If you are starting or restructuring a medical clinic, a telehealth service, or a direct primary care practice in Minnesota, the first legal question is who may own it. Minnesota case law bars a lay person or a lay-owned company from practicing medicine through doctors it hires, with limited exceptions. Since 2026, a statute, Minn. Stat. § 147.081, subd. 1, also makes it unlawful “for any person who is not a natural person to practice medicine,” which by its words reaches a physician-owned company too. A separate statute, chapter 319B, authorizes a professional firm owned and governed by licensed professionals to furnish professional services. A non-physician founder or investor can still build and run the business side through a separate management company, within limits on control and on how its fee is set. This page, part of my Minnesota business compliance practice, covers those rules for physicians, investors, and platform operators. Dental ownership, patient privacy, and practice sales have their own pages, collected under legal help for Minnesota medical practice owners.

What Is the Corporate Practice of Medicine Doctrine in Minnesota?

The corporate practice of medicine doctrine is a Minnesota rule, from the courts and now also a statute, that keeps the practice of medicine in the hands of licensed individuals. A company owned by people who are not licensed may not practice medicine by hiring licensed doctors, unless a statute permits that form of practice. The 2026 statute is broader: Minn. Stat. § 147.081, subd. 1, makes it unlawful “for any person who is not a natural person to practice medicine,” so its words reach a company owned by physicians as well.

The Minnesota Supreme Court confirmed the doctrine in Isles Wellness, Inc. v. Progressive Northern Insurance Co., 703 N.W.2d 513 (Minn. 2005). The court’s summary reads: “we recognize that, with limited exceptions, the corporate practice of medicine doctrine exists in Minnesota and hold that the corporate employment of chiropractors is prohibited except as expressly permitted by statute.” Quoting an earlier decision, the court explained the point: “the patient shall be the patient of the licensed physician not of a corporation or layman,” and “There is no place for a middleman.” The court named the concerns as “the specter of lay control over professional judgment, commercial exploitation of health care practice,” and divided loyalty. Three justices dissented in part, concluding that the doctrine “is not firmly grounded in Minnesota common law,” and the majority said “The legislature is the appropriate branch of government to debate and evaluate the necessity and desirability of alternative forms of health care delivery in this state.”

In 2026, the Legislature added a first sentence to Minn. Stat. § 147.081, subd. 1: “It is unlawful for any person who is not a natural person to practice medicine as defined in subdivision 3.” Subdivision 3 defines that practice to include a person who “offers or undertakes to prevent or to diagnose, correct, or treat in any manner or by any means, methods, devices, or instrumentalities, any disease, illness, pain, wound, fracture, infirmity, deformity or defect of any person.” That sentence names no exception. The professional-firm route this page describes rests on a separate statute, Minn. Stat. § 319B.03, subd. 1, which lets a Minnesota firm with an election in effect “furnish professional services within Minnesota as provided in sections 319B.01 to 319B.12.” For a founder, the case law and the statute point the same direction: the entity that offers medical care to patients should be one the law allows to practice.

Which Health Care Practices Does the Doctrine Reach?

The doctrine reaches a health care field when its practitioners do four things: they practice healing, they belong to a state-licensed profession, they complete significant training, and they exercise independent professional judgment. Medicine meets all four. The Minnesota Supreme Court applied the doctrine to chiropractic and held it does not reach physical therapy or massage therapy.

In Isles Wellness, the court explained that the prohibition arises because practitioners are “members of a state licensed profession, must undergo significant training and education, and enjoy independent professional judgment.” Massage therapy failed because Minnesota did not license it at the time, and physical therapy failed because therapists then worked largely on referral from other providers, which limited their independent judgment.

The Court of Appeals applied the same four criteria in Allstate Indemnity Co. v. Twin Cities Diagnostic Center, L.L.C., No. A21-1116 (Minn. App. May 23, 2022). Three non-physicians owned an MRI facility whose accreditation required a physician medical director responsible for clinical services and for supervising medical staff. The court held that the facility is subject to the doctrine and that “lay ownership of such a facility is prohibited.” It also rejected the argument that the technical side of imaging sits outside the doctrine. Dentistry has its own statute, covered in dental practice ownership rules.

What Exceptions Let an Entity Provide Medical Care in Minnesota?

The main exception is a professional firm under the Minnesota Professional Firms Act, chapter 319B, owned and governed by licensed professionals. A health maintenance organization is a second statutory route, and the Minnesota Supreme Court noted hospitals and nonprofit corporations as common exceptions in other states.

