Form Your Nursing Professional Corporation
Complete guide to incorporating your nursing practice in California. NP independent practice, RN corporations, BRN requirements, and collaborative agreements.
Nursing Professional Corporations in California
California's 2023 implementation of AB 890 grants Nurse Practitioners full practice authority after a transition-to-practice period. This creates new opportunities for NP-owned practices and professional corporations.
AB 890: Full Practice Authority
California NPs who complete 4,600 hours of physician supervision plus additional transition hours can practice independently without standardized procedures or physician oversight.
Independent NP Practice
Qualified NPs can diagnose, treat, prescribe (including Schedule II-V), order tests, and admit patients without physician collaboration agreements.
RN-Owned Entities
RNs who aren't NPs can form professional corporations for nursing services within RN scope (care coordination, education, case management, consulting).
Transition Period Required
Before independent practice, NPs must complete a transition-to-practice period: minimum 4,600 hours under physician supervision, plus 2,000-4,600 additional hours with mentorship.
BRN Certification
NPs must obtain 103 certification from the BRN to practice independently. This requires documenting completion of transition-to-practice requirements.
Liability Protection
Professional corporation provides liability protection for business debts. Professional liability insurance still required for malpractice coverage.
Nurse Practitioner Practice Pathways
AB 890 created two pathways for NP practice in California. Understanding which applies to you determines your practice structure options.
- Requirements: MSN/DNP, national certification, 4,600+ hours physician supervision, transition-to-practice completion
- Prescribing: Full Schedule II-V without physician supervision
- Practice: Independent diagnosis, treatment, referral
- Settings: Any setting, including independent practice
- Collaboration: Not required (voluntary consultation encouraged)
- Corporation: Can own/operate nursing professional corporation independently
- Requirements: MSN/DNP, national certification, practicing under supervision
- Prescribing: Schedule II-V with standardized procedures
- Practice: Per standardized procedures and protocols
- Settings: Must work under physician supervision
- Collaboration: Required standardized procedures with physician
- Corporation: Can own shares but practice still requires MD supervision
Transition to 103 Status
Section 104 NPs can transition to 103 status by completing: (1) 4,600 hours of physician-supervised practice, (2) 2,880 additional mentorship hours in specified settings OR 4,600 hours in other settings.
Procedure Limitations
Even Section 103 NPs cannot perform certain procedures reserved for physicians. Complex surgical procedures, some high-risk interventions, and specific specialty procedures remain outside NP scope.
Who Can Own a Nursing Professional Corporation?
California allows licensed nurses to form and own professional corporations, with specific rules depending on the type of nursing license.
Nurse Practitioners
NPs with active California furnishing licenses can own 100% of a nursing professional corporation. Section 103 NPs can operate fully independently.
Registered Nurses
RNs can own nursing professional corporations for services within RN scope. Cannot provide medical diagnosis or treatment; limited to nursing services.
Clinical Nurse Specialists
CNS licensees can own shares and provide specialty nursing services within their certification area. Similar scope considerations as NPs in specialty areas.
Cannot Own Shares
LVNs, CNAs, unlicensed individuals, physicians, and non-nursing corporations cannot own shares in a nursing professional corporation.
Director Requirements
All directors must be licensed nurses (RN, NP, or CNS). President must be a licensed nurse. Non-nurse officers may handle administrative functions.
Multi-Discipline Practices
To combine nursing with other professions (PT, mental health), consider MSO structures or separate professional entities collaborating under one brand.
How to Form Your Nursing Professional Corporation
Follow these steps to properly incorporate your nursing practice.
Verify License Status
Confirm your nursing license is active and in good standing. For NPs, determine if you qualify for Section 103 or 104 status.
NP Furnishing Number: Required for prescribing
DEA Registration: Required for controlled substances
Choose Corporate Name
Name must comply with BRN regulations and not be misleading about services offered.
- "[Name] Nurse Practitioner, A Professional Corporation"
- "[Name] NP Medical Group, P.C." (if 103 NP)
- "[Practice Name] Nursing Services Professional Corporation"
Draft & File Articles of Incorporation
Prepare articles identifying the entity as a nursing professional corporation.
Purpose: "To engage in the profession of nursing"
Processing: 3-5 business days
Organizational Meeting
Adopt bylaws, elect nurse directors, appoint officers, and issue shares.
Stock: Issue to licensed nurse shareholders only
Tax Registration & Credentialing
Obtain EIN, register with FTB, and begin payer credentialing process.
NPI: Type 2 organizational NPI
Medicare: Enroll as NP-owned clinic
Malpractice Insurance
Obtain professional liability coverage for the corporation and individual practitioners.
Entity coverage: Corporate policy + individual policies
Tail coverage: Plan for claims-made policies
Nursing Scope of Practice in California
Understanding scope determines what services your corporation can provide and bill for.
| Service | Section 103 NP | Section 104 NP | RN |
|---|---|---|---|
| Medical Diagnosis | ✓ Independent | Per protocols | ✗ |
| Prescribe Schedule II-V | ✓ Independent | With standardized procedures | ✗ |
| Order Diagnostic Tests | ✓ Independent | Per protocols | ✗ |
| Hospital Admission | ✓ Where privileged | Facility-dependent | ✗ |
| Patient Education | ✓ | ✓ | ✓ |
| Care Coordination | ✓ | ✓ | ✓ |
| Wound Care | ✓ | ✓ | ✓ |
Billing and Reimbursement for NP Practices
NPs can bill Medicare and most payers directly. Understanding reimbursement rules is essential for practice viability.
Medicare Reimbursement
NPs bill at 85% of the physician fee schedule when billing under their own NPI. "Incident-to" billing at 100% requires direct physician supervision (not applicable to independent practices).
Medi-Cal Direct Billing
California Medi-Cal allows NPs to enroll as rendering providers and bill directly. Rates vary by managed care plan but independent billing is permitted.
Commercial Payers
Most commercial insurers credential and contract with NPs directly. Reimbursement rates vary by payer; some pay equal to physicians, others at discounted rates.
Credentialing Timeline
Payer credentialing takes 60-120 days. Begin the process immediately upon incorporation. Consider credentialing services to manage multiple payer applications.
NPI Requirements
Obtain both Type 1 (individual NP) and Type 2 (organization) NPI numbers. Bill under organization NPI with individual NP as rendering provider.
Coding & Documentation
NPs use standard E/M codes. Documentation requirements are identical to physician visits. Ensure compliance with payer-specific requirements.
Frequently Asked Questions
Yes, if you have Section 103 NP certification. This requires completing the transition-to-practice period (4,600+ hours physician supervision plus additional mentorship hours). Once certified, you can practice completely independently.
Minimum 3-5 years typically. You need 4,600 hours of physician-supervised practice (about 2-3 years full-time), plus 2,880-4,600 additional transition hours depending on practice setting. The BRN reviews applications on a case-by-case basis.
No. California nursing professional corporations can only be owned by licensed nurses (RN, NP, CNS). Physicians cannot hold shares. However, collaborative arrangements and MSO structures can facilitate physician-NP business relationships.
Typically no. Individual NPs hold their own DEA registrations. However, if the corporation operates a clinic, you may need a clinic DEA. Consult with DEA regulations for your specific situation.
NP corporations can provide medical diagnosis and treatment services (within NP scope). RN corporations are limited to nursing services like care coordination, education, case management, and consulting—no prescribing or medical diagnosis.
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