability Companies (PLLC) where all owners are licensed physicians are permitted to employ other physicians and provide medical services.
• Dental Practices: Similar restrictions apply, with dental practices typically requiring ownership by licensed dentists.
• Chiropractic Practices: Must be owned by licensed chiropractors.

Specific Restrictions and Impact:

• Control over Clinical Decisions: Non-physician entities cannot exert control over a physician's independent medical judgment, diagnosis, treatment, or prescribing. This extends to setting fees for professional services, billing, and marketing that implies the non-physician entity is providing medical care.
• Fee-Splitting: Texas law strictly prohibits fee-splitting, where a physician shares a percentage of their professional fees with a non-physician entity or individual in exchange for referrals or other services. Texas Occupations Code § 102.001 et seq. addresses this.
• Telehealth Companies: Telehealth platforms operating in Texas must structure themselves carefully to avoid CPOM violations. The common model is a Management Services Organization (MSO) arrangement, where the non-physician-owned MSO provides administrative and non-clinical support services (e.g., technology, marketing, billing, facilities) to a physician-owned professional entity (P.A. or P.C.) that directly employs or contracts with the physicians providing medical care. The MSO cannot direct or interfere with clinical decisions.
• Medspas: Medspas offering medical services (e.g., injectables, laser treatments, IV therapy) must be owned by a physician or operate under a strict MSO model. A non-physician cannot own the entity providing these medical services. All medical procedures must be performed by or delegated by a physician, and the physician must maintain ultimate responsibility and control.
• Wellness Clinics: Similar to medspas, if wellness clinics offer services that constitute the practice of medicine (e.g., hormone therapy, GLP-1 prescribing, medical weight loss), they must adhere to CPOM requirements, typically necessitating physician ownership or an MSO structure.

In essence, any entity that directly provides or holds itself out as providing medical services in Texas must be owned and controlled by licensed physicians, or operate under a robust and compliant MSO model that clearly delineates clinical and administrative functions, ensuring physician autonomy in all clinical matters.

Texas has a well-defined framework for telehealth, generally supportive but with specific requirements to ensure patient safety and quality of care. The primary statute governing telehealth is Texas Occupations Code § 111.001 et seq., particularly § 111.005, which establishes the conditions under which a physician may provide medical services through telehealth. The Texas Medical Board (TMB) also has extensive rules, primarily found in 22 Texas Administrative Code (TAC) Chapter 174, concerning telemedicine and telehealth.

Establishment of Provider-Patient Relationship: Texas law explicitly permits the establishment of a valid physician-patient relationship via telehealth, provided certain conditions are met. A face-to-face encounter is generally not required to initiate a telehealth relationship. However, the standard of care must be the same as if the services were provided in-person (22 TAC § 174.4).

Permitted Modalities: Texas allows for a range of telehealth modalities:

• Synchronous Audio-Visual (Video): This is the preferred and most robust modality, allowing for real-time interactive communication between the patient and provider. It is widely accepted for establishing new patient relationships and providing ongoing care.
• Synchronous Audio-Only (Telephone): Texas permits audio-only telehealth encounters, but with specific limitations. For new patient relationships or for prescribing certain medications, a video component is often preferred or required to meet the standard of care. However, for established patients and certain follow-up care, audio-only can be sufficient if clinically appropriate and the standard of care is met.
• Asynchronous (Store-and-Forward): This modality involves the transmission of medical information (e.g., images, pre-recorded video, patient data) to a provider for review at a later time. It is permitted but generally used for specific diagnostic or consultative purposes, not typically for establishing an initial comprehensive patient relationship or for prescribing controlled substances.

Telehealth Registration Requirements: Texas does not have a separate 'telehealth license' or 'telehealth registration' for providers already licensed in Texas. A physician or other licensed healthcare professional (e.g., NP, PA) holding a full, unrestricted Texas license is authorized to provide telehealth services within their scope of practice. Out-of-state providers must obtain a full Texas license to practice telehealth with Texas patients, subject to limited exceptions like interstate compacts (e.g., IMLC) once fully implemented and adopted by Texas for specific professions.

Informed Consent Requirements: Prior to providing telehealth services, providers must obtain informed consent from the patient. This consent must include information about the nature of telehealth, its benefits and risks, privacy and security measures, and how to obtain follow-up care. The TMB rules (22 TAC § 174.5) specify that the patient must be informed of their right to refuse telehealth services and their right to withdraw consent at any time. Documentation of informed consent is mandatory.

