Bill Name: House Bill 583 (H 583) 

Primary Sponsor: Rep. Alyssa Black and Rep. Tiffany Bluemle

Status: 1/06/2026 Referred to House Committee on Health Care

AmSpa’s Take: Many states restrict non-physician ownership of medical practices. Management services organizations are businesses that specialize in providing business support services to medical practices. This has the benefit of freeing up the physician and other providers’ time to focus on treating patients rather than paperwork. 

Analysis: Currently, Vermont does not have a statutory prohibition on general business entities from employing physicians or restricting the ownership of medical practices to licensed providers. H 583 would adopt rules prohibiting non-physician ownership, which is commonly known as the “corporate practice of medicine” doctrine (CPOM). In states that have CPOM, a common and well-established way for non-physicians to work with medical practices is by using a management services organization (MSO). MSOs are general business entities that specialize in providing the majority of business services to a medical practice. These services can include accounting, payroll, HR, managing inventory, placing advertising, and other administrative functions. H 583 would also place substantial restrictions on how the owners and employees of an MSO may interact with the medical practice and would create reporting requirements on healthcare transactions.

H 583 would prohibit anyone who is not a licensed physician or who meets the below requirements from owning a medical practice, engaging in the practice of medicine, or employing licensed physicians. A medical practice may employ physicians if Vermont licensed physicians hold a majority of the voting shares and are a majority of the directors. All officers, except for the secretary and treasurer, must be licensed in Vermont to practice medicine. Certain federal or state-owned facilities, nonprofit hospitals, schools, and ambulatory surgery centers could also employ physicians. The entities would still be prohibited from interfering or controlling the judgment or clinical decision making of the physicians. 

H 583 would also prohibit certain transactions involving healthcare entities. These include: 1) a transaction that would give a party ownership of the core business operation of an essential community provider; 2) financing the acquisition of a healthcare entity with debt that becomes the obligation of a healthcare entity; 3) issuing dividends financed by debt; 4) entering any contract or purchasing arrangement except for those necessary for the health purposes of the practice and at fair market value; or 5) a transaction that would result in the health care entity no accepting or limiting acceptance of patients covered by Medicaid or Medicare.

H 583 also contains substantial restrictions on contracts between medical practices and MSOs. The bill bans straw ownership of medical practice. This means that the owners of medical practices must show meaningful ownership of the medical practice and be present in the state and substantially engaged in delivering medical care at the practice or managing the practice. The bill also bans dual ownership or interests. This prohibits a shareholder, director, or officer of a medical practice from:

• Owning or controlling any shares or serving as a director, officer, independent contractor, or employee of both the medical practice and the contracted MSO;
• Receive substantial compensation or renumeration from the MSO in return for owning a medical practice; or
• Under this section, an MSO that is majority owned by medical practice could have shareholder, director, or officer with dual interests. 

H 583 would also ban stock transfer restriction agreements. These prohibit a medical practice from transferring control over the sale, or restriction on sale, or encumbrance of the medical practice’s shares or assets. Medical practices may also not relinquish control over their administrative, business, or clinical operations that may affect the clinical decision making or the nature or quality of medical care. This includes decision making authority over hiring, compensation, schedules, disbursement of revenues, negotiating with hospitals, setting staffing levels, or setting the amount of time a licensee can spend with a patient. They are also prohibited from making diagnostic coding decisions, setting clinical standards or policies, setting billing policies, setting prices or rates, or negotiants or performing contracts with third parties. MSOs would also be prohibited from advertising medical services under any name but that of the medical entity. MSOs may exercise control over administrative and business operations that do not affect clinical decision making or quality of care. 

H 583 also provides protections for licensees and employees by banning entities from enforcing restrictive covenants or interfering in the professional judgment or clinical decision making of the licensee. In this case, restrictive covenants include non-compete, non-disclosure and non-disparagement: these would all be void and unenforceable. 

This bill will also require that businesses file a report requiring disclosing information on control and ownership interests of the healthcare entity. This information must be updated every two years or if the entity completes a transaction that makes a material change. This information will be made part of a public database. 

Many states, including Rhode Island, Washington, Oregon and California, attempt to pass laws regarding the scope of MSO practices. Often they have the goal of limiting avenues for abuse or exercising undue control over the medical practices. However, these restrictions can make it more difficult or impossible for compliant MSOs to function effectively. This bill is somewhat unusual as the trend has often been relaxing CPOM restrictions; this runs counter to that by creating the restriction in Vermont where there previously wasn’t one. If you would like additional information, to read the language of the bill or to contact the sponsors or committee, you can find the information you need through this link: H 583.