Under Minn. Stat. § 319B.03, subd. 1, “A Minnesota firm that has in effect an election under subdivision 2 may furnish professional services within Minnesota as provided in sections 319B.01 to 319B.12.” Professional services include the right “to practice medicine and surgery under sections 147.01 to 147.22” (Minn. Stat. § 319B.02, subd. 19). The election goes in the firm’s organizational document, which must “state that the Minnesota firm elects to operate under those sections,” “acknowledge that the Minnesota firm is subject to those sections,” and “specify from the list stated in section 319B.02, subdivision 19, the category or categories of professional services the Minnesota firm is authorized to provide” (§ 319B.03, subd. 2). Under Minn. Stat. § 319B.11, subd. 3(a), “No professional firm may furnish professional services within Minnesota until the firm files with each board having jurisdiction over the pertinent professional services” a copy of its organizational document, a report, and a fee, and subdivision 4 requires a report to those boards every year. The formation steps are covered in the Minnesota Professional Firms Act guide.

One firm may combine professions: under Minn. Stat. § 319B.40, physicians, physician assistants, registered nurses, and the other listed health professionals “are specifically authorized to practice any of these categories of services in combination if the individuals are organized under this chapter,” though no one may practice beyond their own license.

Two rules keep the firm in licensed hands:

  1. Owners. Under Minn. Stat. § 319B.07, subd. 1, “Ownership interests in a professional firm may not be owned or held, either directly or indirectly, except by” the listed holders, chiefly “professionals who, with respect to at least one category of the pertinent professional services, are licensed and not disqualified.”
  2. Governance. Under Minn. Stat. § 319B.09, subd. 1, governance authority must rest with “one or more professionals, each of whom is licensed to furnish at least one category of the pertinent professional services,” or with “a surviving spouse of a deceased professional who was the sole owner of the professional firm, while the surviving spouse owns and controls the firm, but only during the period of time ending one year after the death of the professional.” A nonprofit corporation under chapter 317A may also be a professional firm, and there “at least one individual possessing governance authority must be a professional licensed to furnish at least one category of the pertinent professional services.”

Health maintenance organizations have their own statute: under Minn. Stat. § 62D.22, subd. 3, “Any health maintenance organization authorized under sections 62D.01 to 62D.30 shall not be deemed to be practicing a healing art.” In Isles Wellness, the court also wrote that “Other common exceptions to the corporate practice of medicine doctrine include hospitals and nonprofit corporations,” citing decisions from other states and a 1955 Minnesota Attorney General opinion. Those are persuasive sources, not a Minnesota holding, so a hospital or nonprofit structure should rest on its own analysis.

How Does a Physician-Owned Firm Work With a Management Company?

A non-physician founder or investor can own a separate management company that contracts with the physician-owned professional firm. The firm may hand the management company administrative and operational work. It may not hand over professional judgment, the governance authority chapter 319B places with licensed professionals, or the ownership-based control rights chapter 319B reserves to licensed owners.

The delegation line is in Minn. Stat. § 319B.09, subd. 1(c): “Individuals who possess governance authority within a professional firm may delegate administrative and operational matters to others. No decision entailing the exercise of professional judgment may be delegated or assigned to anyone who is not a professional licensed to practice the professional services involved in the decision.” Governance authority itself “means the authority and responsibility to: (1) determine important policies for a professional firm; (2) superintend the professional firm’s overall operations; and (3) maintain general, active management of and ultimate control over all matters involving professional judgment” (Minn. Stat. § 319B.02, subd. 9), and under § 319B.09, subd. 1(a), “a professional firm’s governance authority must rest with” the licensed professionals or surviving spouse described above.

In practice, a management company can take on billing and collections, the lease, equipment, non-clinical staff, scheduling software, marketing, and bookkeeping. Marketing has a licensing edge. Under Minn. Stat. § 147.081, subd. 3, a person not exempted under section 147.09 practices medicine by advertising, holding out, or representing in any manner that it may practice medicine in Minnesota. Clinical protocols, which patients to treat and how, clinical hiring standards, and medical records decisions belong to the physicians.

