3 Legal Considerations About Physician Pay

Debra Shute, October 5, 2017

Don't change a thing about your physician compensation plans before taking these proactive steps.

Changing physician compensation plans is inherently difficult, but especially toilsome as reimbursement mechanisms continue to transition away from fee for service (FFS) and toward value-based care.

This evolution is manifesting more quickly in some U.S. markets, such as in the progressive Commonwealth of Massachusetts, where risk-based contracts are plentiful.

During a recent panel discussion hosted and live-streamed by the Massachusetts Medical Society's Physician Practice Resource Center, experts offered guidance to leaders looking to align their compensation plans with the way practices are getting paid.

1. Teach 'Value 101'

"Before you make radical changes, either operationally or as it relates to physician compensation, there needs to be broad education," said Eric Passon, founder and CEO of consultancy Ancore Health. In particular, employed physicians as well as their leaders need to understand the basics of how their organization makes and spends money under its current value paradigm.

Related: 3 Employment Laws Tennessee Physicians Should Know

Physicians should also be provided with insights into where a group's contracting strategy is going.

"There are a lot of things in the FFS world that are not really good for a hospital," he said. "Understanding that economic transition between point A and point B is critical."

2. Know What You Owe

Even though compensation linked to meeting certain metrics is often called a "bonus," physicians count on receiving it.

"The more metric-driven a comp plan, the more the program becomes, in the eyes of the law, essentially a commission. And a commission is considered to be wages," noted Valerie Samuels, a partner with Posternak Blankstein & Lund LLP in Boston.

Debra Shute

Debra Shute is the Senior Physicians Editor for HealthLeaders Media.

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