OIG Advisory Opinion 25-03: The Federal Government Just Validated the Telehealth MSO Business Model
How the Office of Inspector General's June 2025 Opinion Provides the Legal Blueprint for Compliant Telehealth Operations
On June 6, 2025, the OIG issued what may be the most significant federal regulatory guidance telehealth has ever received. The opinion validated the telehealth MSO arrangement and concluded it "would not generate prohibited remuneration under the Federal anti-kickback statute."
On June 6, 2025, the U.S. Department of Health and Human Services' Office of Inspector General (OIG) issued Advisory Opinion No. 25-03, providing what may be the most significant federal regulatory guidance the telehealth industry has ever received.
For operators, investors, and healthcare attorneys who have been asking "Is this legal?"—this opinion is the answer.
The OIG—the federal government's primary enforcer of the Anti-Kickback Statute—reviewed a telehealth MSO arrangement involving physician services, administrative support, and patient referrals, and concluded:
OIG Advisory Opinion 25-03 · June 6, 2025
"The Proposed Arrangement, if undertaken, would not generate prohibited remuneration under the Federal anti-kickback statute."
This isn't vague regulatory guidance. This is the federal government explicitly validating the telehealth MSO business model—provided it's structured correctly.
This article breaks down what the OIG reviewed, what principles they validated, what this means for telehealth operators, and how companies like Medstra have built their infrastructure to align with this federally approved framework.
June 2025
Opinion issued
Favorable
OIG conclusion
7 Safe Harbors
Requirements met
What Is an OIG Advisory Opinion?
Before diving into Opinion 25-03 specifically, it's important to understand what an advisory opinion is and why it carries significant legal weight.
The Authority
The Office of Inspector General (OIG) is the enforcement arm of the Department of Health and Human Services responsible for:
- ·Investigating healthcare fraud and abuse
- ·Enforcing the Federal Anti-Kickback Statute
- ·Administering exclusions from federal healthcare programs
- ·Imposing civil monetary penalties
When the OIG issues an advisory opinion, they're providing formal guidance on whether a specific arrangement complies with the Anti-Kickback Statute.
The Process
A party submits a detailed description of a proposed business arrangement
The OIG conducts a thorough legal analysis
The OIG issues a formal opinion on whether the arrangement would violate federal law
The opinion is published (with identifying information redacted) for public guidance
The Legal Weight
While advisory opinions are technically binding only on the parties who requested them, they provide:
- ·Federal validation of specific business practices
- ·Legal precedent that other parties can reference
- ·Regulatory guidance on what structures are compliant
- ·Defense in enforcement actions (if your arrangement matches the approved structure)
Advisory Opinions Are Rare and Valuable
The OIG issues only a handful each year, and favorable opinions provide the closest thing to federal "pre-approval" that exists in healthcare.
What the OIG Reviewed in Advisory Opinion 25-03
Opinion 25-03 examined a multi-party telehealth arrangement that mirrors the core structure used by modern telehealth operators.
The Parties
Requestor Inc.
Management Services Organization
- ·Provides non-clinical management services
- ·Not physician-owned
Requestor PC
Professional Corporation
- ·Wholly owned by a physician
- ·Maintains payor contracts with commercial health plans
- ·Maintains contracts with Medicare Advantage and Medicaid managed care plans
- ·Over 400 commercial payor contracts (80% of commercially covered lives)
- ·Covers 65% of Medicare Advantage lives
- ·Does not employ or contract with clinical staff directly
Platform Entities
Third-Party MSOs and Their Physician Groups
- ·Management services organizations serving telehealth providers
- ·Platform PCs (physician groups) provide telehealth services
- ·Offer services including urgent care, rheumatology, oncology navigation, menopause care, obesity management, mental health care
- ·Limited payor contracts (why the arrangement was needed)
Healthcare Professionals (HCPs)
Employed by Platform PCs
- ·Health care professionals employed by Platform PCs
- ·Would be leased to Requestor PC under the arrangement
The Proposed Arrangement
The arrangement had two main components:
Component #1: HCP Leasing
- ·Requestor PC would lease healthcare professionals from Platform PCs
- ·Leased HCPs would provide telehealth services to patients covered by Requestor PC's payor contracts
- ·Requestors would credential the HCPs
- ·Requestors would facilitate enrollment under existing payor contracts
- ·Requestors would submit claims through Requestor PC's payor contracts
Component #2: Administrative Services
Platform would provide administrative services to Requestor PC:
- ·Accounting services (collecting patient cost-sharing)
- ·Marketing services (digital marketing, online advertising)
- ·Administrative support (patient scheduling)
- ·IT services (HIPAA-compliant telehealth platform)
The Payment Structure
This is where the Anti-Kickback analysis becomes critical.
