New Employment Contracts: What Physicians Need To Know About Compensation And Benefits

Physicians receiving a new employment contract need to be aware of issues that can arise related to their compensation and benefits. These are some of the things that should be carefully reviewed before signing the agreement.

Compensation

The agreement should clearly provide what productivity is expected. You can frequently gauge expected productivity by the salary level. If one employer is paying significantly more than another, it is a safe bet that the higher-paying employer expects more productivity. The employer should not have the right to unilaterally adjust compensation, and the compensation offered should be appropriate when compared to benchmarks, such as the Medical Group Management Association (“MGMA”).

If you are starting with an employer, the bulk of compensation should be a base salary because the risk of insufficient demand should rest on the employer, not the physician. If there is productivity compensation, you should carefully review the language to ensure that it is understandable and internally consistent. You should have the right to confirm calculations of productivity by the employer.

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If productivity is based on wRVU production, your productivity should not be adjusted by compensation modifiers. A wRVU should be earned at the date of service, not when it is billed. The timing of payment of any productivity bonus should be specified.

Every agreement should provide a signing bonus if you are starting at the employer or a retention bonus if you are renewing the agreement. MGMA has benchmarks for signing bonuses, which should be consulted. The employer should offer a separate relocation allowance if you are moving to the area. Here again, MGMA has benchmarks to consult.

If the agreement provides that you must repay the signing bonus or the relocation allowance if the agreement is terminated, repayments should be forgiven on a monthly basis. The time over which the bonus or relocation allowance is forgiven should not exceed the length of the guaranteed base salary. You should not have to repay the bonus or relocation allowance if the employer terminates the agreement without cause or because of a change in law, if you terminate the agreement because of a breach by the employer, or if the agreement is terminated because of your death or disability.

Benefits

The agreement should provide compensation for some period of time while you are disabled. A disability should be determined by a physician mutually agreeable to you and the employer. If the employer offers disability insurance, you should confirm that the policy defines a disability as an inability to work in your “own occupation.”

Vacation should be consistent with MGMA benchmarks. Most employers provide an allowance for CME (which can be checked against MGMA benchmarks) and pay medical staff dues for maintaining privileges. The agreement should also provide that medical licensure and DEA and state equivalent fees will be paid by the employer.

Most employers provide a cell phone and usage plan and a laptop computer. Some employers provide mileage allowances for trips between offices and hospitals and pay the dues for the AMA or AOA and state and local medical societies. Some employers also pay the dues for one or more specialty societies.

It is sometimes possible to negotiate medical school debt assistance and to receive a fellowship or residency stipend while in training. Board certification and recertification expenses should be separately reimbursed rather than included in the CME allowance.

The employer’s discretion to change benefits should only apply to benefit plans the employer is purchasing from a third party or is offering as a tax-qualified plan. Although an employer cannot guarantee deductibles for your health insurance plan, for example, the employer should not be permitted to unilaterally amend schedules regarding vacation, CME allowances, or other benefits that the employer is not relying on a third party to provide.

You should be aware if benefits are charged against you in the calculation of compensation. Finally, you should be aware of compensation that is related directly or indirectly to the value or volume of referrals, as these are likely to run afoul of the fraud and abuse laws.

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