Physicians News » Medicine & the Law

Help Your Patients Get the Benefits They Deserve

Physicians News — Wed, 01 Feb 2012 19:07:18 +0000

[caption id="attachment_4585" align="alignright" width="150" caption="Eric Shore"][/caption] By Eric A. Shore, J.D. and Pia Horton Everyday your patients trust you to care for their health. Many of your patients find themselves unemployed and therefore, uninsured. While some will find work eventually, those with physical and/or mental limitations may not. This is especially true for those approaching retirement age (50-65 years). You can help. Patients who are unable to sustain work due to their health may be eligible for Social Security disability benefits, therefore making them eligible for Medicare or Medicaid. Although treating your patients is obviously your primary concern, taking a few steps to encourage patients to apply and obtain Social Security benefits may be necessary for them to afford the care you provide. Physicians play an instrumental role in helping their patients obtain the Social Security disability benefits they need. Social Security disability claims are evaluated by determining whether your patient suffers from a severe physical and/or mental impairment that has lasted and/or will last for twelve (12) months, and/or result in your patient's death. Judges and attorneys review your medical records, looking for your specific documentation of your patient’s physical and mental limitations and how those limitations are caused by your patient's impairments. To be most helpful, your medical records should also indicate how those limitations prevent or restrict your patient's ability to function on a daily basis. The severity and duration requirements can only be proven by obtaining proper medical evidence, as medical evidence is key to any successful Social Security Disability claim. Social Security cases are often built and won on the strength of the medical records provided by a client’s treating physician. Therefore, detailed progress/treatment notes, an accurate accounting of your patient's subjective complaints, referrals to specialists, and referrals for objective testing are necessary to build a winning claim. Your treatment notes are an important part of building the strength of your patient's case. Consistent treatment should be documented with detailed narratives that include the following: specific dates of treatment, your diagnosis, the nature of your patient’s illness, its etiology, severity, and to what degree the impairment limits your patient’s ability to perform day to day activities, function on a job, and/or maintain full time employment. For example, if your patient has COPD and experiences severe dyspnea, chest pains, wheezing, and fatigue upon minimal exertion, indicate all in your treatment narratives. Further indicate that medium and heavy exertional level activities are not recommended for your patient, and document specific functional restrictions and/or precautions that your patient should exercise on a daily basis. Also, note why your patient should not partake in specific exertional activities. For example, "due to Chronic Obstructive Pulmonary Disease, my patient’s lung volume capacity is severely compromised. My patient should not lift any weight over ten (10) pounds frequently; never climb ladders; never walk for more than five (5) minutes; avoid vacuuming, dusting, mopping, and standing for more than thirty (30) minutes at a time; avoid all exposure to dust, chemicals, or other environmental hazards." Also indicate what adverse effects your patient will experience if he or she partakes in any of the restricted activity Your patient’s subjective complaints are extremely important to record upon every visit to your office. Often, subjective complaints suggest the true severity of your patient’s impairment and how the impairment limits his or her ability to function. Subjective complaints of chronic and severe pain should prompt further objective testing, physical therapy, and/or referrals to specialists. The results of objective tests offer concrete evidence that cannot be disputed. Making timely and accurate referrals for CT scans, MRI’s, and X-rays can strengthen your patient’s case and provide and further confirm your diagnosis. In addition, timely referrals to specialists and physical therapists document the severity of your patient’s impairment and can significantly increase the chances of winning the claim by indicating your patient’s need for ongoing care and treatment. With the proper referrals, your patient can build a well documented treatment history, which will in turn bolster your patient’s credibility and increase his or her chances of success. Moreover, timely objective testing can show permanent impairments, helping to satisfy both the severity requirement and the twelve (12) month duration requirement. For example, frequently a patient who suffers from severe asthma and/or airway restriction disease is referred for a Pulmonary Function Testing (PFT). The results of an initial PFT may only show a mild impairment. However, over the course of time, your patient's complaints and symptoms may worsen requiring you to refer them for further testing. Subsequent tests can document how your patient's illness has progressed from tolerable to disabling. Often times, physicians note that their patient is applying for disability benefits, but do not indicate whether they have observed whether their patient is disabled. Therefore, your observations of how your patient’s impairments affect them should be documented, as well. For example, noting that your patient walks with a limp, experiences frequent falls, has difficulty getting on or off of your examining table, was short of breath walking a short distance, heard voices, could not focus during your exam, could not walk from the waiting room to the treatment room without assistance, winces in pain to your touch, or requires assistive devices to ambulate, can benefit your patient’s claim. When your observations are consistent with your patient's subjective complaints and objective test results, the strength of your patient's claim increases substantially. Moreover, completing simple questionnaires or residual functional capacity (RFC) forms indicating how your patient’s impairments limit their ability to function can be invaluable to your patient’s claim. Residual Functioning Capacity (RFC) forms and/or Medical Source Statement (MSS) are of great importance to any Social Security disability claim. The forms help Social Security to evaluate the functional limitations caused by your patient's impairments by giving us insight into how those impairments limit the ability to perform work related activities. The form consists of a list of physical or mental activities allowing the treating physician to assess their patient's ability to perform work related activities by indicating how the patient’s ability to function is limited by his or her impairment. More importantly, the form contains sections that allow you to further comment on your patient's limitations in a brief narrative. In a sense, the form gives you an opportunity to be present at your patients hearing. A supported RFC form completed by you may be the most influential piece of evidence in the case and may actually determine whether your patient will receive the benefits they need. We know completing forms and copying records for legal matters are not a primary concern. However, because your assistance can be the deciding factor in whether your patient will obtain Medicare/Medicaid and the cash benefits needed to afford transportation to your office, helping patients with their Social Security disability and SSI cases is different. The Social Security Administration must consider all medical evidence of record in your patient's claim including your records and opinions, and give great weight to all evidence submitted by you, the treating physician. Therefore, your observations, recommendations, referrals, and treatment plans are crucial in assessing your patient’s case and achieving the favorable outcome your patient needs and deserves. ### The Law Offices of Eric A. Shore, P.C. (www.1800cantwork.com) focuses on matters of Social Security Disability and SSI benefits. They can be reached at 215.627.9999.

