PHYSICIAN EMPLOYMENT AGREEMENT
Template — Arbor Health Technologies Inc.
Calderwood & Harkness LLP — Matter No. 1010-00003
TEMPLATE — FOR USE IN ALL NEW AND RENEWED PHYSICIAN EMPLOYMENT AGREEMENTS EFFECTIVE [DATE]. THIS TEMPLATE REPLACES ALL PRIOR PHYSICIAN EMPLOYMENT AGREEMENT FORMS, INCLUDING LEGACY LAKEVIEW MEDICAL ASSOCIATES, P.C. FORMS.
Prepared by: Calderwood & Harkness LLP One Federal Street, 30th Floor Boston, MA 02110
Prepared for: Arbor Health Technologies Inc. 200 Concord Avenue, Suite 400 Cambridge, MA 02138
Version Date: [Insert Date]
Approved by General Counsel: ___ / **Approved by Chief Compliance Officer:** ___
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TEMPLATE INSTRUCTIONS AND GUIDANCE NOTES
The following instructions and guidance notes are for internal use by Arbor Health Technologies Inc. ("Company") personnel and legal counsel in connection with the preparation, review, and execution of physician employment agreements using this template. These instructions are not part of the executed agreement and should be removed from the final executed version. However, these instructions should be retained in the Company's files for compliance documentation purposes.
1. This template was prepared in connection with a comprehensive Anti-Kickback Statute ("AKS") and Stark Law self-assessment and remediation engagement undertaken by the Company with the assistance of Calderwood & Harkness LLP. The template reflects remediation measures identified during that engagement and incorporates provisions designed to ensure ongoing compliance with applicable federal and state healthcare fraud and abuse laws.
2. All bracketed fields (indicated by "[Insert]" or similar notation) must be completed with agreement-specific information before execution. No agreement should be circulated for signature until all bracketed fields have been populated with the correct, agreement-specific data.
3. The compensation methodology set forth in this template has been designed to satisfy the Stark Law employment exception under 42 U.S.C. § 1395nn and 42 C.F.R. § 411.357(c), and the AKS employment safe harbor under 42 C.F.R. § 1001.952(i). Strict adherence to the compensation structure and methodology described herein is required to maintain exception and safe harbor protection.
4. Prior to execution, the compensation terms for each individual physician agreement must be supported by an independent fair market value ("FMV") opinion obtained from a qualified healthcare valuation firm (e.g., the Company's retained appraiser) and a documented commercial reasonableness determination. Agreements must not be executed without a current FMV opinion on file.
5. All completed agreements must be reviewed and approved by the General Counsel and Chief Compliance Officer prior to execution. The approval line on the signature page must be completed by both individuals before the agreement is forwarded for physician signature.
6. This template is to be used exclusively for W-2 employed physicians. Independent contractor arrangements and medical director arrangements are governed by separate templates. For independent contractor and medical director engagements, use the Revised IC/Medical Director Agreement Template (Calderwood & Harkness LLP — Matter No. 1010-00003).
7. For approved benchmark sources, compensation ranges, approval workflows, and FMV determination procedures, refer to the Company's Revised Physician Compensation Policy (adopted [date]) and the FMV Determination Procedures Manual.
PHYSICIAN EMPLOYMENT AGREEMENT
This Physician Employment Agreement (this "Agreement") is entered into as of [Insert Effective Date] (the "Effective Date"), by and between:
EMPLOYER:
Arbor Health Technologies Inc., a Delaware corporation with its principal offices at 200 Concord Avenue, Suite 400, Cambridge, MA 02138, together with its subsidiaries and affiliates (referred to herein as "Employer" or the "Company").
Employer Identification Number (EIN): [Insert — e.g., 84-3291057]
Organizational NPI: [Insert organizational NPI — e.g., 1497253810]
PHYSICIAN:
[Insert Full Legal Name], M.D./D.O., an individual residing at [Insert Address] (referred to herein as "Physician").
Physician NPI: [Insert]
State Medical License Number(s): [Insert for each state of practice]
RECITALS. WHEREAS, Employer operates a network of outpatient clinics across [Insert states — e.g., Massachusetts, Connecticut, Rhode Island, New Hampshire] providing primary care, specialty care, and ancillary services, and maintains a commitment to delivering high-quality, patient-centered healthcare services in the communities it serves;
WHEREAS, Employer desires to employ Physician to provide professional medical services in the specialty of [Insert Specialty] at [Insert Clinic Location(s)], and Physician desires to accept such employment, on the terms and conditions set forth in this Agreement;
WHEREAS, Physician is duly licensed to practice medicine in [Insert State(s)] and is board certified or board eligible in [Insert Specialty], and possesses the qualifications, training, experience, and credentials necessary to provide the professional medical services contemplated by this Agreement;
WHEREAS, the parties intend for the compensation and other terms of this Agreement to comply with the Physician Self-Referral Law (42 U.S.C. § 1395nn) and its implementing regulations (42 C.F.R. Part 411, Subpart J), the federal Anti-Kickback Statute (42 U.S.C. § 1320a-7b(b)) and its implementing regulations (42 C.F.R. Part 1001), and all applicable state laws governing healthcare referrals, fee-splitting, and anti-kickback prohibitions;
WHEREAS, the compensation set forth herein has been determined to be consistent with fair market value for the services to be provided by Physician and is commercially reasonable irrespective of the volume or value of any referrals or other business generated between the parties; and
NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
ARTICLE 1: DEFINITIONS
Section 1.1 — Defined Terms
As used in this Agreement, the following terms shall have the meanings set forth below. Capitalized terms used but not defined in this Section 1.1 shall have the meanings assigned to them elsewhere in this Agreement.
