Illinois telehealth MSO-PC: licensure, fee-splitting, and PC ownership
Illinois spells out who may treat Illinois patients online, lists four narrow exceptions, and has one of the most specific fee-splitting statutes in the country. Each one shapes how the MSO gets paid.
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An Illinois telehealth company needs an Illinois license or permit for each physician who treats patients located in Illinois under 225 ILCS 60/49.5, a clinical entity where every owner is licensed (a medical corporation, professional service corporation, or professional LLC), and an MSO fee that fits 225 ILCS 60/22.2. That statute allows a percentage fee only for billing and collection services and bars a percentage of professional fees for marketing or management. Foundry forms the MSO-PC for $15,000 and matches an Illinois-licensed friendly PC owner for $3,000/mo.
Illinois is a Strict state on the CPOM 50-state guide. The case law (United Medical Service and Berlin) is on Illinois CPOM, and the funds-flow test is on CPOM compliance. General information only, not legal advice.
The license rule and its four exceptions
225 ILCS 60/49.5(b) applies the Medical Practice Act's penalties to anyone who practices telemedicine without an Illinois license or permit. The Telehealth Act (225 ILCS 150) repeats the rule for all health professionals: a clinician treating a patient located in Illinois must be licensed or authorized in Illinois, within the scope of that license and the in-person standard of care. An out-of-state physician who treats an Illinois resident submits to Illinois courts under subsection (e).
| Exception under 49.5(c) | Fits a growth-stage platform? |
|---|---|
| Periodic consultations between an Illinois licensee and a person outside Illinois | Physician-to-physician consults only |
| A second opinion given to an Illinois licensee | Physician-to-physician only |
| Care in Illinois that follows treatment first given in the provider's licensing state | Follow-up for an existing patient only |
| Care for an existing patient while the physician or patient is traveling | Short trips, existing patients only |
New patient acquisition in Illinois fits none of the four, so plan Illinois licenses for every treating physician. Illinois participates in the Interstate Medical Licensure Compact, which gives eligible physicians a faster path to the license.
Fee-splitting: the rule that shapes the MSA
225 ILCS 60/22.2 is unusually specific about MSO money. Founders who copy a percentage-of-revenue MSA from another state run into it first.
| Subsection | Rule | MSA takeaway |
|---|---|---|
| 22.2(a) | No dividing professional fees with anyone, for referrals or otherwise, except as the section allows | The default is no sharing |
| 22.2(c) | Fees may be pooled inside an entity where each owner is licensed, formed under the Medical Corporation Act, Professional Service Corporation Act, Professional Association Act, or Professional LLC Act | Clinical revenue stays in the physician-owned PC |
| 22.2(d) | A fair-market-value fee for billing, claim preparation, or collection may be a percentage, if the practice controls its fees and collections go to an account it controls | A percentage fee works for a billing scope only |
| 22.2(f) | No percentage of professional fees for marketing or management of the practice, payer network access, or fee negotiation | Management fees should be fixed or cost-plus |
| 22.2(g) | Violations are unlawful practices under the Consumer Fraud and Deceptive Business Practices Act | The Attorney General can enforce |
A common Illinois pattern splits the MSA into two fee schedules: a billing-and-collections fee that can be a fair-market-value percentage under 22.2(d), and a fixed or cost-plus management fee for everything else. Healthcare counsel should sign off on both.
Who owns the Illinois practice
The Medical Corporation Act (805 ILCS 15) and the Professional Service Corporation Act limit ownership of a medical corporation to licensed physicians. Berlin v. Sarah Bush Lincoln Health Center (1997) let licensed hospitals employ physicians. That exception covers hospitals, not a venture-backed telehealth LLC. The founder owns the MSO; an Illinois-licensed physician owns the PC.
Controlled substances
Under 720 ILCS 570/314.5, prescribers document a check of the Illinois Prescription Monitoring Program before writing an initial prescription for a Schedule II narcotic such as an opioid. The DEA telemedicine flexibilities under 21 CFR 1307.41 run through December 31, 2026, and each prescriber needs a DEA registration for the state where the patient sits.
Setup steps for an Illinois telehealth company
- List each visit type and mark which ones prescribe controlled substances.
- Match an Illinois-licensed physician to own the PC through friendly PC owner matching ($3,000/mo).
- Form the Illinois medical corporation or professional LLC and the MSO. See MSO-PC formation ($15,000).
- Write the MSA with a billing fee schedule and a separate fixed or cost-plus management fee.
- License every treating physician in Illinois and build the PMP check into the prescribing flow.
- Route all clinical payments to an account the PC controls, as 22.2(d)(ii) requires for billing arrangements.
Pricing
MSO-PC formation
$15,000One-time. The MSO and the Illinois physician-owned PC, scoped to your visit model.
Friendly PC owner
$3,000/moAn Illinois-licensed physician who owns your PC.
Illinois telehealth MSO-PC FAQ
Do I need an Illinois license to treat Illinois patients by telehealth?
Yes. Under 225 ILCS 60/49.5, a person who practices telemedicine on a patient in Illinois without an Illinois license or permit faces the penalties in Section 59, and the Telehealth Act says a professional treating a patient located in Illinois must be licensed or authorized in Illinois.
Are there exceptions to the Illinois telemedicine license rule?
Four. Periodic consultations between an Illinois licensee and an out-of-state person, a second opinion given to an Illinois licensee, care for a patient in Illinois that follows treatment first given in the provider's licensing state, and care for an existing patient while the physician or patient is traveling. A platform that acquires new Illinois patients fits none of them.
Can an Illinois MSO charge a percentage of collections?
Only for billing and collection work. 225 ILCS 60/22.2(d) allows a fair-market-value percentage fee for billing, claim preparation, or collection services if the practice controls its fees and collections land in its own account. Section 22.2(f) bars paying a percentage of professional fees for marketing or management of the practice. Most MSA fees cover management, so a fixed or cost-plus fee is the safer pattern.
Can a lay founder own an Illinois medical practice?
Not the clinical entity. Illinois is a Strict corporate practice state. Section 22.2(c) lets physicians share fees inside entities where each owner is licensed, such as a medical corporation, professional service corporation, or professional LLC. The founder owns the MSO.
How much does Foundry charge for an Illinois telehealth MSO-PC?
MSO-PC formation is $15,000 one-time. An Illinois-licensed friendly PC owner is $3,000/mo.
Related reading
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