How to Protect Your Practice From Your Spouse

Physicians News — Tue, 06 Dec 2011 15:28:48 +0000

By Deborah B. Miller, Esq.

From a personal perspective, prenuptial agreements are not very appealing, but from a common sense and legal point of view, they can be essential. Getting married is the biggest financial decision in most people’s lives, but many do not consider the financial entanglements that marriage creates. Just ask anyone who has lost a house or retirement plan in a divorce. Despite reading articles about the importance of using a prenuptial agreement as a tool for planning, plenty of people feel uncomfortable with prenuptial agreements. Luckily, there are secondary measures, not all as good as a prenuptial agreement, but perhaps more in line with your personal views and the realities of your relationship. For example, there are ways to structure corporate documents to insulate your medical practice from divorce proceedings, whether your own divorce or that of another physician in your practice. Buy-sell agreements among shareholders and corporate insurance policies in the event of a forced buyout can be effective tools to protect the practice. Likewise, postnuptial agreements are an option, even if the prenuptial agreement seemed awkward at the time of marriage. A postnuptial agreement can be limited to a spouse relinquishing claims on your interest in your medical practice. This can be a mandatory prerequisite for membership in a practice group, essentially forcing all group members to enter either prenuptial or postnuptial agreements to protect the medical practice from divorce. This can be effective, as the pressure to enter such an agreement is external, and the blame for needing a postnuptial agreement can be shifted to the attorney for the medical practice. It’s easy to blame the attorney, just give it a try. Everyone (whether married or not) should make sure their estate plans are up to date and there are a variety of situations in which prenuptial agreements should part of those estate plans. The most important of these situations are a second marriage, or where at least one spouse has children before the marriage. Let’s start with what happens in a second marriage from a social perspective. Statistics tell us that 2 out of 3 second marriages fail. Yet hope springs eternal, as does love, and plenty of divorced folks get remarried. Those who remarry are more experienced than the first time around, having learned either personally or through a friend the expense and stress associated with a difficult divorce. Most people have heard about prenuptial agreements, but may not understand how a prenuptial agreement can help them avoid a long and costly divorce, while also protecting their Estate for their children. Essentially, a prenuptial agreement should streamline a divorce in the event the marriage does not work out, having resolved the marital financial issues before the marriage. The prenuptial agreement, however, will not address the issues as to any children of the marriage, such as child support and custody. What it can do for you is to protect your medical practice, your salary, your pension and your retirement account. It can state how the marital home is to be handled and what property is separate property. The significance of protecting your medical practice from equitable distribution during a divorce, and your salary from years of alimony cannot be understated. A prenuptial agreement can set forth the financial parameters of the marriage from the day of the wedding up through and including how your Estate is handled after you die. It can state whether your spouse has a right to an interest in your retirement benefits and your medical practice. It can state whether or not your spouse waives the right to claim spousal support or alimony. Some couples do not agree on a straightforward waiver of rights, but instead agree on a sliding scale—the longer the marriage lasts, the greater a dependent spouse’s entitlement to a portion of specified marital property. In addition to setting the