"Ancillary Services" means laboratory services, diagnostic imaging services, physical therapy services, and other designated health services (as defined in 42 U.S.C. § 1395nn(h)(6)) that are operated by or on behalf of Employer, or that are billed by Employer or any of its subsidiaries or affiliates, in connection with the delivery of healthcare services to patients at any of Employer's clinic locations.
"Base Salary" means the annual base salary payable to Physician as set forth in Section 4.2 of this Agreement and as specified in Exhibit A (Compensation Schedule).
"Board" means the Board of Directors of Employer.
"CMS" means the Centers for Medicare & Medicaid Services, an agency within the United States Department of Health and Human Services, or any successor agency.
"Commercial Reasonableness" means the standard by which an arrangement is evaluated to determine whether it is reasonable under the circumstances, consistent with the definition and analytical framework described in the Stark Law regulations (including, without limitation, 42 C.F.R. § 411.351) and as further elaborated in Employer's Physician Compensation Policy. An arrangement is commercially reasonable if it furthers a legitimate business purpose of the parties and the arrangement makes commercial sense, considering the terms and subject matter of the arrangement, in the absence of referrals.
"Compliance Program" means Employer's corporate compliance program as set forth in the Compliance Program Manual adopted by the Board and administered by the Chief Compliance Officer, as such program may be amended, supplemented, or restated from time to time.
"Designated Health Services" or "DHS" means the categories of healthcare services designated under the Stark Law as set forth in 42 U.S.C. § 1395nn(h)(6) and 42 C.F.R. § 411.351, including, without limitation, clinical laboratory services, physical therapy services, occupational therapy services, outpatient speech-language pathology services, radiology and certain other imaging services, radiation therapy services and supplies, durable medical equipment and supplies, parenteral and enteral nutrients, equipment, and supplies, prosthetics, orthotics, and prosthetic devices and supplies, home health services, outpatient prescription drugs, and inpatient and outpatient hospital services.
"Effective Date" means the date set forth in the introductory paragraph of this Agreement, being [Insert Effective Date].
"Employee Benefits" means the benefits described in Article 5 of this Agreement.
"Fair Market Value" or "FMV" means the value in arm's-length transactions, consistent with the general market value, as defined in 42 C.F.R. § 411.351. With respect to compensation for services, Fair Market Value means the compensation that would be paid at the time the parties enter into the service arrangement as the result of bona fide bargaining between well-informed parties who are not otherwise in a position to generate business for each other. Fair Market Value is determined based on the facts and circumstances of the particular arrangement, taking into account relevant benchmark data, geographic market conditions, physician specialty, qualifications, and experience, and the nature and scope of services to be provided.
"MGMA" means the Medical Group Management Association, and references to MGMA compensation data shall mean the most recently published MGMA DataDive Provider Compensation data (or any successor publication) applicable to Physician's specialty and geographic region.
"Primary Practice Location" means the Employer clinic location designated as Physician's primary site of practice, as specified in Section 2.2 of this Agreement and in Exhibit B, which is located at [Insert clinic address].
"Productivity Bonus" means the annual productivity-based incentive compensation payable to Physician as described in Section 4.3 of this Agreement and as specified in Exhibit A (Compensation Schedule).
"Specialty" means the medical specialty in which Physician is board certified or board eligible, as specified in the Recitals to this Agreement and in Exhibit B, being [Insert physician's specialty].
"SullivanCotter" means Calderon Consulting Group, and references to SullivanCotter compensation data shall mean the most recently published Physician Compensation and Productivity Survey (or any successor publication) applicable to Physician's specialty and geographic region, or such other nationally recognized physician compensation survey approved by Employer's Physician Compensation Policy.
"Term" means the term of this Agreement, including the Initial Term and any Renewal Term, as specified in Article 3 of this Agreement.
"wRVU" means a work relative value unit, as established by CMS under the Medicare Physician Fee Schedule (42 C.F.R. Part 414), reflecting the physician work component of the relative value assigned to each Current Procedural Terminology (CPT) code, as updated annually by CMS.
ARTICLE 2: EMPLOYMENT AND DUTIES
Section 2.1 — Employment
Employer hereby employs Physician, and Physician hereby accepts employment with Employer, as a [Insert Title — e.g., Staff Physician, Attending Physician] in the specialty of [Insert Specialty], subject to and in accordance with the terms and conditions set forth in this Agreement. Physician's employment shall be on a [full-time / part-time — select one] basis, and Physician shall be classified as a W-2 employee of Employer for all purposes, including without limitation federal and state tax withholding, employee benefit eligibility, and workers' compensation coverage. Physician's employment relationship with Employer shall be that of an employee and not that of an independent contractor.
Section 2.2 — Practice Locations
Physician's primary practice location shall be at [Insert address from list of clinic locations — e.g., 75 Belmont Street, Worcester, MA 01605, or 310 Main Street, Suite 2A, Shrewsbury, MA 01545, or other Arbor Health Technologies clinic] (the "Primary Practice Location"). Physician shall provide the majority of clinical services at the Primary Practice Location unless otherwise directed by Employer in accordance with this Section 2.2.