Requestor PC would pay:
1. HCP Lease Fee
- ·Hourly rate based on licensure type (MD, NP, PA)
- ·Consistent with Fair Market Value established by independent third-party valuator
- ·Paid regardless of whether Requestor PC is ultimately reimbursed by third-party payors
2. Administrative Fee
- ·Fee for non-clinical administrative services
- ·Consistent with Fair Market Value established by independent third-party valuator
Critical Certification
"The methodology for determining the Service Fee would be set in advance and consistent with fair market value in arm's-length transactions and would not be determined in a manner that takes into account the volume or value of any referrals or business otherwise generated between the parties for which payment may be made in whole or in part under Medicare, Medicaid, or other Federal health care programs."
This is the difference between legal and illegal.
The OIG's Analysis: Why This Arrangement Is Compliant
The OIG concluded that the arrangement would be protected by the safe harbor for personal services and management contracts at 42 C.F.R. § 1001.952(d)(1).
The Seven Safe Harbor Requirements
The OIG verified that the arrangement met all seven requirements:
Set out in writing and signed by all parties.
Agreement specifies all services provided among parties. No side deals or undocumented arrangements.
Agreement for a term of at least 1 year. Not terminable at will during the first year.
Methodology for determining compensation set in advance. Consistent with fair market value in arm's-length transactions. Not determined by volume or value of referrals.
Services don't involve counseling or promotion of illegal activity.
Aggregate services don't exceed those reasonably necessary for the commercial purpose.
Payment not based on volume or value of business generated.
The Critical Factor: Outcome-Independent Compensation
The OIG specifically highlighted one aspect of the payment structure:
From the Opinion
"Importantly, Requestors would pay the hourly rate HCP Lease Fee for services rendered regardless of whether Requestor PC ultimately is reimbursed by third-party payors for telehealth services, which decreases the likelihood that the Service Fee would be determined in a manner that takes into account the volume or value of any referrals or business otherwise generated between the parties that is reimbursable by a Federal health care program."
Translation:
If the physician sees a patient and the patient's insurance doesn't cover it, or the claim is denied, or the patient doesn't pay—the physician still gets paid the same hourly rate.
This proves the payment is for services rendered, not for business generated.
This is the model.
What This Opinion Validates for Telehealth Operators
Opinion 25-03 provides federal validation of several critical principles for telehealth business models.
The arrangement involved a management services organization (Requestor Inc.), a physician-owned professional corporation (Requestor PC), administrative services provided by the MSO to the PC, and healthcare professionals leased to the PC.
From the Opinion
"The three-entity MSO-PC model that forms the foundation of compliant telehealth operations is explicitly approved by the OIG when structured properly."
Payment structure must be set in advance. Compensation must be at Fair Market Value (established by independent valuator). Payment cannot be tied to volume or value of referrals. Payment for services regardless of reimbursement by third-party payors.
Platform (MSO) could provide administrative services to Requestor PC: Accounting services, marketing services, administrative support (scheduling), and IT services (HIPAA-compliant platform).