financial parameters of your marital relationship, a prenuptial agreement is the best tool to prevent your Estate from ending up in the hands of someone else’s children. Let’s consider Mom, who at 65 looks great (because she follows her family physician’s advice). Last year, she married Bob. Mom has a son and a daughter, but Mom did not get around to having a pre-nuptial agreement...so what happens when Mom dies before Bob and she does not have a will? If Mom is a resident of Pennsylvania, we need to consider Bob’s statutory right of election. This law allows, but does not require, Bob to “elect” to take 1/3 of Mom’s Estate. The right of election exists whether or not Mom has a Will, and regardless of what Mom leaves Bob in her Will. The only way to cancel this right is by agreement between Mom and Bob. If Bob elects against Mom’s will, he gets 1/3 of Mom’s assets that pass through her Will. Let’s say Mom’s Estate assets are a 0,000 investment account, and her house worth 0,000—a total of 0,000—essentially the money Dad made through hard work and careful saving. This means that Bob gets 0,000, Mom’s son inherits 0,000, and Mom’s daughter inherits 0,000. Did Mom want Bob to get 0,000 from her Estate? Didn’t Mom always say she would leave everything to her children 50/50? A simple solution would have been a prenuptial agreement stating that Mom and Bob mutually waive their rights to each other’s Estates, including a waiver of their statutory right to claim an Elective Share. Or, if there was no prenuptial agreement, a post-nuptial agreement is another option. The agreement to waive the elective share need not occur before the marriage. In the event Mom does not want to leave Bob without anything, Mom and Bob can explore options that express loyalty and respect for her late husband and their children, as well as for Bob’s well-being after she dies. For example, Mom may wish to grant Bob a life estate in her home, so long as he pays upkeep and taxes or may want to fund a testamentary trust from which Bob can obtain income and support after her death. Depending on Mom’s wishes and the situation, this can be accomplished in a prenuptial agreement, a Will or by Deed. In second marriages, using Mom above as the ongoing example, there is a particular need to address where Mom will be buried. If she does not make her intentions as to her remains firmly known, then Pennsylvania law allows Bob as the surviving spouse the unfettered right to decide where she will be buried. Bob might want her to be buried in Florida near his winter condo. Mom’s children, however, may want Mom to be buried next to Dad in the established family plot in Pennsylvania. To resolve this issue, Mom can state her intentions as to her remains in her Will. There are plenty of other marital issues that can be addressed with other proper estate planning tools. For example, a prenuptial agreement cannot protect Bob’s Estate from bills owed to third parties who provided Mom with “necessaries” such as a hospital care. Nor can a prenuptial agreement protect Bob’s Estate from the Commonwealth of Pennsylvania seeking dollar-for-dollar reimbursement for all Medicaid benefits provided to Mom. Depending on which issues are relevant to each couple, there are estate planning tools that can be used to address the various concerns, including placing monies in an irrevocable inter vivos trust. Second marriages involving younger couples are equally fraught with their own types of financial concerns that benefit from a prenuptial agreement. In the case of younger couples who remarry with children from a prior marriage, the prenuptial agreement should address the thorny issues of how income and assets will be allocated to children and step-children for things ranging from medical expenses, to college tuition, to legal fees for custody and child support proceedings. ### Deborah B. Miller, Esquire, is a partner at Strong, Stevens, Miller & Wyant, P.C. (www.strongfirm.com). For follow up, please contact Debbie directly at (610) 239-8600 x 234 or dmiller@strongfirm.com