Geographic Restrictions: There are no specific geographic restrictions within Texas for telehealth services, meaning a Texas-licensed provider can provide telehealth to a patient located anywhere within the state. However, the provider must be physically located in Texas or a state from which they are licensed to practice when providing services to a Texas patient, unless an interstate compact or specific reciprocity agreement applies.

Texas maintains stringent rules for prescribing, particularly for controlled substances via telehealth, reflecting a cautious approach to remote prescribing. The primary regulatory bodies are the Texas Medical Board (TMB) for physicians, the Texas Board of Nursing for Advanced Practice Registered Nurses (APRNs), the Texas Physician Assistant Board for Physician Assistants (PAs), and the Texas State Board of Pharmacy (TSBP).

Controlled Substance Prescribing via Telehealth:

• Schedules II-V: Texas Occupations Code § 111.005 and 22 TAC § 174.6 generally permit the prescribing of controlled substances via telehealth, provided a valid physician-patient relationship has been established through an in-person medical evaluation or a synchronous audio-visual encounter. Prescribing based solely on an audio-only or asynchronous encounter is generally prohibited for controlled substances.
• Schedule II Medications: Prescribing Schedule II controlled substances via telehealth requires a robust patient evaluation, typically involving a synchronous audio-visual encounter. Long-term prescribing often necessitates periodic in-person evaluations. The TMB rules emphasize that the standard of care must be met, which may include physical examination or diagnostic testing that cannot be fully achieved via telehealth alone.
• DEA Requirements: Federal DEA regulations (21 CFR Part 1304) apply. While the Ryan Haight Online Pharmacy Consumer Protection Act of 2008 generally requires an in-person medical evaluation for prescribing controlled substances, the COVID-19 public health emergency (PHE) waivers allowed exceptions. As of the anticipated end of DEA's PHE flexibilities (currently May 11, 2023, with proposed rules allowing for a 180-day grace period for initial prescribing via telehealth, followed by an in-person visit), providers must adhere to the 'telemedicine exception' criteria or the in-person requirement. Texas law aligns with the federal requirement for a prior in-person or synchronous audio-visual encounter.

Prescription Drug Monitoring Program (PDMP) Checking: Texas Health and Safety Code § 481.076 requires prescribers to check the Texas Prescription Monitoring Program (PMP) database for a patient's prescription history for Schedule II, III, IV, and V controlled substances before prescribing these substances. This is a mandatory step for both in-person and telehealth encounters and must be documented.

Quantity or Refill Limitations: Texas law does not impose specific quantity or refill limitations unique to telehealth prescribing beyond what applies to in-person prescribing. However, the standard of care and medical necessity dictate appropriate quantities and refills. For Schedule II substances, state law typically limits prescriptions to a 90-day supply, and refills are generally prohibited. Schedule III-V substances may have up to five refills within six months.

Special Rules for Specific Drug Classes:

• GLP-1s (e.g., Ozempic, Wegovy): Prescribing GLP-1 receptor agonists for weight loss or diabetes management via telehealth is permissible if a legitimate physician-patient relationship is established (synchronous audio-visual or in-person) and the prescribing meets the standard of care, including appropriate patient evaluation, diagnosis, and monitoring. Off-label prescribing must be clinically justified and documented.
• Hormone Therapy (e.g., Testosterone): Prescribing controlled substances like testosterone via telehealth requires careful adherence to the established relationship and standard of care. Due to the potential for abuse and the need for ongoing monitoring, regular follow-ups and potentially in-person visits may be required, especially for long-term therapy.
• Stimulants (e.g., Adderall, Ritalin): Prescribing Schedule II stimulants for conditions like ADHD via telehealth is highly scrutinized. While permitted if the in-person or synchronous audio-visual relationship is established, providers must exercise extreme caution, ensure comprehensive diagnostic evaluation, and implement robust monitoring protocols. The TMB is particularly vigilant regarding stimulant prescribing via telehealth, emphasizing the need for thorough documentation and adherence to the standard of care. Many providers choose to require an initial in-person visit for stimulant prescribing to mitigate risk.

Texas has a structured, but not full, practice authority model for Advanced Practice Registered Nurses (APRNs) and Physician Assistants (PAs), requiring varying degrees of physician collaboration or supervision. The delegation of medical tasks to other qualified personnel is also strictly regulated.