Employer may, from time to time, assign Physician to provide professional medical services at other Employer clinic locations upon [Insert notice period — e.g., thirty (30) days'] prior written notice to Physician, provided that such reassignment does not materially increase Physician's commuting distance or fundamentally alter the nature of Physician's duties without Physician's consent. Additional Employer clinic locations at which Physician may be assigned to practice include the following: [Insert additional clinic locations, if applicable, or state "None as of the Effective Date"].
Any changes to Physician's Primary Practice Location shall be reflected in an updated Exhibit B attached hereto and shall not require a formal amendment to this Agreement, provided that such changes do not affect the compensation terms set forth in Article 4.
Section 2.3 — Professional Duties
Clinical Duties. Physician shall provide [Insert description of clinical services — e.g., comprehensive outpatient primary care services, including but not limited to patient evaluation and management, diagnosis and treatment of acute and chronic conditions, preventive care, care coordination, and such other clinical services within Physician's scope of licensure and credentialing as may be assigned by Employer] to patients at the assigned Practice Locations. A detailed description of Physician's clinical duties is set forth in Exhibit B (Position Description and Duties).
Expected Clinical Hours. Physician shall maintain a minimum of [Insert — e.g., thirty-six (36)] patient contact hours per week (or such lesser number as may be applicable to part-time physicians, as specified in Exhibit B), exclusive of administrative time, on-call time, and CME leave.
Expected Patient Volume. [Insert if applicable — e.g., Physician is expected to maintain a patient panel of approximately [number] patients, subject to adjustment based on patient demand and operational needs, or "Not applicable."]
Administrative Duties. In addition to clinical duties, Physician shall perform such administrative duties as are reasonably assigned by Employer, including without limitation: timely completion and authentication of all medical records and clinical documentation in accordance with Employer's policies and the ArborConnect electronic health record (EHR) system requirements; participation in peer review and quality assurance activities; service on quality improvement committees and other departmental or organizational committees as assigned; participation in on-call coverage as scheduled by the Department Chief or Regional Medical Director; and such other administrative responsibilities as are customary for physicians in similar positions within Employer's organization. A detailed description of Physician's administrative duties is set forth in Exhibit B.
Teaching and Supervision Duties. [Insert if applicable — e.g., Physician shall participate in the supervision and instruction of medical residents, fellows, nurse practitioners, and physician assistants as reasonably assigned by Employer, in accordance with applicable accreditation and licensure requirements, or "Not applicable."]
Guidance Note: Duties must be specifically described and must be sufficient to justify the total compensation paid under this Agreement. Vague or minimal duty descriptions are insufficient for Stark Law compliance purposes. The duties described herein and in Exhibit B should clearly delineate the bona fide services for which Physician is being compensated.
Section 2.4 — Standard of Care and Compliance
Physician shall perform all professional medical services and other duties under this Agreement in accordance with all applicable federal, state, and local laws, rules, and regulations, and in conformity with the prevailing standards of care applicable to Physician's specialty and geographic market. Physician shall at all times exercise independent medical judgment in the diagnosis and treatment of patients and shall not permit any financial or business consideration to compromise the quality or integrity of patient care.
Physician shall comply with all Employer policies and procedures, as adopted and amended from time to time, including without limitation the following:
(a) the Compliance Program Manual;
(b) the Physician Compensation Policy;
(c) the Physician Referral and Self-Referral Policy;
(d) the Vendor and Third-Party Arrangement Policy;
(e) the Gifts, Meals, and Entertainment Policy;
(f) the Coding and Billing Compliance Policy;
(g) the HIPAA Privacy and Security Policies;
(h) the ArborConnect EHR System Use Policy; and
(i) such other policies and procedures as Employer may adopt from time to time and communicate to Physician.
Physician shall obtain and maintain at all times during the Term all licenses, certifications, registrations, and credentials required for the lawful performance of Physician's duties under this Agreement, including without limitation: (i) an active, unrestricted license to practice medicine in each state in which Physician provides services under this Agreement; (ii) a valid and current Drug Enforcement Administration (DEA) registration; (iii) board certification or board eligibility in Physician's Specialty (and, if board eligible, Physician shall obtain board certification within the timeframe required by Employer's credentialing policies); and (iv) active medical staff privileges at such hospitals and healthcare facilities as Employer may reasonably require.
Physician shall comply with all Medicare and Medicaid conditions of participation applicable to Employer's clinic operations and shall cooperate with Employer in maintaining compliance with all federal and state healthcare program requirements.
Section 2.5 — Exclusive Employment / Outside Activities
Physician shall devote [his/her/their] full professional time, energy, skill, and best efforts to the performance of duties under this Agreement during the Term. [For part-time arrangements, insert: "Physician shall devote not less than [Insert percentage — e.g., 80%] of [his/her/their] professional time and effort to the performance of duties under this Agreement."] Physician shall not engage in any outside professional activities, including but not limited to the practice of medicine, consulting, expert witness services, teaching, or other healthcare-related activities, without the prior written approval of [Insert — e.g., the Regional Medical Director and General Counsel].
Any request for approval of outside professional activities must be submitted in writing and must include a description of the proposed activity, the identity of the outside party, the anticipated time commitment, and the compensation (if any) to be received. Employer's approval of any outside activity shall be conditioned upon a determination that such activity: (a) will not interfere with Physician's performance of duties under this Agreement; (b) does not create a conflict of interest, whether actual or apparent; (c) does not violate the Anti-Kickback Statute, the Stark Law, or any applicable state healthcare fraud and abuse law; and (d) is consistent with Employer's Compliance Program and policies. Employer reserves the right to withdraw approval of any outside activity at any time if, in Employer's reasonable judgment, any of the foregoing conditions is no longer satisfied.
