SUBCHAPTER 16X – MANAGEMENT ARRANGEMENTS

 

section .0100 – management arrangements

 

21 ncac 16x .0101          MANAGEMENT ARRANGEMENTS

(a)  No dentist or professional entity shall enter into a

management arrangement, contractual agreement, stipulation, or other legal

binding instrument with a business entity, corporation, proprietorship, or

other business entity, for the provision of defined business services, bundled

business services, or other business services, the effect of which may provide

control of business activities or clinical/professional services of that

dentist or professional entity, unless such management arrangement meets the

requirements of Paragraphs (b) and (c) of this Rule.  This Rule shall not apply

to agreements for the provision of legal, financial, or other services not

related to the provision of management services for a fee or to employment

arrangements between an employee and the dentist or professional entity.

(b)  Any management arrangement, contractual agreement,

stipulation, or other binding instrument shall:

(1)           be in a writing that:

(A)          is signed by all parties to the agreement;

(B)          sets forth all material terms of the arrangement

between or among the parties thereto;

(C)          describes all of the types of services to be

provided by the management company and the time periods during which those

services will be provided; and

(D)          sets forth the aggregate compensation to be paid

under the management arrangement, contractual agreement, stipulation, or other

legal binding instrument with a business entity or the precise methodology for

calculating such compensation.

(2)           be reviewed by the Board.

(c)  No management arrangement shall provide for or permit

any of the following:

(1)           direct or indirect ownership of, or control

over clinical aspects of, the dental business of a dentist or professional

entity by a management company or the grant to the management company or

another non-professional entity control over the distribution of a revenue

stream or control over a line of business of the professional entity except for

the sale of fixed assets of a dentist or professional entity permitted under

the laws of the State of North Carolina;

(2)           ownership or exclusive control of patient

records by a management company;

(3)           direct or indirect control over, or input

into, the clinical practices of the professional entity or its dentists or

ancillary personnel by a management company;

(4)           direct or indirect control over the hiring

and firing of clinical personnel or material terms of clinical personnel's

relationship with the dentist or professional entity by a management company or

a related person;

(5)           authority in the management company to

enter into or approve any contract or other arrangement, or material terms of

such contract or arrangement, between the professional entity and a dentist for

the provision of dental services or the requirement that the management company

or related person approve or give input into such contract or arrangement;

(6)           direct or indirect control over the

transfer of ownership interests in the professional entity by a management

company or other non-professional entity including, without limitation, any

agreement or arrangement limiting or requiring in whole or in part the transfer

of ownership interests in a professional entity;

(7)           payment to the management company of

anything of value based on a formula that will foreseeably increase or decrease

because of the increase or decrease in profitability, gross revenues or net

revenues of the dentist or professional entity; or

(8)           payments to the management company that, at

the time of execution of an agreement as required under Paragraph (b) of this

Rule, are likely, foreseeably and purposely in excess of the likely profits of

the professional entity not taking into account the compensation to be paid to

the management company under the management arrangement.

(d)  Notwithstanding Subparagraphs (c)(7) and (c)(8) of this

Rule, a management arrangement may provide for the following:

(1)           increased payments to the management

company based upon the lowering of costs to the professional entity or dentist;

(2)           decreased payments to the management

company based upon increases             in costs to the professional entity or

dentist; or

(3)           collection of monies, or payment of costs,

of the professional entity or dentist by the management company so long as the

amounts retained by the management company following payment of any costs of

the professional entity or dentist comply with the provisions of this Rule

relating to compensation to the management company and all sums collected or

retained by the management company in excess of costs paid by the management

company plus its compensation are paid at least monthly and at regular

intervals to the professional entity.

(e)  No dentist or professional entity shall enter into an

oral or written arrangement or scheme that the dentist or professional entity

knows or should know has a material purpose of creating an indirect arrangement

that, if entered into directly, would violate this Rule.

(f)  For purposes of this Rule, the following terms shall

have the following meanings:

(1)           "Ancillary personnel" shall mean

any individual that regularly assists a dentist in the clinical aspects of the

practice of dentistry;

(2)           "Clinical" shall mean of or

relating to the activities of a dentist as described in G.S. 90-29(b)(1)-(10);

(3)           "Employment arrangement" shall

mean an arrangement between a professional entity or dentist and an individual

who is considered an employee of the professional entity or dentist under the

common law test of an employer/employee relationship, or a leased employee

working under a written employee leasing agreement which provides that:

(A)          the individual, although employed by the leasing

company, provides services as the leased employee of the dentist or

professional entity; and

(B)          the dentist or professional entity exercises control

over all actions taken by the leased employee with regard to the rendering of

services to the same extent as the dentist or professional entity would

exercise such control if the leased employee were directly employed by the

dentist or professional entity;

(4)           "Management arrangement" shall

mean any one or more agreements, understandings or arrangements, alone or

together, whether written or oral, between a management company and a dentist

or professional entity whereby:

(A)          a management company regularly provides services for

the clinical-related business of a dentist or professional entity; or

(B)          a management company exerts control over the

management or clinical aspects of the business of a dentist or professional

entity or its or their employees or contractors; or

(C)          a management company receives a percentage of the

net or gross revenues or profits of a dentist or professional entity.

(5)           "Management company" shall mean

any individual, business corporation, nonprofit corporation, partnership,

limited liability company, limited partnership or other legal entity that is

not a professional entity or dentist;

(6)           "Professional entity" shall mean

a professional corporation, nonprofit corporation, partnership, professional

limited liability company, professional limited partnership or other entity or

aggregation of individuals that is licensed or certified or otherwise

explicitly permitted to practice dentistry under North Carolina General

Statutes; and

(7)           "Related person" shall mean any

person or entity, other than a dentist or professional entity, that owns, is

employed by, or regularly receives consideration from, a management company or

another related person.

 

History Note:        Authority G.S. 90‑29(b)(11); 90-48;

Eff. April 1, 2001.