The arrangement involved multiple entities: Requestor Inc. (MSO), Requestor PC (physician-owned PC), multiple Platform Entities (third-party MSOs and their PCs), and healthcare professionals employed by Platform PCs.
The entire purpose of the arrangement was to give patients access to in-network telehealth providers, expand payor contract coverage for telehealth services, and reduce out-of-pocket costs for patients (especially in underserved/rural areas). The OIG explicitly approved this purpose.
What This Opinion Does NOT Cover
It's equally important to understand what Opinion 25-03 did not address.
From the Opinion
"This advisory opinion is issued only to Requestors. This advisory opinion has no application to, and cannot be relied upon by, any other person."
The opinion technically only protects the specific parties who requested it. However, the opinion is published as public guidance, and its principles can be used as a compliance roadmap by other operators. While you can't rely on it as a legal defense (only the requestors can), you can structure your business to align with the validated principles.
From the Opinion
"We express no opinion herein with respect to the application of any other Federal, State, or local statute, rule, regulation, ordinance, or other law that may be applicable to the Proposed Arrangement."
While the federal Anti-Kickback Statute is satisfied, you must still comply with: state anti-kickback laws (most states have 'all-payer' laws), Corporate Practice of Medicine (CPOM) state laws, state telemedicine requirements, and state licensing and credentialing laws.
From the Opinion
"We express no opinion herein with respect to... the physician self-referral law, section 1877 of the Act."
If your arrangement involves physician self-referral issues (Stark Law), you need separate analysis. For most cash-pay telehealth operations, Stark Law is less relevant because it primarily applies to designated health services billed to Medicare.
From the Opinion
"We express no opinion herein regarding the liability of any person under the False Claims Act or other legal authorities for any improper billing, claims submission, cost reporting, or related conduct."
The opinion says the arrangement doesn't violate the Anti-Kickback Statute, but doesn't address whether your billing practices are proper. You still need to submit accurate claims, properly document services, and follow all billing regulations.
The Compliance Principles Operators Must Follow
Based on Opinion 25-03, here are the non-negotiable compliance principles for telehealth operators:
Requirement
The entity providing medical services must be 100% physician-owned and physician-controlled.
From Opinion 25-03
"Requestor PC is wholly owned by a physician shareholder."
What This Means
This solves Corporate Practice of Medicine (CPOM). Non-physician entities cannot own medical practices in most states. The physician-owned PC structure is the solution.
Requirement
All compensation must be established by independent third-party valuators, consistent with Fair Market Value, and documented with clear methodology.
From Opinion 25-03
"Each component of the Service Fee would be consistent with fair market value as established by a reputable, independent third-party valuator."
What This Means
You can't just decide physician compensation arbitrarily. You need independent valuation from a reputable firm, market comparables analysis, and documented justification for rates.
Requirement
Payment methodology must be set in advance, before services are performed.
From Opinion 25-03
"The methodology for determining the Service Fee would be set in advance."
What This Means
You can't adjust payment based on outcomes. No 'let's see how much revenue you generate, then we'll decide payment.' No retroactive bonuses based on performance. No variable compensation determined after the fact.
Requirement
Payment cannot vary based on volume of referrals, value of business generated, whether services are reimbursed by payors, or clinical outcomes or prescriptions.
From Opinion 25-03
"Requestor PC would pay the HCP Lease Fee regardless of whether Requestor PC is ultimately reimbursed by third-party payors for telehealth services."
What This Means
This is the critical protection against kickback allegations.
Requirement
All arrangements must be in writing, signed by all parties, term of at least one year, and specify all services provided.
What This Means
No verbal agreements. No short-term deals. No vague service descriptions. Everything must be documented, detailed, and long-term.
Requirement
Services provided must be actually performed (not phantom arrangements), reasonably necessary for legitimate business purpose, and not excessive beyond what's needed.
From Opinion 25-03
"The aggregate services contracted for would not exceed those which are reasonably necessary to accomplish the commercially reasonable business purpose of the services."