Section 2.6 — Supervision and Reporting
Physician shall report to [Insert — e.g., the Regional Medical Director for the [Region] or the Chief Medical Officer] (the "Supervising Authority"), or to such other individual as Employer may designate from time to time. Employer retains the right to establish and modify clinical protocols, scheduling practices, patient assignment procedures, and operational procedures applicable to Physician and to all physicians employed by Employer, provided that such protocols and procedures do not require Physician to practice medicine in a manner that is inconsistent with applicable professional standards or that would compromise the exercise of Physician's independent medical judgment.
ARTICLE 3: TERM AND TERMINATION
Section 3.1 — Initial Term
The initial term of this Agreement shall commence on the Effective Date and shall continue for a period of [Insert — e.g., two (2) or three (3)] years, unless sooner terminated in accordance with the provisions of this Article 3 (the "Initial Term"). The Initial Term shall expire on [Insert — e.g., the second/third anniversary of the Effective Date], unless renewed or extended as provided herein.
Guidance Note: Under the Stark Law employment exception (42 C.F.R. § 411.357(c)), there is no minimum term requirement for bona fide employment arrangements. However, a specified initial term is recommended for administrative clarity, FMV substantiation purposes, and to facilitate timely renewal and FMV recertification. The initial term selected should be consistent with the term addressed in the applicable FMV opinion.
Section 3.2 — Renewal
Upon the expiration of the Initial Term, this Agreement shall automatically renew for successive [Insert — e.g., one (1)-year] periods (each a "Renewal Term," and together with the Initial Term, the "Term"), unless either party provides written notice of non-renewal to the other party at least [Insert — e.g., ninety (90)] days prior to the expiration of the then-current Term. Any such notice of non-renewal shall be delivered in accordance with Section 12.6 of this Agreement.
Upon each renewal, Employer shall review Physician's compensation terms and shall recertify that such terms are consistent with Fair Market Value and are commercially reasonable, in accordance with Employer's Physician Compensation Policy and FMV Determination Procedures. If compensation adjustments are warranted in connection with a renewal, such adjustments shall be documented in a written amendment to this Agreement and shall be supported by a current FMV opinion, in each case prior to the commencement of the applicable Renewal Term.
Section 3.3 — Holdover Provision
If Physician continues to provide professional medical services to or on behalf of Employer following the expiration of the Term (whether the Initial Term or any Renewal Term) without the execution of a signed renewal agreement or new employment agreement, the arrangement between the parties shall be deemed to continue on a holdover basis on the same terms and conditions as the expired agreement for a period not to exceed six (6) months from the date of expiration of the then-current Term (the "Holdover Period"). This holdover provision is intended to comply with the holdover allowance set forth in 42 C.F.R. § 411.357(c), as amended by the CMS Stark Law Modernization Final Rule (85 Fed. Reg. 77492, effective January 19, 2021).
During any Holdover Period, the following conditions shall apply:
(a) The holdover arrangement shall be on the same terms and conditions as the immediately preceding agreement, and no compensation terms shall be modified during the Holdover Period except as expressly permitted by applicable law;
(b) The holdover arrangement shall remain commercially reasonable and shall further a legitimate business purpose of Employer;
(c) The compensation paid during the Holdover Period shall remain consistent with Fair Market Value for the services provided; and
(d) No holdover arrangement shall extend beyond six (6) months from the date of expiration of the applicable Term without the execution of a new or renewed agreement. If a new or renewed agreement is not executed within the six (6)-month Holdover Period, Physician's employment shall terminate at the conclusion of such Holdover Period, and Employer shall have no further obligation to compensate Physician for services rendered after the expiration of the Holdover Period.
Guidance Note: Holdover provisions are critical for Stark Law compliance. Under the 2021 Stark Law Modernization Final Rule, holdover arrangements of up to six (6) months are permitted under certain exceptions, including the employment exception (42 C.F.R. § 411.357(c)). However, best practice requires that Employer proactively track contract expiration dates and initiate the renewal process well in advance to avoid reliance on the holdover provision. The Compliance Department should maintain a contract management system with alerts triggered no later than one hundred eighty (180) days prior to the expiration of each physician employment agreement.
Section 3.4 — Termination by Employer
Termination Without Cause. Employer may terminate this Agreement at any time, with or without reason, upon [Insert — e.g., ninety (90)] days' prior written notice to Physician, delivered in accordance with Section 12.6 of this Agreement.