Advanced Practice Registered Nurses (APRNs):

• Full Practice Authority: Texas does not grant full practice authority to APRNs (which include Nurse Practitioners, Certified Nurse-Midwives, Certified Registered Nurse Anesthetists, and Clinical Nurse Specialists). While significant advancements were made with House Bill 1775 (85th Legislature, 2017) and subsequent legislation, APRNs still operate under a 'delegated' or 'prescriptive authority' model.
• Prescriptive Authority: APRNs with prescriptive authority must have a formal written agreement, known as a 'Prescriptive Authority Agreement' (PAA), with a delegating physician. This agreement outlines the scope of prescriptive authority, the types of drugs that can be prescribed, and the protocols for consultation and referral. The PAA must be filed with the Texas Medical Board (TMB) and the Texas Board of Nursing (BON). (Texas Occupations Code § 157.051 et seq.; 22 TAC § 221.12).
• Supervision/Delegation: APRNs can perform medical acts delegated by a physician under a PAA or other delegation agreement. The physician remains ultimately responsible for the delegated acts. While the PAA provides a framework for independent practice within its bounds, it is not full autonomy. The physician must be available for consultation and review of patient charts as specified in the agreement.

Physician Assistants (PAs):

• Supervision Requirements: PAs in Texas operate under the direct supervision and delegation of a licensed physician. A 'Delegation Agreement' or 'Supervision Agreement' is required, outlining the scope of services the PA can provide, including prescribing. This agreement must be filed with the TMB and the Texas Physician Assistant Board. (Texas Occupations Code § 204.201 et seq.; 22 TAC § 185.10).
• Prescriptive Authority: PAs can prescribe medications, including controlled substances, as delegated by their supervising physician and within the scope of their delegation agreement. The same rules for controlled substance prescribing apply as for physicians, including PDMP checks.
• Independent Practice: PAs do not have independent practice authority in Texas. Their practice is always contingent on a delegating physician.

Delegation Rules for Medical Assistants (MAs) in Medspas:

• Strict Limitations: The delegation of medical tasks to Medical Assistants (MAs) in Texas, particularly in settings like medspas, is highly restrictive. MAs are generally limited to performing administrative and very basic clinical tasks that do not require independent medical judgment. (22 TAC § 193.1 et seq.).
• Prohibited Acts: MAs cannot perform acts that constitute the practice of medicine, including but not limited to: diagnosing, prescribing, interpreting diagnostic tests, performing invasive procedures (e.g., injections, laser treatments, chemical peels, IV insertions) unless under direct, on-site supervision for specific tasks and within strict parameters. The TMB has issued guidance clarifying that many common medspa procedures (e.g., Botox injections, dermal fillers, advanced laser treatments) cannot be delegated to an MA, even under indirect supervision. These procedures typically require a physician, NP, or PA to perform them, or for the MA to be under direct, immediate supervision by a physician or other authorized practitioner, with the delegating practitioner physically present in the treatment room.
• Supervision: Any delegated task must be performed under appropriate supervision, which can range from general supervision (for administrative tasks) to direct, on-site supervision (for limited clinical tasks). The delegating physician bears full responsibility for the MA's actions.

Other Mid-Level Providers: Other licensed professionals, such as Licensed Professional Counselors (LPCs) or Licensed Clinical Social Workers (LCSWs), operate under their respective board's scope of practice, which generally does not include prescribing or performing medical procedures.

Navigating Texas's strict Corporate Practice of Medicine (CPOM) doctrine requires careful consideration of business structure, particularly for non-physician-owned entities seeking to operate in the healthcare space. The primary compliant model is the Professional Corporation (PC) or Professional Association (PA) for clinical services, coupled with a Management Services Organization (MSO) for administrative support.