The second limit is control that comes through ownership. A “partial right” is “a right in or with respect to an ownership interest where the right is by itself insufficient to make the right’s holder an owner” (§ 319B.02, subd. 15). Under Minn. Stat. § 319B.07, subd. 3, “Except as permitted by this paragraph, no professional firm may sell, grant, give, allocate, issue, or otherwise transfer a partial right,” and an owner may “grant a proxy to a person who meets the requirements of subdivision 1.” Paragraph (b) provides that “no owner may transfer any partial right” beyond agreements with other owners and a proxy to a qualifying holder, and paragraph (c) provides that “Except as permitted by paragraphs (a) and (b), no person may hold or transfer a partial right.” Subdivision 4 provides that a transfer in violation of the section “is void.” A management agreement that gives the investor a proxy, an option over the physician’s shares, or veto rights tied to ownership should be checked against these subdivisions before anyone signs. Physicians carry personal exposure too: Minn. Stat. § 147.091, subd. 1(i), makes “Aiding or abetting an unlicensed person in the practice of medicine” a ground for discipline. The same paragraph adds “except that it is not a violation of this paragraph for a physician to employ, supervise, or delegate functions to a qualified person” practicing within that person’s license, registration, or delegated authority.

What Fee Arrangements Raise Fee-Splitting and Kickback Problems?

Several sets of rules govern how a management company is paid, including these four. The first is the Board of Medical Practice’s fee-splitting ground, and the second is a Minnesota statute applying the federal anti-kickback restrictions to everyone in the state. The third is a Minnesota crime for remuneration tied to referrals or recommendations paid under federal health care programs and listed state programs. The fourth is the federal Anti-Kickback Statute with its safe harbor for management contracts. A fee set in advance at fair market value is the design these rules point toward. Among other conditions, the 42 C.F.R. § 1001.952(d) safe harbor requires a compensation method that does not take into account the volume or value of referrals or other business between the parties.

Fee splitting. Minn. Stat. § 147.091, subd. 1(p), lists “Fee splitting, including without limitation” four clauses. Clause (1) covers “paying, offering to pay, receiving, or agreeing to receive, a commission, rebate, or remuneration, directly or indirectly, primarily for the referral of patients or the prescription of drugs or devices.” Clause (2) covers “dividing fees with another physician or a professional corporation, unless the division is in proportion to the services provided and the responsibility assumed by each professional and the physician has disclosed the terms of the division.” Clause (3) reaches referrals to a provider in which the physician has a financial or economic interest unless that interest is disclosed, and clause (4) reaches “dispensing for profit any drug or device, unless the physician has disclosed the physician’s own profit interest.” Disclosure has its own form: “The physician must make the disclosures required in this clause in advance and in writing to the patient and must include in the disclosure a statement that the patient is free to choose a different health care provider.” The clause “does not apply to the distribution of revenues from a partnership, group practice, nonprofit corporation, or professional corporation to its partners, shareholders, members, or employees if the revenues consist only of fees for services performed by the physician or under a physician’s direct supervision, or to the division or distribution of prepaid or capitated health care premiums, or fee-for-service withhold amounts paid under contracts established under other state law.”

Minnesota’s anti-kickback rule. Under Minn. Stat. § 62J.23, subd. 2(a), “until rules are adopted by the commissioner under this section, the restrictions in the federal Medicare antikickback statutes . . . apply to all persons in the state, regardless of whether the person participates in any state health care program.” Subdivision 3 provides that “The commissioner may assess a fine against a person who violates this section.”

Minnesota’s illegal remuneration crime. Under Minn. Stat. § 609.542, subd. 2, “A person who intentionally solicits or receives money, a discount, a credit, a waiver, a rebate, a good, a service, employment, or anything else of value” in return for listed acts, or who “intentionally offers or provides” anything of value to induce them, “is guilty of a crime,” where the acts include “referring an individual to a person for the furnishing or arranging for the furnishing of any item or service” and “arranging for or recommending purchasing, leasing, or ordering any good, facility, service, or item for which payment may be made in whole or in part under a federal health care program, behavioral health program under chapter 254B, or program under chapter 142E,” and subdivision 3(a) provides that “Subdivision 2 does not apply to any payment, discount, waiver, or other remuneration exempted under United States Code, title 42, section 1320a-7b(b)(3), or payment made under a federal health care program that is exempt from liability by United States Code, title 42, section 1001.952.”