Termination for Cause. Employer may terminate this Agreement immediately, or upon [Insert — e.g., thirty (30)] days' prior written notice (with an opportunity to cure, if the breach or event giving rise to termination is reasonably susceptible to cure), upon the occurrence of any of the following events (each constituting "Cause"):
(a) Loss, revocation, suspension, restriction, or non-renewal of Physician's license to practice medicine in any state in which Physician is required to hold a license under this Agreement;
(b) Loss, revocation, suspension, or restriction of Physician's DEA registration;
(c) Exclusion, debarment, or suspension of Physician from participation in Medicare, Medicaid, or any other federal or state healthcare program, or the initiation of proceedings seeking such exclusion, debarment, or suspension;
(d) Conviction of, or entry of a plea of guilty or nolo contendere to, a felony or any crime involving moral turpitude, healthcare fraud, patient abuse, or controlled substances;
(e) A material breach of any provision of this Agreement by Physician that is not cured within [Insert — e.g., thirty (30)] days after written notice specifying the nature of the breach is delivered by Employer to Physician; provided, however, that no cure period shall be required for breaches that are not reasonably susceptible to cure;
(f) Any violation by Physician of Employer's Compliance Program, including without limitation any violation of the Anti-Kickback Statute, the Stark Law, HIPAA, or any applicable state anti-kickback, referral fee, or healthcare fraud and abuse law;
(g) Loss, revocation, suspension, or restriction of Physician's hospital privileges at any hospital or healthcare facility at which Physician is required to maintain privileges in connection with the performance of duties under this Agreement, where such loss is material to the performance of Physician's duties;
(h) Conduct by Physician constituting gross negligence, recklessness, or willful misconduct in the performance of professional duties;
(i) Failure to maintain board certification or board eligibility as required by Employer's credentialing policies, unless such failure is the result of circumstances beyond Physician's reasonable control;
(j) Failure or refusal to comply with Employer's reasonable clinical protocols, administrative policies, or operational procedures after written notice of such failure and a reasonable opportunity to comply; or
(k) Any act of fraud, dishonesty, embezzlement, or misappropriation of funds or property involving Employer, its patients, or any third-party payer.
Section 3.5 — Termination by Physician
Termination Without Cause. Physician may terminate this Agreement at any time, with or without reason, upon [Insert — e.g., ninety (90)] days' prior written notice to Employer, delivered in accordance with Section 12.6 of this Agreement.
Termination for Cause. Physician may terminate this Agreement immediately upon a material breach of this Agreement by Employer that is not cured within [Insert — e.g., thirty (30)] days after written notice specifying the nature of the breach is delivered by Physician to Employer. Material breaches by Employer shall include, without limitation, the failure to pay compensation when due under this Agreement (after notice and a reasonable cure period), the failure to maintain professional liability insurance coverage as required under this Agreement, or the failure to maintain licenses necessary to operate the clinic locations at which Physician provides services.
Section 3.6 — Effect of Termination
Upon the termination or expiration of this Agreement (including upon the expiration of any Holdover Period), the following provisions shall apply:
(a) Patient Transition. Physician shall cooperate with Employer in the orderly transition of patient care responsibilities to other physicians designated by Employer. Physician shall continue to provide patient care during any applicable notice period and shall not abandon patients during the transition period. The parties shall cooperate in providing patients with notice of the change in treating physician and of their right to select a physician of their choice, in accordance with applicable law and medical ethics.
(b) Medical Records. All medical records generated by Physician during the course of employment are and shall remain the property of Employer. Physician shall not remove, copy, or retain any medical records or patient information upon termination, except as may be required by law for Physician's own malpractice defense or as otherwise agreed in writing by Employer. Employer shall provide copies of medical records to patients upon request in accordance with HIPAA and applicable state law.
(c) Return of Employer Property. Physician shall promptly return to Employer all property belonging to Employer, including without limitation keys, access cards, identification badges, electronic devices, ArborConnect EHR system login credentials and equipment, clinical supplies, books, manuals, and all documents, files, and materials (whether in physical or electronic form) containing Employer's proprietary or confidential information.
(d) Tail Coverage. Professional liability tail coverage (extended reporting endorsement) shall be addressed in accordance with Section 5.2 of this Agreement.
(e) Surviving Obligations. Physician's obligations under Article 7 (Referral Independence and Regulatory Compliance, to the extent applicable), Article 8 (Restrictive Covenants), Article 9 (Records, Audit, and Regulatory Cooperation), Article 10 (Insurance and Indemnification), and the applicable provisions of Article 12 (Miscellaneous Provisions) shall survive the termination or expiration of this Agreement as set forth in Section 12.10.
(f) No Compensation for Referrals. For the avoidance of doubt, no compensation shall be paid to Physician for referrals or for the value of referrals made prior to, during, or after the termination or expiration of this Agreement. Upon termination, all compensation obligations shall be limited to amounts earned and accrued for services actually rendered by Physician through the effective date of termination.
ARTICLE 4: COMPENSATION
Section 4.1 — General Compensation Principles
All compensation payable to Physician under this Agreement, including without limitation Base Salary, Productivity Bonus, signing bonus (if any), quality incentive bonuses (if any), on-call compensation (if any), benefits, and any other form of remuneration:
(a) Has been determined to be consistent with Fair Market Value for the services actually provided or to be provided by Physician under this Agreement;
(b) Is commercially reasonable even if no referrals of patients or other business are generated between the parties;
(c) Does not take into account the volume or value of any referrals of patients or other business generated between the parties, except to the extent expressly permitted by the Stark Law for productivity bonuses based on services that are personally performed or supervised by Physician (as set forth in 42 C.F.R. § 411.357(c)(2));
(d) Is supported by an independent FMV opinion obtained by Employer from a qualified healthcare valuation firm in accordance with Employer's FMV Determination Procedures, a copy or summary of which is attached as Exhibit C to this Agreement; and
(e) Was established through an arm's-length negotiation process and reflects the totality of the consideration exchanged between the parties.
