Physician and other medical professionals contracts interfacing with government healthcare programs have specific requirements. You want to ensure that your contract meets any applicable safeharbors available under the federal Ethics in Patient Referrals Act (also called the Stark Act). Essentially, under Stark, an independent contractor contract must:

• Be in writing, signed by the parties, and cover specified services
• Not be modified within the first year. It can be terminated during that time, but if so, no new agreement may be executed until the first full year is complete.
• Specify the compensation to be provided; said compensation must be consistent with fair market value and not based on the number or value of referrals
• Be commercially reasonable, considering the nature of the relationship and its business purposes.

You will also want to avoid kickbacks under the Anti-Kickback Statute (AKS).

Contracts

Medical professionals should have written agreements whether they are based on an employment relationship or an independent contractor agreement. While those two relationships have different issues, they share certain commonalities. Either way, we can help with a medical contract review.

Identify Parties & Their Relationship

As with all contracts, clarity, and evidence of the meeting of the minds is essential. Make sure that all parties to the agreement are identified. Also, be sure to state clearly the nature of the relationship between the parties. Given the regulatory and wage/hour differences between an employee and an independent contractor, this is crucial.

Services to Be Provided; When and Where

As we saw above, federal law generally requires specifics as to what duties the employed or contracted physician will be expected to perform. You will want to be very clear as to the nature of those tasks and the schedule under which the physician will provide them. In particular, the contract should state whether the position is full, part-time, or on-call as needed. If you have more than one location, you should also specify the location(s) where the employee/contractor physician will provide services. On-Call or other coverage issues should be addressed as well.

Physician Judgment

Ensure that the contract is clear on the issue of the employee/contractor physician’s independent professional judgment in the care of patients. This will help if someone raises the corporate practice of medicine issue and may provide some focus on the individual doctor in the case of malpractice claims.

Intellectual Property

Typically intellectual property generated by an employee is owned by the employer. Again, generally, intellectual property generated by an independent contractor remains in the name of the contractor. Intellectual property in the medical sphere can be extremely valuable. Special attention should be paid to this issue if it is likely to be relevant. Other portions of a contract should address how the name and likeness of a medical professional can be used in marketing and other communication.

Professional Qualifications

The effectiveness of the contract should be conditioned on the physician’s proof of satisfaction and maintenance of necessary qualifications, including:

• Unrestricted state license
• DEA registration
• Required medical staff memberships and privileges
• Participation in payer programs
• Board certification or eligibility
• Insurability
• necessary skills to perform the required services

Contracts should also specify what performance standards are expected. Again, one of the purposes of negotiation is to align these expectations and avoid surprises. Examples include:

• Compliance with applicable law and regulation; payer requirements
• Meeting the required standard of care
• Compliance with your policies and procedures
• Cooperation in collection, investigations

Compensation & Benefits; Fees

Your contract should state compensation in the agreement, including bonuses, benefits, relocation, loan assistance, and everything else. If the physician or medical professional is an employee, state that they are exempt under the Fair Labor Standard Act and state wage and hour laws.

You should also state that it represents fair market value and is not impacted by referrals. Consider scheduling repayment based on early departure if you are giving extraordinary payments like signing bonuses, relocation, or loan payments. For example, you could require 100 percent if the physician leaves in the first year, 50 percent in the second, and so on. Be sure to consider expressly excluding payments that will continue post-termination of the contract. Also, reserve the right to offset any debts the physician owes you against the final compensation.

Expressly state benefits to be provided. Avoid giving benefits to independent contractors as this may imply employee status.

It is possible to comply with federal law and still condition referral compensation. It is, however, subtle, and the conditions for doing so must be in the contract.

A contract should address roles and responsibilities for billing and collections.

Insurance Matters

State who provides liability insurance for the physician, and include any applicable policy limits or terms. If the medical professional is permitted to do outside work, insurance issues should be addressed. The requirement for and who pays for tail insurance coverage should also be considered.

If the physician is an independent contractor, they must maintain workers’ compensation insurance to the extent required under Georgia law.

Confidentiality; Noncompete; Non-Solicitation

You should require that all client information be maintained confidential. Georgia does permit non-compete, non-solicitation, and other restrictive covenants. This is a complex area that has changed dramatically in Georgia in the last decade. If such terms are in your contract, they should be reviewed by an attorney.

Miscellaneous Provisions

Specify your choice of law and venue – usually your location and preference. Decide whether you want to go to court or arbitration and state that. Prohibit assignment and use a four corner clause, stating that the agreement is complete and entire. Finally, include a broad provision stating the parties’ intent to comply with applicable law and regulation.

Before you sign a contract, contact DeLong, Caldwell, Bridgers, Fitzpatrick, & Benjamin, LLC for a medical contract review. We will work to make sure that you are protected.