What This Means
You can't pay for unnecessary services just to justify payments. Services must be genuinely needed, actually delivered, and documented.
Requirement
Services cannot involve counseling or promotion of illegal activity, facilitating fraud or abuse, or violation of any state or federal law.
From Opinion 25-03
"The services performed under the Agreement would not involve the counseling or promotion of a business arrangement or other activity that violates any State or Federal law."
What This Means
Basic but critical: Everything must be legal.
How Medstra's Model Aligns with Opinion 25-03
Medstra has built its infrastructure to align with the principles validated in OIG Advisory Opinion 25-03.
The Three-Entity Structure
Brand Partner
Your Company
Medstra MSO
Infrastructure
IMG
Physician Group
Brand Partner
Your Company
- ·Independent marketing entity
- ·Acquires patients
- ·Provides non-clinical support
Medstra MSO
Infrastructure Provider
- ·Management services organization
- ·Provides technology, admin services
- ·MSA with IMG
IMG
Physician-Owned PC
- ·100% physician-owned
- ·Employs physicians
- ·Provides all medical services
This matches the validated structure: Physician-owned medical practice (IMG = Requestor PC), MSO providing administrative services (Medstra = Requestor Inc.), and clear contractual separation.
Fair Market Value, Outcome-Independent Physician Compensation
IMG physicians are paid:
- ✓$25-$60 per telehealth consultation (Fair Market Value range)
- ✓Rates established by independent third-party valuators
- ✓Same fee whether they prescribe or not
- ✓Same fee regardless of reimbursement
Example in Practice
Patient requests testosterone therapy.
Scenario A
Physician evaluates, determines patient is medically appropriate, prescribes TRT.
→ Physician paid $60
Scenario B
Physician evaluates, determines patient is NOT medically appropriate, declines to prescribe.
→ Physician paid $60
Same payment. Outcome-independent. Compliant.
Written Agreements Meeting Safe Harbor Requirements
All Medstra agreements:
- ✓In writing and signed by parties
- ✓Term of 1+ years
- ✓Specify all services in detail
- ✓Compensation set in advance
- ✓At Fair Market Value
- ✓Not based on referral volume or value
- ✓Services reasonably necessary
- ✓Don't involve illegal activity
This meets all seven safe harbor requirements validated in Opinion 25-03.
What Operators Can Learn from Opinion 25-03
If you're building or operating a telehealth business, Opinion 25-03 provides a compliance roadmap.
Key Takeaway
Even with the best intentions, if your payment structure creates the appearance of paying for referrals, you're at risk.
What This Means
The right structure: Flat fees or hourly rates, set in advance, not tied to outcomes, with independent FMV validation. The wrong structure: Percentage of revenue, bonuses based on patient volume, variable compensation based on prescriptions. Get the structure right from day one.
Key Takeaway
The OIG's analysis relied heavily on certifications about how fees were established, what methodology was used, what services were provided, and what safeguards existed.
What This Means
You need independent FMV valuations, written agreements (signed, 1+ years), detailed service descriptions, time tracking and documentation, and regular compliance reviews. If you can't document it, you can't defend it.
Key Takeaway
The OIG repeatedly emphasized that fees were 'consistent with fair market value as established by a reputable, independent third-party valuator.'
What This Means
You need independent FMV valuations (not just your internal opinion), reputable valuation firms, market comparables analysis, and documented methodology. Don't try to establish FMV yourself.
Key Takeaway
The OIG specifically called out that payment was made 'regardless of whether Requestor PC is ultimately reimbursed' as a key factor in reducing kickback risk.
What This Means
Your payment structure must be completely disconnected from clinical outcomes, business results, referral volume, and revenue generated. If there's any link between payment and outcomes, you're at risk.
Key Takeaway
Opinion 25-03 involved multiple entities (Requestor Inc., Requestor PC, Platform Entities, Platform PCs, HCPs). Each relationship had to be structured compliantly.