In establishing the compensation terms set forth in this Agreement, Employer has considered and relied upon the following approved benchmark sources: independent valuation opinions obtained from qualified healthcare valuation firms retained by Employer, MGMA physician compensation data for the applicable specialty and geographic region, SullivanCotter physician compensation survey data, and other nationally recognized physician compensation surveys identified in Employer's Physician Compensation Policy. The specific benchmark data and FMV analysis supporting the compensation terms of this Agreement are set forth in the FMV opinion referenced in Section 6.1 and attached as Exhibit C.
Guidance Note: The compensation structure set forth in this Article 4 is designed to satisfy the Stark Law employment exception (42 C.F.R. § 411.357(c)). Total compensation (Base Salary plus Productivity Bonus plus any other amounts, including the value of benefits) must not exceed Fair Market Value and must not take into account the volume or value of referrals. Before completing the compensation fields in this Article 4 and in Exhibit A, the user must verify that the proposed compensation falls within the FMV range established by the applicable independent valuation opinion and that total compensation at maximum performance levels does not exceed the upper end of the FMV range.
Section 4.2 — Base Salary
Employer shall pay to Physician an annual base salary in the amount of $[Insert Amount] (the "Base Salary"), payable in equal [bi-weekly / semi-monthly] installments in accordance with Employer's standard payroll practices, less all applicable federal, state, and local tax withholdings, FICA contributions, and other deductions required by law or authorized by Physician.
The Base Salary shall be effective as of the Effective Date and shall remain in effect for the duration of the Initial Term, unless modified by written amendment in accordance with Section 4.8 and Section 12.2 of this Agreement. The Base Salary reflects the value of Physician's clinical, administrative, and other duties as described in Section 2.3 and Exhibit B, and is established at a level consistent with Fair Market Value for physicians in Physician's Specialty, geographic market, and with comparable qualifications and experience.
Guidance Note: Base Salary should be within the FMV range established by the applicable independent valuation opinion and should reflect Physician's specialty, years of experience, geographic market, and anticipated clinical effort (i.e., full-time versus part-time). For reference, current approved benchmark ranges are set forth in the FMV opinion and the Physician Compensation Policy. The Base Salary specified herein should correspond to the benchmark percentile identified below and in Exhibit A.
FMV Range for [Insert Specialty]: $[Insert low] to $[Insert high] per year.
Benchmark Percentile: [Insert]th percentile per [MGMA / SullivanCotter / Northbridge opinion].
Section 4.3 — Productivity Bonus
In addition to Base Salary, Physician shall be eligible to receive an annual productivity bonus (the "Productivity Bonus") based on work relative value units (wRVUs) generated by Physician during the applicable measurement period, as set forth below.
Productivity Bonus Formula. The Productivity Bonus shall be calculated as follows:
Productivity Bonus = (Physician's actual wRVUs generated during the measurement period minus the wRVU Threshold) × the Conversion Factor
The components of the Productivity Bonus formula are defined as follows:
wRVU Threshold: [Insert — e.g., _ wRVUs per year]. The wRVU Threshold represents the minimum level of wRVU production that Physician must achieve before becoming eligible for a Productivity Bonus. No Productivity Bonus shall be payable unless Physician's actual wRVU production exceeds the wRVU Threshold during the applicable measurement period.
Conversion Factor: $[Insert] per wRVU generated above the wRVU Threshold. The Conversion Factor represents the dollar amount payable per wRVU for each wRVU generated in excess of the wRVU Threshold.
Maximum Productivity Bonus (Cap): $[Insert] per year. The Productivity Bonus payable to Physician in any single measurement period shall not exceed the Maximum Productivity Bonus specified herein, regardless of the total wRVUs generated by Physician during such period. This cap is established to ensure that total compensation (Base Salary plus maximum Productivity Bonus) does not exceed the upper end of the applicable FMV range.
Measurement Period. The measurement period for purposes of calculating the Productivity Bonus shall be [Insert — e.g., each calendar year / each fiscal year / each rolling twelve (12)-month period beginning on the anniversary of the Effective Date]. For the initial measurement period (if the Effective Date does not coincide with the beginning of the standard measurement period), the wRVU Threshold shall be prorated based on the number of months in the initial partial measurement period.
Payment Timing. The Productivity Bonus, if any, shall be calculated and paid within [Insert — e.g., ninety (90)] days following the end of the applicable measurement period, subject to Employer's standard reconciliation and audit procedures. Employer reserves the right to withhold payment of the Productivity Bonus pending completion of its audit and reconciliation process, including verification of wRVU data and confirmation that all billed services were properly documented and coded.
wRVU Counting Rules. Only wRVUs generated for professional services that are personally performed by Physician or that are performed by other qualified healthcare professionals under Physician's direct supervision (to the extent that such supervision satisfies the applicable Medicare "incident to" requirements or other applicable billing requirements) shall be counted toward the Productivity Bonus calculation. wRVUs generated for services that are not personally performed or directly supervised by Physician shall not be counted. Employer shall use the CMS Medicare Physician Fee Schedule wRVU values in effect during the applicable measurement period for purposes of determining wRVU credits.
Total Compensation Cap. In no event shall the sum of Base Salary and Productivity Bonus paid to Physician in any single measurement period exceed $[Insert Total Compensation Cap] per year, which represents the [Insert]th percentile for [Insert Specialty] per the applicable FMV opinion. If the application of the Productivity Bonus formula would result in total compensation exceeding this cap, the Productivity Bonus shall be reduced to the extent necessary to ensure compliance with the Total Compensation Cap.
