A wound care group or mobile wound care program built on a clinician-owned practice paired with a separate management company is using a structure federal investigators have examined before. The practice holds the medical license, the payer contracts and the Medicare enrollment; the management company works under a services agreement and collects a management fee, sometimes alongside a branding or territory license. The Office of Inspector General (OIG) and state boards focus on three features: a fee that moves with claim volume or skin substitute use, a management company that directs clinical decisions or product choice, and ownership that a state's corporate practice of medicine and fee-splitting rules do not permit.
The Clinician-Owned Practice and Its Management Company
The clinician-owned practice signs the payer contracts and carries the Medicare enrollment it bills under. The management company works under a services agreement covering staffing, supply purchasing, billing support, marketing, and the technology platform, often with a brand or territory license for a multi-site program. What changes the legal analysis is which entity makes the clinical call, and which entity's fee rises when that call favors a particular product or a higher volume of visits. A later change in ownership raises its own diligence questions, covered separately in Wound Care Practice Acquisitions and Audit Liability.
Management Fees That Draw Scrutiny
The OIG analyzed a percentage-of-revenue management fee in a 1998 advisory opinion involving a management company that also handled billing and marketing, and concluded the fee could implicate the federal anti-kickback statute because its incentive to raise billable volume, and the risk of upcoding, rose with the fee. A federal personal services and management contracts safe harbor protects only a fee whose methodology is set in advance at fair market value and not tied to referral volume or value. A fee that scales with skin substitute applications, graft size, or collections sits outside it. A state fee-splitting rule can separately bar sharing a professional fee with a non-licensed entity; check the rule where the practice operates. The management company's own False Claims Act exposure for billing is a related, separate question, addressed in FCA Liability for Billing Companies and Management Entities.
A management fee that rises with claim volume or skin substitute use is the one feature OIG advisory opinions and state corporate practice of medicine enforcement look for first.
Clinical Control, Product Choice and the Corporate Practice Line
A state that has adopted a corporate practice of medicine doctrine requires the licensed clinician, not the management company, to control diagnosis and treatment, including which skin substitute a patient receives and how a wound is debrided. A management company that sets the product formulary or overrides the clinician's judgment can cross into the unlicensed practice of medicine, even without equity or a percentage fee. The separate product-side vendor relationship, where a skin substitute distributor aligns with the practice, is addressed in Skin Substitute Distributor Arrangements and Enforcement; this is about who inside the management relationship makes the clinical call, not which product a distributor sells. The rule, and how strictly a state enforces it, varies, so check it where the practice operates before the management company's role is finalized.
Payer Contracts, Enrollment and the Record Trail
Who signs the payer contract and who carries the Medicare enrollment should match who actually renders and directs the care. Medicare's medical review rules require that the person who provided, ordered or certified the service be identifiable in the record, so a management company holding the contracts the practice bills under, or a signature log that cannot connect a billed service to the clinician whose license supports it, is a documentation problem distinct from the structural question of who controls the arrangement. Coverage for the product itself still turns on the local coverage determination for the service billed, reviewed alongside the management question in the same audit.
Why Early Legal Counsel Is Critical
It is critical that practices and management companies retain experienced healthcare defense counsel before a services agreement, fee formula or branding license is finalized, not after an auditor or state board raises a question about it. Counsel experienced in corporate practice of medicine, fee-splitting and anti-kickback review can confirm which categories of state law apply, structure the fee to withstand a volume-based read, and document who controls the clinical decisions the arrangement affects. Addressing these questions at formation costs far less than unwinding a structure once an OIG inquiry or payer audit is underway.
Health Law Alliance's attorneys have overseen 2,000+ audits and handled 5,000+ matters, with 25+ years of experience.
Health Law Alliance defends wound care practices and management companies in payer audits and government inquiries that raise a corporate practice of medicine, fee-splitting or anti-kickback question about the management structure. If your practice or management company is facing that kind of audit or inquiry, contact us for a free, confidential consultation through our wound care audit defense practice.