Federal law. The federal Anti-Kickback Statute, 42 U.S.C. § 1320a-7b, reaches both sides of a payment. Subsection (b)(1) makes it a felony for “Whoever knowingly and willfully solicits or receives any remuneration (including any kickback, bribe, or rebate) directly or indirectly, overtly or covertly, in cash or in kind” in return for referrals or “in return for purchasing, leasing, ordering, or arranging for or recommending purchasing, leasing, or ordering any good, facility, service, or item for which payment may be made in whole or in part under a Federal health care program.” Subsection (b)(2) does the same for “Whoever knowingly and willfully offers or pays any remuneration” to induce a person “to refer an individual to a person for the furnishing or arranging for the furnishing of any item or service for which payment may be made in whole or in part under a Federal health care program,” or “to purchase, lease, order, or arrange for or recommend purchasing, leasing, or ordering” such a good or service. The statute lists its own exceptions in subsection (b)(3), and federal regulations add safe harbors. The safe harbor for personal services and management contracts, 42 C.F.R. § 1001.952(d)(1), protects compensation only when every listed standard is met, including that “The agency agreement is set out in writing and signed by the parties,” “The term of the agreement is not less than 1 year,” and the compensation methodology “is set in advance, is consistent with fair market value in arm’s-length transactions, and is not determined in a manner that takes into account the volume or value of any referrals or business otherwise generated between the parties.” I suggest documenting how the fee was valued when the agreement is signed, because fair market value is one of the safe harbor’s conditions.

Medicare and Medicaid billing agents. A management company that receives the practice’s Medicare payments as its billing and collection agent may be paid by Medicare only if, among other conditions, “The agent’s compensation is not related in any way to the dollar amounts billed or collected” (42 C.F.R. § 424.73(b)(3)). Under 42 C.F.R. § 424.73(b)(3), the agent’s compensation also “is not dependent upon the actual collection of payment,” and 42 C.F.R. § 424.80(b)(5) applies these conditions to a physician’s or group’s agent. Medicaid likewise pays a billing agent only if its compensation is “Not related on a percentage or other basis to the amount that is billed or collected” and “Not dependent upon the collection of the payment” (42 C.F.R. § 447.10(f)).

For a larger group practice, a management agreement that results in “the sharing of 40 percent or more of the health care entity’s revenues with another entity” can also bring the health care transaction notice and data-reporting rules in Minn. Stat. § 145D.01 and Minn. Stat. § 145D.02.

How Do Licensing Rules Apply to Telehealth for Minnesota Patients?

A physician who treats a patient located in Minnesota by video practices medicine in Minnesota and needs a Minnesota license or a Minnesota interstate telehealth registration. A physician licensed in another state is exempt from that registration in limited cases. A platform company that is not a natural person may not practice medicine itself, and chapter 319B’s ownership limits apply to the professional firm that furnishes the care. Under Minn. Stat. § 147.081, subd. 3, a person not exempted under section 147.09 is practicing medicine if the person “advertises, holds out to the public, or represents in any manner that the person is authorized to practice medicine in this state.” For that reason, I suggest that the platform’s marketing present the care as the physicians’ firm’s care.

Minn. Stat. § 147.081, subd. 1, requires that the physician either “holds a valid license issued according to this chapter” or “is registered to provide interstate telehealth services according to section 147.032.” Under Minn. Stat. § 147.032, subd. 1(a), “A physician not licensed to practice medicine in this state may provide medical services to a patient located in this state through interstate telehealth if the following conditions are met”:

  1. “the physician is licensed without restriction to practice medicine in the state from which the physician provides telehealth services”
  2. “the physician has not had a license to practice medicine revoked or restricted in any state or jurisdiction”
  3. “the physician does not open an office in this state, does not meet with patients in this state, and does not receive calls in this state from patients”
  4. “the physician annually registers with the board, on a form provided by the board.”

Subdivision 2 provides that a physician “who holds a valid license to practice medicine in another state or jurisdiction” is “not subject to the registration requirement of subdivision 1, paragraph (a), clause (4),” for care “provided in response to an emergency medical condition,” care on “an irregular or infrequent basis,” defined as “less than once a month or . . . to fewer than ten patients annually,” and care given “in consultation with a physician licensed in this state” where “the Minnesota physician retains ultimate authority over the diagnosis and care of the patient.” Under § 147.091, subd. 1(z), “Providing interstate telehealth services other than according to section 147.032” is a ground for discipline. Subdivision 4 of § 147.032 also requires compliance with Minnesota’s health records sections; see HIPAA and Minnesota health records rules. Registration under § 147.032 is for physicians. Nurse practitioners follow their own statute: under Minn. Stat. § 148.211, subd. 1a, “No advanced practice registered nurse shall practice as an advanced practice registered nurse unless the advanced practice registered nurse is licensed by the board under this section.”