Guidance Note: The Conversion Factor and wRVU Threshold must be established prospectively (i.e., set in advance before the commencement of the applicable measurement period) and must be consistent with FMV. The Conversion Factor must not be adjusted during any measurement period based on the volume or value of referrals. The Maximum Productivity Bonus cap ensures total compensation (Base Salary + maximum Productivity Bonus) does not exceed the upper end of the FMV range. Before completing these fields, verify that the total of Base Salary + maximum Productivity Bonus is within the FMV range established by the applicable independent valuation opinion for the applicable specialty.
Section 4.4 — Signing Bonus / Relocation Allowance (If Applicable)
[If applicable, insert the following provisions. If not applicable, delete this Section 4.4 or insert "Intentionally Omitted."]
Employer shall pay to Physician a one-time signing bonus in the amount of $[Insert Amount] (the "Signing Bonus"), payable on [Insert date or conditions — e.g., the first regular payroll date following the Effective Date / within thirty (30) days of the Effective Date], less applicable withholdings and deductions. [If applicable, insert: "In addition, Employer shall reimburse Physician for documented, reasonable relocation expenses incurred in connection with Physician's relocation to the geographic area of the Primary Practice Location, in an aggregate amount not to exceed $[Insert Amount] (the 'Relocation Allowance'), subject to submission of expense documentation in accordance with Employer's expense reimbursement policies."]
Repayment Obligation. If Physician voluntarily terminates employment with Employer or if Employer terminates Physician's employment for Cause (as defined in Section 3.4) within [Insert — e.g., twenty-four (24)] months of the Effective Date, Physician shall repay to Employer a pro rata portion of the Signing Bonus [and Relocation Allowance, if applicable], calculated as follows: the total amount of the Signing Bonus [and Relocation Allowance] multiplied by a fraction, the numerator of which is the number of full months remaining in the [Insert — e.g., twenty-four (24)]-month period and the denominator of which is [Insert — e.g., twenty-four (24)]. Such repayment shall be due and payable within sixty (60) days following the effective date of termination. Employer may, at its election, offset the repayment amount against any final compensation or other amounts owed to Physician, to the extent permitted by applicable law.
Guidance Note: Any signing bonus or relocation allowance must be within FMV, set in advance, and not conditioned on referrals. The signing bonus and relocation allowance should be included in the FMV analysis of total compensation. The repayment obligation should be reviewed for compliance with applicable state wage laws.
Section 4.5 — Quality / Performance Incentive Bonuses (If Applicable)
[If applicable, insert the following provisions. If not applicable, delete this Section 4.5 or insert "Intentionally Omitted."]
In addition to Base Salary and Productivity Bonus, Physician shall be eligible to receive an annual quality incentive bonus (the "Quality Bonus") based on Physician's achievement of objective, measurable quality performance metrics established by Employer. The quality metrics applicable to Physician, the measurement methodology, and the maximum Quality Bonus payable shall be as follows:
[Insert description of quality incentive bonus program, including the specific quality metrics to which the bonus is tied — e.g., patient satisfaction scores (Press Ganey or similar), clinical quality measures (HEDIS measures, CMS quality reporting metrics), care gap closure rates, medication adherence metrics, documentation completeness scores, or other objective quality indicators.]
Maximum Quality Bonus. The maximum Quality Bonus payable to Physician in any single measurement period shall not exceed $[Insert] per year.
Verification. Achievement of quality metrics shall be measured and verified by [Insert — e.g., Employer's Quality Department / Chief Quality Officer] in accordance with Employer's quality measurement and reporting protocols. Employer shall provide Physician with periodic reports (not less than quarterly) regarding Physician's performance against the applicable quality metrics.
Payment Timing. The Quality Bonus, if earned, shall be calculated and paid within [Insert — e.g., ninety (90)] days following the end of the applicable measurement period.
Guidance Note: Quality bonuses must be tied to bona fide quality metrics that are objectively measurable and that do not serve as proxies for referral volume. Metrics based solely on patient volume, revenue generation, or the number of referrals to Employer or its affiliates are not acceptable quality metrics for purposes of this provision. Any quality bonus program should be reviewed for compliance with the Stark Law value-based enterprise exceptions (42 C.F.R. §§ 411.357(aa), (bb), (cc)) and the AKS care coordination and value-based arrangement safe harbors (42 C.F.R. § 1001.952(ee), (ff), (gg)), as applicable. The aggregate of Base Salary, maximum Productivity Bonus, and maximum Quality Bonus must remain within the FMV range.
Section 4.6 — On-Call Compensation (If Applicable)
[If applicable, insert the following provisions. If not applicable, delete this Section 4.6 or insert "Intentionally Omitted."]
If Physician is required to provide on-call coverage in connection with Physician's duties under this Agreement, Employer shall pay Physician on-call compensation at the rate of $[Insert] per [day/shift/weekend] for each on-call period during which Physician is assigned to provide on-call coverage. The on-call schedule shall be established by [Insert — e.g., the Department Chief or Regional Medical Director] in accordance with Employer's on-call scheduling policies, and Physician shall participate in the on-call rotation on an equitable basis with other physicians in Physician's Specialty employed at the same or nearby clinic locations.
On-call compensation shall be paid in accordance with Employer's standard payroll practices and shall be in addition to Base Salary and any Productivity Bonus or Quality Bonus otherwise payable under this Agreement. On-call compensation is included in the determination of total compensation for FMV purposes and is subject to the Total Compensation Cap set forth in Section 4.3.