Resolutions Reflect the Changing Influences On Our Profession

Physicians News — Thu, 17 Nov 2011 14:59:06 +0000

By Lynn Lucas-Fehm, MD, JD

When the AMA was formed in 1847, the founders could not have imagined how health care delivery would change in the ensuing 150 years. The goals of the 19th century medical profession were ambitious but clear - to assure that the highest standards of excellence became the foundation for the practice of medicine. At the first meeting of the AMA, the delegates developed policies by introducing, debating, amending and ultimately passing resolutions. One example was the policy establishing the requirement for "gentlemen" entering the profession: Resolved, that this convention earnestly recommends to the members of the medical profession throughout the United States to satisfy themselves, either by personal inquiry or written certificate of competent persons, before receiving young men into their offices as students, that they are of good moral character, and that they have acquired a good English education, a knowledge of natural philosophy, and the elementary natural sciences, including geometry and algebra, and such an acquaintance, at least, with the Latin and Greek languages as will enable them to appreciate the technical language of medicine and read and write prescriptions. Today, resolutions affecting how we practice medicine are still introduced, debated, and voted upon in the same basic format as a century ago. Parliamentary procedure is aptly enforced by the speaker of the House of Delegates. When resolutions are passed, they are sent to the Board of Trustees for implementation while others are delegated to governmental liaisons who lobby politicians in hopes of favorable legislation. From October 14 through 16, I attended the annual meeting of the Pennsylvania Medical Society as a delegate. Over the many years that I have attended this meeting I find myself constantly looking for the changes which have occurred in the process and content of the event. What I have discovered is that the protocol has not changed but the issues that we address have persistently expanded to include government, political, business and legal issues which have taken control of our profession. Examples of this outside influence were quite apparent in the resolutions presented for consideration at the PAMED House of Delegates. A synopsis of the adopted resolutions taken from the PAMED website is as follows: Energy sources, risks to public health: Supporting energy sources that decrease environmental risks to public health and studying the state’s public health infrastructure State regulation of medical spas: Collaborating with state and national medical organizations to advocate for state regulation of medical spa facilities Professional liability coverage for physician volunteers: Seeking legislation requiring the state to provide free professional liability coverage in return for volunteering at free non-government clinics Medical Staff Code of Conduct: Adopting the American Medical Association’s (AMA) Model Medical Staff Code of Conduct Observation care codes; Medicare reimbursement: Advocate for an increase in Medicare reimbursement for observation care codes Physical fitness guidelines: Work with other organizations to develop a checklist to identify risk factors in patients starting physical fitness programs Water fluoridation: Working in conjunction with the Pennsylvania Dental Association to urge the state to adopt federal fluoride standards and apply them through legislative or regulatory initiatives Collective bargaining: Supporting federal legislation authorizing collective bargaining Several issues were referred to PAMED’s Board of Trustees for further study, which included consideration of Medicare as a public option, reforms to address problems with health plan pre-authorization programs that are outsourced to benefit managers, and controlling children’s misuse of prescription drugs. Resolutions affecting the practice of medicine have certainly evolved since 1847. Response to these adopted policies will likely be diverse. Healthy discourse is always good. However ultimately I hope that whether physicians agree or disagree with the resolutions that were passed at this year’s Pa Med House of Delegates, at least a few will be encouraged to get involved in the process. There is no question that we have little time to do anything except take good care of our patients while complying with the endless red tape that is necessary to run a practice. If we are lucky we find a little time to enjoy our family and friends. However, as the rules and regulations continue to increase, the need for all of us to be involved will be essential. For more information about these resolutions please go to the Pennsylvania Medical Society website at www.pamedsoc.org. ### Lynn Lucas- Fehm, MD, JD, is a radiologist at Abington Memorial Hospital and the 150^th President of the Philadelphia County Medical Society.