On the business side, I suggest that the physicians’ professional firm be the party that contracts with patients for care. The platform can then contract with that firm for technology and administrative services. I suggest this order because the Minnesota Supreme Court, quoting an earlier decision, put the patient with “the licensed physician not of a corporation or layman.” A professional firm formed in another state can elect to furnish professional services in Minnesota: under Minn. Stat. § 319B.04, subd. 1, “A foreign firm that has in effect an election under subdivision 2 may furnish professional services within Minnesota as provided in sections 319B.01 to 319B.12,” and subdivision 2 places the election in the firm’s “certificate of authority or statement of foreign qualification.” There the firm must state its election, acknowledge that it is subject to sections 319B.01 to 319B.12, “state that, to the extent its generally applicable governing law conflicts or differs with those sections, the foreign firm has made the necessary changes to the agreements and other documents controlling its structure, governance, operations, and internal affairs so as to comply with those sections,” and specify the categories of professional services it “is authorized to provide within Minnesota” (subd. 2). In one inquiry I answered, a licensed clinician had formed a company in another state to offer telehealth to Minnesota patients. The clinician asked how to register that company in Minnesota with professional-firm language and how to register it with the clinician’s licensing board. The certificate’s professional-firm language, the order of the filings, and the board’s registration requirements were the details to get right.

How Does Minnesota Treat Direct Primary Care Memberships?

Minnesota enacted a direct primary care statute in 2026 that declares a qualifying membership agreement is not insurance, but that statute does not take effect until August 1, 2027. I suggest that a practice launching now design its agreement to the statute’s terms, because the not-insurance rule reaches only an agreement that meets them.

Minn. Stat. § 62A.01, subd. 5, provides that “A direct primary care service agreement under section 62Q.20 is not insurance and is not subject to this chapter,” and that a provider “is not required to obtain a certificate of authority or license under this chapter or chapter 60A, 62C, 62D, or 62N to market, sell, or offer to sell a direct primary care service agreement that meets the requirements of section 62Q.20.” The revisor’s note states that subdivision 5 “is effective August 1, 2027,” and Laws 2026, chapter 131, section 3, sets the same date for Minn. Stat. § 62Q.20.

Once in effect, § 62Q.20 sets conditions an agreement must meet, including these:

  • Form. Subdivision 2 requires that the agreement “be in writing,” “be signed by the primary care provider or agent of the primary care practice and the direct patient or the patient’s legal representative,” “allow either party to terminate the direct agreement upon written notice to the other party according to subdivision 3,” “describe the scope of the primary care services that are to be covered under the direct agreement,” “specify the fee to be paid on a monthly basis or as specified in the direct agreement,” and “specify the duration of the direct agreement.”
  • Who may offer it. A “primary care provider” is “a physician who is licensed under chapter 147 or an advanced practice registered nurse licensed under chapter 148, who is authorized to engage in independent practice, and who is qualified to provide primary care services” (subd. 1).
  • Required statement. The agreement “must clearly state that a direct primary care service agreement: is not considered health insurance; does not meet the requirements of federal law mandating individuals to purchase health insurance; and the fees charged in the agreement may not be reimbursed or applied toward a deductible under a health plan offered through a health plan company” (subd. 2).
  • Patients and pricing. A practice “may not decline to accept a new patient or discontinue care to an existing patient solely on the basis of the patient’s health status” (subd. 3), and “The direct fee must not vary from patient to patient based on the patient’s health status or sex” (subd. 4).
  • Refunds and fee changes. After a patient’s written termination notice, “the direct practice must promptly refund the unearned amount of the direct fees,” and a practice “shall not increase the monthly fee that has been negotiated with an existing direct patient more frequently than on an annual basis” (subd. 4). “A direct practice must provide advance notice of at least 60 days to existing patients of any change in the direct fee” (subd. 4).
  • No double billing. A practice “must not submit a claim for payment to a health plan company for a primary care service provided to a direct patient that is covered by a direct agreement” (subd. 5).
  • Enforcement. “A violation of this section shall constitute unprofessional conduct and may be grounds for disciplinary action under chapters 147 and 148” (subd. 7).