PC-MSO Structures:

• When Needed: A PC-MSO structure is essential whenever a non-physician or non-physician-owned entity wishes to provide administrative, technological, or marketing support to a physician-led practice that delivers medical services. This is the standard for telehealth companies, medspas, dental practices, and wellness clinics that are not wholly owned by licensed physicians.
• Professional Corporation (PC) / Professional Association (PA): This entity (e.g., a Texas Professional Association or Professional Corporation) must be 100% owned by one or more Texas-licensed physicians (or other licensed professionals for their respective services, e.g., dentists for dental PCs). This entity directly employs or contracts with the physicians and other licensed healthcare professionals (NPs, PAs) who provide clinical services to patients. All clinical decisions, diagnoses, treatment plans, and prescribing authority reside solely with the PC/PA and its licensed providers.
• Management Services Organization (MSO): The MSO is a separate, non-physician-owned entity (e.g., LLC or C-Corp) that provides non-clinical, administrative, and management services to the physician-owned PC/PA. These services typically include billing, scheduling, marketing, IT, human resources (for non-clinical staff), facilities, equipment, and other operational support. The MSO charges the PC/PA a fair market value (FMV) fee for these services.
• Management Services Agreement (MSA): A comprehensive MSA legally defines the relationship between the MSO and the PC/PA. It must clearly delineate the services provided by the MSO, the fees charged (which must be FMV and not tied to patient volume or revenue from professional services to avoid fee-splitting), and explicitly state that the MSO has no control over clinical decisions or the practice of medicine. The MSA is critical for compliance.

Fee-Splitting Rules: Texas has strict prohibitions against fee-splitting (Texas Occupations Code § 102.001 et seq.). This means a physician cannot share a percentage of their professional fees (revenue generated from patient care) with a non-physician entity or individual in exchange for referrals or other services. The MSO's compensation from the PC/PA must be based on a fixed fee, a cost-plus model, or another FMV arrangement that is not contingent on or a percentage of the professional fees generated by the PC/PA. Violations can lead to severe penalties, including license revocation.

Professional Corporation Requirements:

• Ownership: As noted, only licensed professionals (e.g., physicians for a medical PC) can own shares in a Texas Professional Corporation or Professional Association. (Texas Business Organizations Code § 301.003, § 301.007).
• Name: The name of the professional entity must comply with TMB rules, typically including 'P.A.' or 'P.C.' and clearly indicating the professional nature.
• Purpose: The PC/PA's sole purpose must be to provide professional services.

How to Structure Ownership for Compliance:

• Physician Control: Ensure that the physician owner(s) of the PC/PA maintain ultimate authority and control over all clinical aspects of the practice. This includes hiring and firing clinical staff, setting clinical protocols, and making all patient care decisions.
• Fair Market Value: All transactions between the MSO and the PC/PA, including equipment leases, space leases, and management fees, must be at fair market value and commercially reasonable to avoid kickback concerns (Texas Occupations Code § 102.001) and illegal remuneration.
• Documentation: Robust documentation, including the MSA, employment agreements, and corporate governance documents, is crucial to demonstrate compliance with CPOM and anti-kickback laws. Regular legal review of these agreements is highly recommended.

The regulatory landscape in Texas is dynamic, with ongoing legislative efforts and board actions shaping healthcare operations, particularly in telehealth and scope of practice. Key developments and anticipated changes for 2024-2026 include:

88th Legislative Session (2023) Impact:

• Telehealth Parity: While Texas has had some form of telehealth payment parity, the 88th session continued to refine the requirements for commercial health plans to reimburse for telehealth services at rates comparable to in-person services. However, parity is not absolute and can vary by plan and service type. Providers must stay updated on specific insurer policies.
• Behavioral Health Access: There's an ongoing legislative push to expand access to behavioral health services via telehealth, including potential adjustments to prescribing rules for certain psychiatric medications, aligning with federal trends post-PHE. However, strict controlled substance rules remain.
• Interstate Compacts: Texas continues to evaluate participation in various interstate compacts. While Texas is a member of the Interstate Medical Licensure Compact (IMLC), its full implementation for all physicians and the extent of its application for telehealth remain areas of ongoing administrative and legislative clarification. Participation in other compacts (e.g., APRN Compact, PT Compact) is also under review or in various stages of implementation, which could impact multi-state practice for NPs and PAs.

Board Actions and Enforcement:

• TMB Enforcement: The Texas Medical Board (TMB) remains highly active in enforcing the Corporate Practice of Medicine (CPOM) and rules related to appropriate prescribing, especially for controlled substances and off-label use (e.g., GLP-1s, hormone therapy). Recent enforcement actions have targeted entities perceived to be operating in violation of CPOM by allowing non-physician control over medical services or engaging in improper delegation. The TMB also scrutinizes 'pill mill' type operations and inappropriate telehealth prescribing.
• Medspa Oversight: There's increased scrutiny on medspas and wellness clinics regarding physician supervision, proper delegation of medical procedures, and CPOM compliance. The TMB frequently issues guidance and takes enforcement actions against facilities where non-physicians perform medical procedures without adequate supervision or where ownership structures violate state law.