The Art of Negotiating Physician Employment Agreements

Physicians News — Mon, 07 Nov 2011 14:07:30 +0000

By Lucia Francesca Bruno, JD, LLM, MBA The proverbial statement, “You only get one bite at the apple” couldn’t be truer than when negotiating a Physician Employment Agreement. Whether you’re the head of a medical practice inviting an experienced physician to join the group, or a resident contemplating a Letter of Intent, fair and effective negotiations are paramount to establishing a long-term working relationship. Forethought, preparation, and the ability to listen are essential to success. Regrettably, by the time most physicians realize that the terms of their Agreement are less than propitious it is usually too late. In fact, most disputes between physicians and employers resulting in termination aren’t related to medical competence. To the contrary, more common than not, physicians claim that their employers failed to inform them of, or misrepresented, working conditions, patient workload, call responsibilities, partnership potential, or the prospects for increased compensation. To avoid these unnecessary pitfalls this article will address key factors to consider when negotiating a Physician Employment Agreement. Itemize Your Priorities First and foremost, it is important to know the difference between a “need” and a “want.” All too often, physicians become blindsided in the negotiation process for lack of preparation and the failure to rank priorities effectively. Keep in mind that priorities change over time. What you want today may not be what you need tomorrow. For instance, early-career physicians place a great emphasis on guaranteed compensation whereas, mid-career physicians focus on productivity-based compensation. Finally, late-career physicians prioritize flexibility, limited call responsibilities and a work/life balance. According to a survey conducted by the American Medical Group Association (AMGA) and the physician recruiting firm, Cejka Search, the top three recruitment strategies medical groups use to attract new physicians are Market-based Compensation (65%), Income Guarantee (61%), and Signing Bonuses (42%). In comparison, physician-respondents prioritize Market-based Compensation (70%), Productivity Bonuses (60%), and a Flexible Schedule (34%).[1] Since the goal of all negotiations is to reach an Agreement that is mutually satisfactory, it is crucial to develop a strategy for getting what you “need” before addressing what you “want.” By ranking priorities in the order of importance you’ll develop a blueprint for success that will serve as a visual reminder of what’s important. Failure to prioritize not only weakens your position at the bargaining table it also delays the negotiation process, wasting valuable time and money. Know Your Worth Although there are many compensation models, some are more complex than others. Regardless of the model used, it is imperative to know your worth before negotiating a Physician Employment Agreement. Since regional market factors and surveys, such as Medical Group Management Association (MGMA), American Medical Group Association (AMGA), and American Medical Association (AMA), dictate physician compensation, most physicians can expect their compensation to reflect what other physicians in the region are earning with comparable skill and experience. When evaluating an offer for employment, it is important to consider each dimension of the compensation package and its value to you. Packages that contain a bonus or incentive component should be realistic and attainable given the doctor-to-patient ratio of the practice. Most groups acknowledge that it takes time for a new physician to grow his/her share of the practice; accordingly, first and second year incentive components require only modest performance. Despite the obvious grace period, new physicians should be aware of what is expected long-term and how future earnings will be calculated. Ask the employer if future earnings will be based on productivity or group collections? If based on group collections, every effort should be made to find out what percentage of billing the group typically collects and the reimbursement rate it receives from third-party payers before committing long-term. Look Inside the Box Having an adequate understanding of the practice’s long-term fiscal obligations can mean the difference between financial ruin and prosperity. It is incumbent upon a new physician to take a careful look at the inner-workings of the practice prior to joining the same. Especially when dealing with smaller practices, it is important to ask whether senior members of the group plan to retire in the near future. Retirement by one or more members can potentially expose new physicians to a costly buy-out when they least expect it. Other factors to consider include the debt-to-equity ratio of the practice and whether additional capital is needed to fund overhead expenses. In addition to assessing the practice’s fiscal health, a new physician would be wise to familiarize himself/herself with the policies and procedures of the group before accepting an offer. When terms in the Agreement reference documents, such as Bylaws, SOP manuals, Partnership Agreements, and Health or Retirement Plans, make certain to request dated copies of the same and review them prior to signing the Agreement. Many physicians are hesitant to request copies of pertinent documents because they fear being perceived as difficult or demanding; however, nothing could be farther from the truth. To the contrary, failure to familiarize yourself with these documents could jeopardize your long-term relationship with the practice. Always remember, that an ounce of prevention is worth a pound of cure. Ask the Tough Questions Health care is an ever changing and consolidating industry. Both internal and external factors influence how long a physician will stay with a practice. It is not uncommon for newly-hired physicians to stick with a job only a short time. Historically, 50 percent of physicians leave a practice within three years and 60 percent exit by Year Five.