A direct primary care practice owned by a non-physician investor still faces the ownership rules above, because the membership statute governs the agreement with the patient, not who may own the practice.

What Happens When a Clinic Structure Violates the Doctrine?

A clinic that violates the doctrine faces payment disputes, possible criminal exposure under the medical practice statute, discipline for the physicians involved, and void ownership transfers under chapter 319B. In a 2006 no-fault payment case about lay-owned chiropractic clinics, decided under the court-made doctrine, the Minnesota Supreme Court declined to void the contracts absent a knowing and intentional violation. It relied in part on the doctrine’s lack of clarity for chiropractors before 2005.

In Isles Wellness, Inc. v. Progressive Northern Insurance Co., 725 N.W.2d 90 (Minn. 2006), no-fault insurers refused to pay a lay-owned chiropractic clinic for care that licensed chiropractors had provided. The court said its precedent “does not support creating a per se rule, which would void all contracts entered into in violation of the corporate practice of medicine doctrine as a matter of public policy,” and held it would not void a contract unless the corporation’s actions showed “a knowing and intentional failure to abide by state and local law.” The owner had asked the chiropractic board and consulted counsel before forming the clinics, and the court wrote that “the record shows an obvious intent to try to comply with Minnesota law.” The court added that “given the lack of clarity regarding the applicability of the corporate practice of medicine doctrine to chiropractors before” its 2005 decision, “the interests of justice do not favor declaring the contracts void.” In Twin Cities Diagnostic, the Court of Appeals concluded as a matter of law that the doctrine applied to the lay-owned MRI facility and its owners. It sent the case back to decide whether the violation was knowing and intentional, because the insurers’ duty to pay turned on that question.

Other consequences come from statute:

  • Criminal. Under Minn. Stat. § 147.081, subd. 2, “Any person violating the provisions of subdivision 1 or section 147.082 is guilty of a gross misdemeanor.”
  • Physician discipline. Under Minn. Stat. § 147.091, subd. 1, “The board may refuse to grant a license, may refuse to grant registration to perform interstate telehealth services, or may impose disciplinary action as described in section 147.141 against any physician” on the listed grounds, which include aiding or abetting unlicensed practice and fee splitting.
  • Void transfers. Under Minn. Stat. § 319B.07, subd. 4, “A sale, grant, gift, allocation, issuance, undertaking, creation, pledge, or other transfer in violation of this section is void,” so an investor’s purchased stake in a professional firm may not exist at all.

How Do You Check an Existing Clinic Structure?

You can check a structure by tracing who owns the entity that treats patients, who controls its clinical decisions, and how money moves between it and any management company. Each answer maps to a rule above, and a gap can be fixed by restructuring before a payer, an insurer, or a board raises it.

I suggest working through these questions in order, because the later ones depend on the earlier ones:

  1. Which entity contracts with patients and bills for care? It should be a professional firm with an election in effect, which Minn. Stat. § 319B.03, subd. 1, authorizes to “furnish professional services within Minnesota,” or another route described above, such as a health maintenance organization under § 62D.22.
  2. Did that entity make its chapter 319B election, and does it name medicine? The organizational document should contain the statement, the acknowledgment, and the specification § 319B.03, subd. 2, requires. Did it make the board filing § 319B.11, subd. 3, requires before furnishing professional services within Minnesota?
  3. Is every owner, direct or indirect, an eligible holder? Section 319B.07, subd. 1, reaches interests held “directly or indirectly,” so a holding company above the firm counts.
  4. Who holds governance authority, and what has been delegated? Clinical decisions stay with licensed professionals under § 319B.09, subd. 1(c).
  5. Does any agreement give a non-owner a proxy, an option, or control tied to ownership? Those are partial rights under § 319B.07, subd. 3.
  6. How is the management fee set? The fee should fit the fee-splitting ground in § 147.091, subd. 1(p), and the safe harbor conditions in 42 C.F.R. § 1001.952(d), because both turn on how the fee is calculated. If the management company receives Medicare or Medicaid payments as the practice’s billing agent, the federal billing-agent rules in the fee section also require compensation not related to the amounts billed or collected.
  7. Do remote physicians hold a Minnesota license or a § 147.032 registration?