Guidance Note: On-call compensation must reflect FMV for the specialty and subspecialty in the applicable geographic market, as supported by the applicable FMV opinion and nationally recognized benchmark data. On-call compensation rates should be reviewed annually in connection with the FMV recertification process.
Section 4.7 — No Compensation for Referrals
No amount of compensation paid under this Agreement is intended to be, nor shall it be construed as, an inducement or reward for the referral of patients, or for the recommending or ordering of any item or service, including any Designated Health Service. Physician's compensation under this Agreement does not vary with, and is not determined by reference to, the volume or value of any referrals by Physician to Employer or to any entity with which Employer has a financial relationship, except to the extent that the Productivity Bonus component of compensation is based on wRVUs for services that are personally performed or directly supervised by Physician, as expressly permitted under 42 C.F.R. § 411.357(c)(2) and the Stark Law employment exception.
Neither party shall condition any aspect of the employment relationship, including the continuation of employment, the amount of compensation, or the assignment of duties, practice locations, or resources, upon the volume or value of referrals made by Physician to Employer or by Employer to Physician, or upon the revenue generated from such referrals.
Section 4.8 — Annual Compensation Review and FMV Recertification
Employer shall review Physician's compensation on an annual basis, or more frequently as circumstances may require, in accordance with Employer's Physician Compensation Policy and FMV Determination Procedures. The annual review shall include an assessment of whether Physician's total compensation remains consistent with Fair Market Value and is commercially reasonable in light of the services actually provided by Physician, changes in market conditions, and updates to applicable benchmark data.
Any adjustment to Base Salary, the Conversion Factor, the wRVU Threshold, the Maximum Productivity Bonus, the Total Compensation Cap, or any other compensation component under this Agreement must satisfy all of the following requirements:
(a) The adjustment must be prospectively established (i.e., determined and documented before the commencement of the period to which it applies);
(b) The adjustment must be supported by a current FMV determination, which may take the form of an updated FMV opinion from a qualified healthcare valuation firm or, if appropriate, a documented internal FMV analysis performed in accordance with Employer's FMV Determination Procedures;
(c) The adjustment must be documented in a written amendment to this Agreement, executed by both parties;
(d) The written amendment must be reviewed and approved by the General Counsel and Chief Compliance Officer prior to execution; and
(e) The adjustment must not take into account the volume or value of referrals.
FMV recertification shall be performed no less frequently than annually, and in all cases in connection with any contract renewal, compensation adjustment, or material change in the scope of Physician's duties.
Guidance Note: Reference the FMV Determination Procedures Manual for the detailed process of obtaining, documenting, and updating FMV opinions. FMV opinions should be refreshed annually, or more frequently if there are material changes in Physician's duties, compensation, or market conditions.
ARTICLE 5: BENEFITS
Section 5.1 — Standard Employee Benefits
Physician shall be eligible to participate in Employer's standard employee benefit programs, subject to the terms, conditions, and eligibility requirements of each such program, on a basis that is consistent with the benefits provided to other similarly situated physicians within Employer's organization. As of the Effective Date, Employer's standard employee benefit programs include the following:
(a) Health Insurance. Employer-sponsored medical, dental, and vision insurance, with Employer contributing toward the cost of premiums in accordance with its standard benefit plans and contribution schedules.
(b) Retirement Plan. Participation in Employer's 401(k) retirement savings plan, with an employer matching contribution of [Insert — e.g., 4]% of eligible compensation, subject to the terms of the plan document and applicable IRS limits.
(c) Life Insurance. Employer-paid group term life insurance in an amount equal to [Insert — e.g., one times] Physician's annual Base Salary, subject to applicable maximums under the group policy.
(d) Disability Insurance. Employer-paid short-term and long-term disability insurance, providing benefit payments as specified in the applicable group disability insurance policies.
(e) Paid Time Off (PTO). [Insert — e.g., twenty-five (25)] days of paid time off per year, accruing in accordance with Employer's PTO policy. PTO may be used for vacation, personal time, and holidays, subject to advance scheduling approval.
(f) Sick Leave. [Insert — e.g., ten (10)] days of paid sick leave per year, in accordance with Employer's sick leave policy and applicable state law requirements.
(g) Continuing Medical Education (CME) Allowance. An annual CME allowance of $[Insert] per year, to be used for registration fees, travel expenses, and materials associated with approved continuing medical education activities. In addition, Physician shall receive [Insert — e.g., five (5)] days of paid CME leave per year for attendance at approved CME programs.
(h) Professional Dues and Membership Fees. Reimbursement of annual dues and membership fees for [Insert — e.g., up to two (2)] professional medical associations or societies, as approved by the Supervising Authority.
(i) Professional Liability Insurance. Employer shall provide and pay for professional liability (malpractice) insurance covering Physician for all services performed within the scope of Physician's employment under this Agreement, with coverage limits of not less than $[Insert — e.g., 1,000,000] per occurrence and $[Insert — e.g., 3,000,000] in the aggregate, and shall provide or fund tail coverage upon termination of this Agreement in accordance with Section 5.2 below.
Employer reserves the right to modify, amend, or discontinue any employee benefit program at any time, provided that any such modification, amendment, or discontinuation is applied uniformly to all similarly situated employees. The value of all benefits provided under this Section 5.1 is included in the determination of total compensation for purposes of FMV analysis and the Total Compensation Cap.