[2] To avoid becoming a statistic, make sure the practice is a good fit before signing on the dotted line. Ask the employer where they see the practice five years from now and where you’ll fit into their long-term plans. By the close of negotiations you should be completely confident that the employer’s goals are realistic, attainable, and consistent with your time frame and professional agenda. Don’t Get Lost in the Translation Employment Agreements are designed to memorialize the intentions of the parties and protect them when things don’t go as planned. All terms governing the employer/employee relationship should be explicit and in writing. Statements that seek to dismiss or diminish terms of the Agreement should be avoided at all cost. New physicians to a practice should be leery of any comments that are inconsistent with the Agreement. Comments, such as “Oh, our attorney always puts that in there” or “That doesn’t apply to you” should be taken with a grain of salt. Remember all language is relevant and is put there for a reason. If you do not understand one or more terms, ask! Don’t wait until it is too late. A good rule of thumb to remember is to have the Agreement reviewed by an attorney familiar with the applicable laws of the state where you intend to practice. In addition to the business of medicine, the attorney should also be familiar with employment law and contracts. Hope for the Best, Plan for the Worst Despite the best intentions, things don’t always go as planned. Negotiating with the worst-case scenario in mind will help you deal with the uncertainty of the future. Although there are a plethora of issues that arise after a physician leaves a practice, there are two provisions of the Agreement that cause considerable concern, insurance coverage and restrictive covenants. Insurance Coverage: Let’s face it, as long as there’s health care there will be claims of malpractice. One of the most important provisions of the Agreement is insurance coverage. Though most employers offer coverage within statutory limits, it is prudent to confirm sufficient coverage in order to avoid being placed in a financially precarious position in the future. Depending on the employer, coverage is offered on an “occurrence” or “claims-made” basis. Occurrence coverage is usually preferred by physicians because the purchase of extended reporting endorsement (“tail”) is not required at the end of the policy. Occurrence coverage applies to alleged acts of negligence that occur during the policy year. Even if you no longer possess the policy, you are still covered if the incident occurred while the policy was in effect. In contrast, claims-made coverage is the most common type of coverage. It provides protection for claims that occur on or after the policy retroactive date and are reported to the carrier, in writing, during the policy year. Tail coverage is required for claims that occurred during the active period of the policy, but were reported after the policy terminated. Keep in mind that tail coverage is very costly. Tail coverage typically costs between 150 to 200 percent of the price of a mature claims-made policy. Given the expense, it is prudent to negotiate full payment by the practice. Since many employers are hesitant to flip the bill, strategize by negotiating one or more of the following: (i) tail is to be paid, in full, by the party who terminates the employment relationship; (ii) tail is to be paid by the practice, in full, if termination is without cause (professional misconduct, loss of licensure, uninsurable for professional liability, or acts involving moral turpitude); (iii) tail is to be paid by the practice, in full, after three years of service; or (iv) the cost of tail is to be divided evenly between the parties. If all else fails, cover your tail! Start saving now or look into the purchase of prior-acts coverage, also known as “nose” coverage, once you leave the practice. Restrictive Covenants: Non-competition and non-solicitation provisions of the Agreement place time and geographic restrictions on where a physician can practice and who he/she can solicit as patients upon separation from the practice. Restrictive covenants are premised on the fact that since the employer invested tremendous resources in recruitment and helped the physician build his/her practice, the employer should be protected from future competitive activity. Although the intricacies of such covenants exceed the scope of this article, it is important to keep in mind that restrictive covenants are governed by the laws of the jurisdiction in which the practice is located. Historically, jurisdictions which recognize such covenants have held that the covenant be “reasonable” to protect the legitimate interests of the employer, impose no undue hardship on the employee, and do not harm public interests. As with all other provisions of the Agreement it is wise to have the covenants reviewed by counsel before consenting to the same. Know When to Walk Away Reluctance to negotiate terms of an Employment Agreement may be an early indication of a strenuous working relationship or an inability to embrace conflicting ideas, or encourage professional development in the workplace. Accordingly, a physician should never hesitate to question the terms of an Agreement or tenaciously negotiate terms that are integral to professional growth and personal satisfaction. If negotiations are not going well, or seem particularly adversarial, it may be a good time to reevaluate your options and pursue another path. Check and Double Check Once negotiations are complete and an Employment Agreement has been presented for consideration the final step is to go through the Agreement with a fine tooth comb. At a minimum, make certain that the following provisions are expressly stated in the Agreement and meet with the approval of counsel:

Conditions of Employment (State Licensure, DEA, Credentialing and Hospital Privileges);
Term (Length of Contract), Renewal or Future Negotiations;
Termination (At Will v. For Cause, Notice Period, Payment and Post-Termination Obligations);
Compensation Package (Base Salary, Percent of Collections, Bonuses, etc.);
Business Expenses (CMEs, Professional Dues, Staff Fees, Journals, Stipends, etc.);
Fringe Benefits (Health / Life Insurance, Retirement Plans, etc.);
Malpractice Insurance (Occurrence or Claims Made and Tail Coverage);
Paid Time Off (Vacation, Sick Leave, Maternity, Disability, etc.);
Restrictive Covenants (Non-Competition, Non-Solicitation); and
Co-Ownership (Partnership, Buy-Ins, Pay- Outs).

In closing, the strategy you implement to negotiate your Employment Agreement should reinforce your personal goals and professional agenda. As you go through the negotiation process stay focused on the fact that you’ve invested a great deal of time and money to get where you are today; so don’t drop the ball now. Remember, if you don’t look out for yourself, no one else will! ### Lucia Francesca Bruno, JD, LLM, MBA, is Principal Shareholder of Physicians' Legal Group, LLC (www.physicianslegalgroup.com). She can be reached at (215) 688-3909.

[1] Tom Flatt, The Recession and the Three R's of Healthcare: Reform, Recruitment, and Retention Medical Groups Are Adjusting to Meet Economic Challenges Reports Cejka Search and AMGA Survey (March 2010)

[2] Gail Garfinkel Weiss, Group Practice: How to keep the new guy. Modern Medicine (June 2010)

How to Develop a Fair Physician Compensation Plan

Physicians News — Tue, 27 Sep 2011 17:04:38 +0000

By Daniel M. Bernick, Esq., M.B.A When I first started as a health care attorney and consultant, 20 years ago, my mentor remarked that compensation planning for physician groups was probably the most challenging type of consulting assignment that our firm handled. In the years since, after performing many such assignments, I agree. On its face, choosing a compensation formula may appear to be a simple task. It is not a highly technical problem. There a number of standard formulas (see addendum to this article) and virtually all groups use one of these formulas, or a variant on them. What makes compensation planning challenging are the high stakes involved, i.e., W-2 pay. This is the stuff that funds mortgages, vacations, private school and college tuitions, and all other “lifestyle” choices. There aren’t many more important issues than that, from a business perspective. It’s true that many factors – not just the compensation formula -- affect a doctor’s compensation, such as cuts in reimbursement, increases in overhead, increased competition, or a general economic recession (especially for elective services). However, such marketplace factors can’t be controlled, very much, and thus are accepted as “life.” By contrast, a change in compensation formula is self-administered. This makes all the difference. When it comes to a change in formula, each shareholder wants -- and generally gets -- a say. In new group practices (e.g., solo adding first partner), the choice of compensation formula can often be made without too much angst. First, the choice of compensation formula is often overshadowed by the hugely emotional negotiation of the buy-in amount and terms. Second, the existing owner holds the keys to partnership, and therefore typically has more leverage than the new partner, when choosing the formula. Third, some choice must be made; the “status quo” (100% of profit to the senior physician) is no longer an option. All of these factors typically conspire to help force a choice of compensation formula within a reasonable period of time. When the two partners add a third or fourth partner, inertia and history begin to play a role. The existing formula becomes the starting point, and changes to that formula must be justified by some pressing need. However, the existing owners likely still have more leverage than the new partner, because they hold the keys to partnership, and because their production (oftentimes) exceeds that of the new partner. This again helps force a resolution. For practices with five or more senior partners, change becomes much more difficult. Typically, the group has become more “democratic”, in that voting rights are no longer controlled by a senior “benevolent dictator” shareholder or small group of “founders.” Thus, the senior partners may no longer have the leverage to impose a resolution on the younger partners. In addition, time has passed; a practice culture has been established; and there is much “history”. By “history” I mean such things as the way people were treated in the past (“I never got a bonus for higher production”), or financial or work-personal life balancing decisions or choice-of-practice decisions made by a shareholder in the past in reliance on the existing formula and the compensation that it generated for him or her. Any change in this established formula means that there will be “winners” and “losers”. For such larger, more mature practices, the impetus for change is usually one or two physicians who are outliers in terms of production. I haven’t done a survey, but my educated guess is that 90% of the time, the reason that a consultant is specially retained to examine the compensation formula is because the high producer is unhappy, and is perhaps threatening to leave. Theoretically, the decision whether to adopt a new formula -- and what that new formula should be -- could be made with the help of the consultant in a single sit-down meeting with all of the shareholders. However, that is not realistic. The stakes are too high; there is too much soft information to be gathered; and there is too much financial information to be processed, to make a good decision, or really any decision. In the end, any one physician who thinks that he may be hurt by change will demand a proforma of the new formula, as applied to existing financials, so that the potential pay cut can be quantified and considered. This can’t be done on the spot. The better way to approach the process involves the following:

