Author
Ronald T. Luke, JD, PhD
Ronald T. Luke, JD, PhDPresident

RPC has assisted a range of parties in physician compensation disputes. Some cases involved disputes between individual physicians and practices they were leaving. Other cases involved disputes between hospitals and their employed physicians. Many disputes are due in whole or part to a failure to draft employment contracts or partnership agreements with unambiguous payment terms. This blog post suggests questions a physician contract should answer to avoid payment disputes.

Physician employment contracts must not only make business sense but also must comply with federal laws that prohibit certain practices:

  • Stark Law – self referral for Medicare services, a false claim
  • Federal Anti-Kickback – referral solicitation / renumeration / fee-splitting
  • IRS Guides – tax-exempt hospitals may not pay more than fair market value for employed physicians (no payment for expected referrals, private inurement – lab tests, physical therapy, or durable medical equipment prescriptions)

To comply with these laws and to reduce the possibility of disputes between the physician and the employer, the employment contract should address these topics explicitly and precisely.

  • Is compensation based on production, quality, outcome, or a mix of these elements?
  1. Fee for service (wRVUs)
  2. Capitation (HMO)
  3. Salary (Fixed)
  4. Performance or Quality Outcome Bonuses

Relative value units (“RVUs”) are determined for each CPT code by the Center for Medicare and Medicaid Services[1] (“CMS”). There are separate RVUs for work, practice expense and malpractice insurance. Counting work RVUs (“wRVUs”) is a generally accepted method of measuring physician productivity. The work component of RVUs gauges the time, skill, effort, judgement, and patient risk factors associated with each CPT code billed. The wRVUs associated with each CPT code provide the employer and the physician an objective measure of value to the employer for direct patient care.  If the physician has duties other than direct patient care, other measures of value must be used.

  • Define how wRVUs are counted
    • Is the wRVU and CPT code crosswalk based on a fixed year or as updated by CMS annually?
  • Understand the basis of how payment per wRVU for the physician is calculated
    • Based on charges for CPT codes billed or
    • Based on revenue collected for CPT codes billed
  • Know when the wRVUs are earned by the physician
    • Date of service
    • Date billed
    • Date paid
  • Address how CPT code modifiers and coding edits affect compensation; e.g.,
    • Multiple procedures rule
    • Two surgeons or assistant surgeon
    • Repeat procedure
    • Unbundling edits
  • Is it the employer’s duty to communicate changes in CPT codes and wRVUs to the physician or is it left to the physician to access the information from published sources?
  • How is termination pay calculated?
    • contractual draw
    • draw plus individual historical productivity bonuses
    • the average pay of physicians in the same group or specialty
    • consideration of quality and administrative incentives earned at termination date

RPC staff have the expertise to prepare expert reports for mediation or trial. When physician payment disputes occur we can analyze billing data and other data to determine amounts a physician is owed.  We have experience with a variety of industries and have special expertise in the healthcare industry.

[1] https://www.cms.gov/medicare/physician-fee-schedule/search/overview