What This Means
In modern telehealth (Brand Partner → MSO → IMG → Physicians), you need compliant structure at each level, clear contractual definitions, proper legal separation, and no direct relationships that create kickback risk. Every connection in the chain must be compliant.
What This Means for the Telehealth Industry
Opinion 25-03 is a watershed moment for telehealth.
Before Opinion 25-03
Regulatory Uncertainty
"Is this telehealth MSO model even legal?" "Will the OIG come after us?" "What if our structure is challenged?"
Conservative Investors
Hesitant to fund telehealth MSO models. Concerned about regulatory risk. Wanting more federal clarity.
Legal Expenses
$100K-$300K+ to get opinions on compliance. Months of legal analysis. No certainty.
After Opinion 25-03
Regulatory Clarity
Federal government explicitly validated the model. Clear compliance roadmap. Specific principles to follow.
Confident Investors
Federal validation reduces regulatory risk. Clearer path to compliant operations. Institutional capital entering space.
Reduced Legal Expenses
Blueprint exists for compliant structure. Less uncertainty to analyze. Can model on validated principles.
The industry just got a green light—for those who structure compliantly.
The Enforcement Implications
While Opinion 25-03 is favorable, it also reveals what the OIG will scrutinize in enforcement actions.
Red Flags the OIG Will Look For
- ✗Compensation is not at Fair Market Value
- ✗Compensation is not established by independent valuators
- ✗Payment varies based on referral volume or business value
- ✗Agreements are short-term or terminable at will
- ✗Service descriptions are vague
- ✗Services aren't actually performed
- ✗Compensation is determined retroactively based on outcomes
Green Lights the OIG Validated
- ✓Physician-owned medical practice
- ✓Fair Market Value compensation (independent valuation)
- ✓Set in advance
- ✓Outcome-independent (same pay regardless of results)
- ✓Written agreements for 1+ years
- ✓Detailed service descriptions
- ✓Services actually performed and documented
- ✓Not based on referral volume or value
Opinion 25-03 shows exactly what the OIG is looking for in compliant arrangements.
Conclusion: The Federal Government Has Spoken
OIG Advisory Opinion No. 25-03 is the federal government's explicit validation of the telehealth MSO business model.
What It Validates
What It Requires
What It Means for Operators
The blueprint exists. The federal government has approved the model.
But—and this is critical—the approval is conditional on proper structure.
If your payment structure ties compensation to referrals, business volume, or outcomes, you're outside the safe harbor and at risk.
If you build exactly what the OIG validated—physician-owned PC, Fair Market Value compensation, outcome-independent payments, safe harbor compliance—you have federal regulatory backing.
Medstra has built its infrastructure on these principles.
The federal government just provided the compliance roadmap. The question is: Will you follow it?
Screenshot from the official OIG Advisory Opinion No. 25-03, issued June 6, 2025. The opinion found the arrangement "Favorable".
Legal Disclaimer
This article is for educational purposes only and does not constitute legal advice. OIG Advisory Opinion No. 25-03 is binding only on the parties who requested it and cannot be relied upon by other persons as a legal defense. While the opinion provides valuable guidance on compliant structures, each business arrangement must be analyzed based on its specific facts and circumstances. Healthcare laws vary by state and are subject to change. We recommend all operators consult with qualified healthcare attorneys to ensure compliance with federal and state laws applicable to their specific situation.
About Medstra
Medstra provides compliant MSO infrastructure for telehealth operators, structured to align with the principles validated in OIG Advisory Opinion No. 25-03. Our three-entity model, Fair Market Value physician compensation, and outcome-independent payment structure follow the federal compliance roadmap established by the OIG. We enable qualified operators to launch telehealth brands in 7 days with pre-built, federally aligned infrastructure.
Ready to launch with OIG-aligned infrastructure?
Schedule a call
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