Pending Legislation (Anticipated 89th Legislative Session, 2025):

• Scope of Practice for APRNs: Efforts to expand the scope of practice for APRNs, potentially moving towards full practice authority, are perennial. While significant changes face strong opposition, incremental adjustments to prescriptive authority agreements or supervision requirements may be considered.
• Artificial Intelligence (AI) in Healthcare: As AI tools become more prevalent, future legislation may address the use of AI in diagnosis, treatment planning, and patient care, including liability and regulatory oversight. This is a nascent area but expected to gain traction.
• Data Privacy: While HIPAA is federal, Texas has its own robust data privacy laws (e.g., Texas Medical Records Privacy Act, Texas Health and Safety Code Chapter 181) that may see updates to align with evolving federal standards or address new technological challenges.

Entering the Texas healthcare market requires a meticulous, multi-faceted approach to compliance. Adhering to the following practical guidance can mitigate significant risks:

Step-by-Step Compliance Checklist:

1. Legal Entity Formation: For clinical services, establish a Texas Professional Association (P.A.) or Professional Corporation (P.C.) owned 100% by a Texas-licensed physician(s). For administrative services, form a separate Management Services Organization (MSO) (e.g., LLC or C-Corp).
2. Licensure: Ensure all healthcare professionals (physicians, NPs, PAs) providing services to Texas patients hold active, unrestricted Texas licenses. Initiate licensing applications well in advance, as the process can be lengthy.
3. Management Services Agreement (MSA): Draft a comprehensive MSA between the MSO and the P.A./P.C. that clearly defines administrative services, sets fair market value fees (not percentage-based), and explicitly states the MSO has no clinical control.
4. Clinical Protocols & Policies: Develop robust clinical protocols, including those specific to telehealth, informed consent, patient evaluation, and prescribing. Ensure these meet or exceed the Texas standard of care.
5. Prescribing Compliance: Implement strict protocols for controlled substance prescribing via telehealth, requiring synchronous audio-visual encounters for initial evaluations and adhering to PDMP checks. Train providers on Texas-specific prescribing rules for all drug classes.
6. Scope of Practice Adherence: For NPs and PAs, ensure valid Prescriptive Authority Agreements or Delegation Agreements are in place, filed with the respective boards, and strictly followed. For medspas, verify that only appropriately licensed and supervised personnel perform medical procedures.
7. Informed Consent: Implement a clear, documented process for obtaining informed consent for telehealth services, explicitly detailing benefits, risks, privacy, and follow-up care options.
8. HIPAA & State Privacy: Ensure full compliance with HIPAA and the Texas Medical Records Privacy Act (Texas Health and Safety Code Chapter 181) for all patient data handling.
9. Billing & Reimbursement: Understand Texas's specific billing codes and reimbursement policies for telehealth, including commercial payer requirements and any state-specific parity laws.
10. Ongoing Monitoring: Establish a system for continuous monitoring of legislative and regulatory changes, particularly from the TMB, BON, and TSBP.

Common Pitfalls to Avoid:

• Ignoring CPOM: Attempting to operate a medical practice or medspa without a compliant physician-owned entity or a robust MSO structure is a primary enforcement target.
• Improper Fee-Splitting: Structuring MSO fees as a percentage of professional revenue or patient volume will be deemed illegal fee-splitting.
• Inadequate Supervision/Delegation: Allowing non-physicians (especially MAs) to perform medical procedures beyond their scope or without proper supervision.
• Lax Telehealth Prescribing: Prescribing controlled substances based on audio-only or asynchronous encounters, or without thorough patient evaluation.
• Lack of Texas Licensure: Practicing telehealth with Texas patients without a full, active Texas license.

Timeline Expectations for Licensing and Setup:

• Physician Licensing: Can take 3-6 months, sometimes longer, depending on the applicant's history and board backlog.
• NP/PA Licensing/Prescriptive Authority: 2-4 months, plus time for PAA/Delegation Agreement approval.
• Entity Formation: 2-4 weeks for state filing, but legal drafting of MSAs and corporate documents can take 1-2 months.
• Overall Setup: Expect a minimum of 4-6 months for full legal and operational readiness, assuming no significant delays in licensing.