Not every fix is a legal document. A founder and the physicians can renegotiate control and economics directly, and a non-physician founder can bring a physician in as an owner of the professional firm. A CPA can value the management fee and set up the accounting between the two companies. A health care billing consultant can handle payer enrollment and claims setup, which may cost less than an attorney for those tasks. Website tracking tools on a clinic site raise separate questions under the Minnesota Consumer Data Privacy Act. If ownership is changing hands, the buyer must also be someone Minnesota allows to own the practice; see selling a medical practice in Minnesota.

Can my company own the clinic if the doctors are independent contractors?

Your company may not be the one providing the medical care, whatever label the doctors carry. Minn. Stat. § 147.081, subd. 1, makes it unlawful for a person who is not a natural person to practice medicine. In Allstate Indemnity Co. v. Twin Cities Diagnostic Center (Minn. App. 2022), a lay-owned MRI facility’s accreditation required a physician medical director. The court held that lay ownership of such a facility is prohibited. Your company may instead provide management services to a physician-owned professional firm with an election under Minn. Stat. § 319B.03.

Can a nurse practitioner and a physician own a clinic together?

Yes, through a professional firm whose election names both services. Minn. Stat. § 319B.40 lets the listed health professionals, including physicians and registered nurses, practice in combination if they organize under chapter 319B. Section 319B.07, subd. 1, lets an owner hold an interest if licensed, and not disqualified, in at least one of the firm’s professional services. Section 319B.40 also states that it does not authorize anyone to practice a profession for which the individual is not licensed.

Is a percentage-of-revenue management fee allowed?

It is barred when the company receives Medicare or Medicaid payments as billing agent. Medicare requires agent compensation “not related in any way to the dollar amounts billed or collected” (42 C.F.R. § 424.73(b)(3)), as does 42 C.F.R. § 447.10(f) for Medicaid. Any fee must clear Minn. Stat. §§ 609.542, 62J.23, and 147.091, subd. 1(p). The 42 C.F.R. § 1001.952(d) safe harbor’s standards include a fee set in advance at fair market value that “is not determined in a manner that takes into account the volume or value of any referrals or business otherwise generated between the parties.”

Do doctors outside Minnesota need a Minnesota license to see Minnesota patients by video?

Yes, unless exempt: Minn. Stat. § 147.081, subd. 1, requires a Minnesota license or § 147.032 registration. A physician not licensed here must be licensed without restriction where the services come from, never have “had a license to practice medicine revoked or restricted in any state or jurisdiction,” not open an office, meet patients here, or “receive calls in this state from patients,” and register annually. Subdivision 2 lifts only registration for physicians licensed elsewhere: emergencies, consultation with a Minnesota physician keeping ultimate authority, or care “less than once a month” or to “fewer than ten patients annually.”

Will a direct primary care membership sold today get the not-insurance rule?

Not before August 1, 2027. Minn. Stat. § 62A.01, subd. 5, states that a direct primary care service agreement under Minn. Stat. § 62Q.20 is not insurance. Under Laws 2026, chapter 131, section 3, that subdivision and § 62Q.20 itself take effect August 1, 2027. Designing memberships now to meet § 62Q.20, including its written statement that the agreement is not health insurance, prepares the practice for the date the sections take effect.

What if our clinic was set up the wrong way years ago?

The contracts may survive, but a violation of Minn. Stat. § 147.081, subd. 1, is a gross misdemeanor under subdivision 2. Isles Wellness, Inc. v. Progressive Northern Insurance Co., 725 N.W.2d 90 (Minn. 2006), was a no-fault case about lay-owned chiropractic clinics. The court held it will not void a contract unless the corporation’s actions show a knowing and intentional failure to abide by state and local law. It relied on the owner’s efforts to comply and on the doctrine’s lack of clarity for chiropractors before 2005. Restructuring into a compliant professional firm addresses the structure going forward.

Corporate Practice of Medicine Planning

In Minnesota, the entity that offers medical care should be one the law allows to practice, which for a physician-owned practice means a chapter 319B professional firm owned and governed by licensed professionals. A non-physician founder can build the business side through a management company, with clinical judgment left to the physicians and a fee set in advance at fair market value. Telehealth adds the Minnesota license or registration requirement, with limited exemptions from registration for physicians licensed in another state. Direct primary care memberships gain a not-insurance statute on August 1, 2027. These questions sit within my Minnesota business compliance practice and my work as a Minnesota healthcare attorney.

If you are planning a clinic, a telehealth service, or a management arrangement, email [email protected] with a brief description of the structure. I can then start an intake and conflict check before you send any confidential documents.