Tennessee Corporate Practice of Medicine (CPOM) Overview
- Does Tennessee have a Corporate Practice of Medicine (CPOM) Doctrine?: Yes.
- Summary of Current Law: A strong and unambiguous ban on the corporate practice of medicine exists in Tennessee, supported by a mix of statutes, court decisions, and Attorney General opinions. The Tennessee Prohibition Against the Corporate Practice of Medicine Act and the Tennessee Practice of Medicine Act are two laws that codify this strict prohibition. These legislative provisions define specific exceptions that permit selected organizations to employ physicians in addition to establishing the general prohibition against corporate involvement in medical practice (e.g. employers covering their own staff and their relatives; hospitals; physician groups; nursing homes; as well as FQHCs (federally qualified health centers) and CMHCs (community mental health centers). A number of court rulings and official Attorney General views demonstrate how adamantly Tennessee maintains this ban. The regulatory structure in Tennessee forbids not just the corporate practice of medicine but also the corporate practice of dentistry and chiropractic, among other fields. Unless outlined an exception, a professional corporation in Tennessee may only practice a single profession (e.g. it cannot practice both physician medical care and dentistry, for example). Tennessee also allows licensed healthcare professionals to form PLLC structures, in addition to PCs, with similar rules. Moreover, outside of patient referrals, the law forbids fee splitting among doctors; in fact, breaking the Practice of Medicine statute carries a Class B misdemeanor penalty. Tennessee is also one of the strictest states when it comes to physician collaborations with nurse practitioners (NPs): The physician must have regular in-person visits with the nurse practitioner that they are supervising or collaborating with.
- Sources: Tennessee Code Ann. § 63-6-204.
What are Corporate Practice of Medicine (CPOM) Laws?
CPOM laws are regulations that prohibit standard corporations (or other non-physician entities) from practicing medicine or employing practicing physicians. The primary goal of these laws is to ensure that medical decisions are made solely based on patient care and not influenced by corporate interests. These laws vary by state, but they generally aim to protect the physician-patient relationship from commercial influence.
While the focus is often on physicians and medical care, the CPOM family of laws typically apply to a wide range of licensed healthcare providers, including psychologists, speech therapists, physical therapists, occupational therapists, mid-level providers (nurse practitioners and physician assistants), dentists, dietitians, podiatrists, chiropractors, pharmacists, optometrists, and many others. The goal of CPOM laws is shared across these professions: ensure clinical decisions aren’t influenced by corporate pressures.
Who Do These CPOM Laws Apply To?
A state’s CPOM restrictions typically apply to any standard corporate entity that seeks to provide medical or licensed healthcare services. This includes corporations, limited liability companies (LLCs), and other business entities. For an entity to comply with CPOM laws and practice medicine, it typically must be:
- 100% owned by a physician (or physicians) licensed to practice medicine in that state, and
- Formed as a special type of physician-owned legal entity: a Professional Corporation (“PC” for short). In some states, a Professional Limited Liability Company (“PLLC”) is also permitted.
Most states with CPOM laws only permit the corporate practice of medicine through these physician-owned PCs or PLLCs.
Complying with Tennessee CPOM laws
If you're looking to start a healthcare business in Tennessee and need to comply with Tennessee CPOM laws by setting up a MSO-friendly PC structure, Permit can help—affordably and fast. Feel free to reach out.
