MSA clause anatomy

Reference companion to Draft the MSA. For each clause: what it does, the market-standard pattern, how it varies by state strictness, and what to negotiate. Sample language here is illustrative, not a template. Every MSA must be drafted by healthcare regulatory counsel licensed in the state, against that state’s current law.

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Clause index

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1. Recitals and purpose

Does: Frames the relationship. Recitals are read and are used interpretively. Pattern: State that the PC is a professional entity practicing through licensed clinicians, that the MSO provides non-clinical administrative services, and that the parties intend the PC to retain complete authority over clinical matters. Negotiation note: Costless to get right. Say the true thing.

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2. Services scope

Does: Enumerates what the MSO provides. Drives the fair market value analysis: you cannot price services you haven’t described. Pattern: An exhibit listing services by category: administrative and management support; non-clinical personnel; premises, furniture, and non-clinical equipment; information technology including EHR licensing; billing and collection support; payer contracting support; financial and accounting services; marketing; purchasing; compliance program support; data analytics. Negotiation note: Put services in an exhibit, not the body — it’s easier to amend and easier to point to when supporting FMV.

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3. Clinical carve-out, the critical clause

Does: States what the MSO may not control. This is the clause a regulator reads first. Pattern:

Notwithstanding any other provision of this Agreement, [MSO] shall not, and shall have no authority to, control, direct, or interfere with the professional judgment of [PC] or its licensed personnel, including with respect to: (a) the diagnosis or treatment of any patient; (b) the selection, ordering, or interpretation of diagnostic tests; (c) the determination of whether a referral is necessary or to whom; (d) responsibility for the overall care of any patient; (e) the number of patients any clinician sees, the time devoted to any patient, or the hours any clinician works; (f) the hiring, supervision, evaluation, discipline, or termination of licensed clinical personnel; (g) the establishment or modification of clinical protocols or standards of care; (h) the ownership, custody, or content of patient medical records; (i) the assignment of diagnosis or procedure codes; or (j) the selection of clinical equipment, supplies, or pharmaceuticals.

Where the list comes from: Items (a)–(e) track California’s SB 351 enumeration of interference with professional judgment. Items (f), (i), and (j) track SB 351’s separate bar on management-entity participation in clinical staff oversight, billing, coding, and equipment selection. Oregon’s SB 951 additionally reaches scheduling, clinician compensation, and payer contract terms.¹ Draft to the strict standard even in permissive states. You will expand, the law is tightening rather than loosening, and diligence applies the worst-case jurisdiction. Negotiation note: There is nothing to negotiate here. A narrower carve-out is not a win for the MSO — it is a liability that reduces the enterprise’s value.

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4. Management fee, the other critical clause

Does: Sets what the PC pays and how. Patterns: Must also specify: monthly invoicing by the MSO; payment from the PC’s operating account; priority after clinical payroll and direct obligations; a deferral mechanism; and an annual FMV review. Negotiation note: For cost-plus, the cost base definition is where disputes live. Specify what is included, what is excluded, and the allocation methodology across PCs. See Set the management fee.

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5. Records ownership

Does: Confirms the PC owns the patient records. Pattern:

All patient medical records are and shall remain the property of [PC]. [MSO] shall provide and administer systems for the maintenance of such records solely as [PC]‘s agent, and shall have no ownership interest therein. Upon termination, [MSO] shall promptly deliver to [PC] all such records in a usable format and shall retain no copies except as required by law.

No state variance — this is a bright line everywhere. Negotiation note: The termination delivery obligation is the part that gets omitted. Insist on it, and specify the format and timeframe.

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6. Compliance allocation

Does: Allocates responsibility for regulatory compliance. Pattern: The PC is responsible for clinical and billing compliance including coding accuracy; the MSO provides personnel, systems, and program infrastructure in support; clinicians retain authority to reject a coding change; cross-reference the BAA. Negotiation note: State the coding point explicitly. It is both a CPOM item and a billing compliance item, and its absence is a self-audit finding.

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7. Term

Pattern: An initial term, often 5–20 years, with automatic renewal. A very long term with limited exit reads as control. Combined with a nominal-price share transfer, a 30-year MSA the PC can never leave is the combination regulators characterize as ownership by contract. Prefer a moderate term with clean renewal.

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8. Termination

Pattern: Termination for cause by either party with cure periods; termination for convenience on stated notice; and detailed consequences, records delivery, systems access wind-down, transition services, and final fee reconciliation. Give the PC a real termination right. California’s Attorney General has attacked friendly-PC MSA-termination provisions in litigation.² An MSA the PC cannot practically exit is a control indicator, and the absence of a meaningful exit is precisely what distinguishes a services agreement from ownership. Negotiation note: Transition services on termination protect both sides. A PC suddenly without billing, scheduling, or EHR access cannot treat patients.

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9. Exclusivity

Pattern: The PC uses the MSO exclusively for the covered services; the MSO may or may not serve other practices.

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10. Audit and inspection

Pattern: Each party may inspect the other’s records relevant to the agreement, on reasonable notice. Negotiation note: Make it mutual. One-sided audit rights in the MSO’s favor read worse than reciprocal ones, and the PC genuinely needs to verify what it is paying for.

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11. Indemnification and insurance

Pattern: The PC carries professional liability; the MSO carries general liability and errors and omissions. Cross-indemnification for each party’s own acts. Specify limits and additional-insured status.

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12. Security interest, include with care

Does: Grants the MSO a security interest in the PC’s assets or receivables to secure the fee.

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13. Transfer restriction cross-reference

Pattern: Reference the separate stock transfer restriction agreement rather than embedding the mechanics. Keeps each document readable and lets the transfer restriction be amended as state law changes without reopening the MSA.

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14. Assignment

Pattern: Whether the MSO may assign the agreement, and on what conditions. Negotiation note: Critical in a sale. An MSA that cannot be assigned, or that requires the PC’s consent, gives the clinician-owner leverage over your exit. Address it at drafting, not at the LOI.

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15. Governing law and dispute resolution

Pattern: Generally the PC’s state, since that is where the regulatory analysis lives. Specify the forum and whether arbitration applies.

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The state variant matrix

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Sources

1. Cal. S.B. 351 (2025); Or. S.B. 951 (2025). See the legislation tracker for citations and effective dates.
2. DLA Piper, Corporate practice of medicine enforcement: New pressure points and a path forward (July 2026).