Congressional Democrats Introduce National Corporate Practice Of Medicine Bill

Highlights

• Democrats in the U.S. Congress have introduced the Stop Corporate Takeovers of Physicians Act – legislation that, for the first time, would establish new federal restrictions on the ownership and control of physician practices.
• These restrictions include significant limitations on practice ownership and management services organization structures.
• Drawing substantially from Oregon's Senate Bill 951, the legislation would establish a federal framework in an area historically regulated at the state level, in turn raising questions about the interaction between federal requirements and existing state corporate practice of medicine laws.

Democrats in the U.S. Congress have introduced legislation that, for the first time, would establish new federal restrictions on the ownership and control of physician practices, including significant limitations on private equity and management services organization (MSO) structures. The legislation draws substantially from Oregon's Senate Bill (SB) 951 and would establish a federal framework in an area historically regulated at the state level, raising questions about the interaction between federal requirements and existing state corporate practice of medicine (CPOM) laws.

The Stop Corporate Takeovers of Physicians Act is led in the U.S. Senate by Sens. Elizabeth Warren (D-Mass.), Ron Wyden (D-Ore.) and Jeff Merkley (D-Ore.) and in the U.S. House of Representatives by Reps. Val Hoyle (D-Ore.), Alexandria Ocasio-Cortez (D-N.Y.) and Suhas Subramanyam (D-Va.). View the bill text and a one-page overview

Although the legislation has been framed principally around the roles of private equity, insurers and other corporate actors in healthcare, its operative provisions are broader. The bill would establish a federal CPOM framework, impose detailed restrictions on MSO relationships and practice governance, limit the use of noncompetition and other restrictive covenants, and establish significant federal and private enforcement mechanisms.

Given the limited legislative calendar remaining in 2026, near-term enactment would require significant additional congressional action. Regardless of its immediate legislative trajectory, the bicameral introduction establishes a federal policy marker that could inform future congressional and state-level debates.

Restrictions on Corporate Ownership and Control

At the center of the legislation is a prohibition on certain corporate ownership and control of medical practices.

Unless an exception applies, a partnership or corporate entity that is not majority-owned and controlled by licensed clinicians could not own or control a medical practice, employ or contract for the professional services of a licensed clinician, or otherwise engage in the practice of medicine.

For purposes of the legislation, majority control generally requires both majority ownership by licensed clinicians and clinician control of a majority of the entity's governing body.

The legislation includes exceptions for certain nonprofit and public healthcare providers, hospitals, hospital-affiliated clinics, critical access hospitals and rural emergency hospitals.

Significant Restrictions on MSOs

The legislation also directly targets arrangements between physician practices and MSOs, including structures sometimes characterized by critics as "friendly physician" arrangements.

Among other restrictions, an MSO generally could not own or control an interest in a medical practice, finance the acquisition of such an interest, control the transfer of practice interests or assets, participate in the management of the practice or exercise ultimate decision-making authority over specified clinical, financial and operational matters.

Those protected areas include decisions concerning clinician hiring and termination, staffing, work schedules and compensation, clinical policies, billing and coding, pricing, payer contracting, and certain revenue and financial decisions.

The legislation also would require MSO agreements to be negotiated at arm's length, with advisors independently selected by the medical practice, and impose fair-market-value requirements on MSO compensation.

These provisions could be particularly consequential for organizations using MSO structures because they address not simply formal ownership, but the degree of operational and financial control exercised through management agreements.

Physician Ownership and Employment Protections

The bill also seeks to ensure that clinician ownership represents meaningful participation in the practice rather than nominal ownership. Among other requirements, clinician owners generally would need to be licensed and present in a state in which the practice provides patient services and substantially engaged in providing medical care. This is significant since it is not common for states to have this "active practice" requirement for practice owners, whether it be in the state or otherwise.

The legislation would also eliminate certain restrictive covenants often seen in employment agreements involving clinicians. It generally would prohibit noncompete agreements, although an exception applies in certain circumstances where a clinician owns at least 25 percent of the medical practice. Covered nondisclosure and nondisparagement provisions also would be void and unenforceable, subject to specified limitations.

Significant Enforcement Authorities

The bill's enforcement provisions are notable.

The Federal Trade Commission would have authority to enforce the legislation. The bill also creates a private right of action for individuals harmed by violations, with the potential for treble damages and attorneys' fees, and authorizes enforcement by state attorneys general.

Courts finding violations may be required to order an end to the prohibited conduct and, where applicable, divestiture and disgorgement of revenue.

In addition, the legislation would amend the Social Security Act to allow exclusion from federal healthcare programs for certain entities found to be in violation.

Interaction with State CPOM Laws

The bill expressly preserves state laws imposing equal or stronger requirements governing corporate ownership, clinician protections or MSO arrangements. In effect, the legislation would establish a new federal floor while permitting states to maintain or adopt more restrictive requirements. This would represent a significant change for states that currently do not prohibit CPOM, as well as states that have adopted less-restrictive frameworks.

The proposal is notable because regulation of licensed professions and the practice of medicine has historically occurred exclusively at the state level, resulting in substantial variations in CPOM requirements across the country. The federal legislation would establish a nationwide framework modeled in significant part on Oregon's SB 951,¹ which strengthened restrictions on MSO ownership and control of medical practices and created a private right of action for certain violations. The legislation therefore raises important questions regarding the interaction between a new federal standard and existing state regulatory frameworks, as well as the potential effects of applying Oregon-style restrictions nationally. The debate is likely to focus on the legislation's intended protections for physician autonomy and clinical decision-making, as well as its potential implications for access to capital, investment, practice structures and healthcare delivery.

A Policy Marker in a Truncated Legislative Year

The timing of the legislation is important. Congress is operating under an unusually compressed calendar ahead of the November midterm elections, with the House's remaining legislative schedule further truncated. That leaves limited time for either chamber to undertake significant legislative work before members return to their districts for the election period.

The introduction should therefore be viewed in the context of both the limited legislative runway remaining in 2026 and the broader policy debate over healthcare consolidation and physician-practice ownership.

The proposal also represents a notable evolution in the policy discussion. Rather than focusing solely on transaction reporting, transparency or additional review of healthcare acquisitions, the legislation would directly regulate who may own and control medical practices and how relationships between practices and management organizations may be structured.

Though the Stop Corporate Takeovers of Physicians Act is currently a Democratic-led proposal, broader congressional scrutiny of healthcare ownership, consolidation and transparency has crossed party lines. For example, the House Committee on Energy and Commerce has considered healthcare transparency legislation that included discussion of ownership and pricing disclosure. These broader efforts differ significantly in scope and approach from the restrictions contemplated by this legislation but provide additional context for the continuing congressional focus on healthcare ownership and consolidation.

What Healthcare Stakeholders Should Watch

Given the truncated congressional calendar, near-term legislative activity will be important to monitor, but the longer-term significance may extend beyond whether this particular bill advances in 2026. Stakeholders should watch whether these concepts reemerge in the next Congress, are incorporated into broader healthcare consolidation proposals or influence continuing state-level efforts to regulate corporate ownership and control of medical practices. The legislation may also prompt debate about the federal government assuming, for the first time in more than 100 years, a direct role in regulating physician-practice ownership, the practice of medicine and the role of MSOs.

Footnote

1 Similar to SB 951, this proposed federal legislation has restrictions on dual roles for physicians in both the MSO and practice, services the MSO can provide, use of restrictive covenants and use of continuity agreements. It also provides a private right of action similar to that of SB 951.