The consultant is provided with Practice financial information, including profit and loss statements, physician productivity, and other data.
Each shareholder provides the consultant with responses to a confidential questionnaire.
The consultant visits the Practice office and interviews the shareholders individually and privately.
The consultant prepares a report outlining a recommended new formula, the reasons for same, and proforma of the new formula, as applied to the last year’s financials.
The consultant comes back to the office to meet with the group, discuss, and hopefully make a decision.

What this process does is allow the individual physicians to express their concerns privately. The weaker members of the group will certainly not offer their unvarnished views in a group meeting, for fear of retaliation by the dominant members. The stronger members of the group may not fear “blow back” to the same extent, but they too want to maintain friendly relationships with their partners. No one will be fully candid in a group setting. The role of the consultant is to privately process all of the confidential information, and then discuss the sentiments expressed by the doctors selected on a non-attributed basis, as necessary to support his or her recommendations to the group. A well drafted report, with proforma, will serve to get the issues “out in the open” in a manner in which they can be discussed and resolved with a minimum of hostility and negativity. In fact, the core issues underlying the group’s internal conflict are already known to the shareholders. It is the proverbial “elephant in the room.” What is needed is the consultant’s experienced, professional evaluation and support or rejection of these competing viewpoints, so that one viewpoint prevails and guides the group to selection of a single, agreed formula. The consultant can also help correct misunderstandings that have created conflict in a group. For example, in a recent compensation consulting engagement, for a group of six-shareholder group, the high producer -- a subspecialist – demanded a new formula with greater productivity credit. Other shareholders resented this demand in part because they believed that the subspecialist’s allocable overhead was far higher than that of the other doctors, thus offsetting the subspecialist’s higher production. In fact, it turned out that the Practice’s financial statements presented a distorted picture of the subspecialist’s allocable overhead, which was higher than that of the other doctors, as a percentage of personal collections, but not by that much. A longstanding misperception was corrected. This discovery helped lower the level of resentment towards the high producer’s demands, and helped facilitate a resolution. Other important aspects of the process described above are:

The individual interviews, followed by discussion of the key internal dynamics of the group, on a non-attributed basis, in the consultant’s report, all serve to allow the shareholders to “vent” their frustrations and concerns (at first privately, and then, in the group setting, on a more limited basis) and are thus “therapeutic.”
The proforma quantifies the new formula’s impact on each shareholder. A pay cut which is quantified -- even if the cut is significant -- is often less threatening than a pay cut whose dimensions are unknown.
The perspective and credibility of an experienced outsider, who has been involved with other medical groups, can help tip the scale towards one approach or another, for a group that has become paralyzed by the compensation-related conflict.
By allowing expressions of individual views, in confidential interviews and questionnaires, there is a greater chance that the new formula will have “buy-in” by each shareholder. It’s a little bit like an election. You vote, you have your say, but if the process has validity, you must abide by and accept the outcome, which in this case the consultant’s recommendations.
The consultant, having been educated on the inner workings of the Practice, can suggest remedial measures that the “loser” under the new formula can take to improve his financial outcome under the new formula. This can include financial support from the group. For instance, if the new formula introduces a greater production component, perhaps the low producer needs additional outside training to enable him to do a new lucrative procedure. Perhaps he needs a greater marketing budget, to develop a stronger flow of patients. Perhaps he is being shorted in terms of technical staff support. The consultant can evaluate these various possibilities and help convert a “win-lose” change in the formula to a “win-and-stay even” outcome, or even (hopefully) a “win-win” (total compensation pool grows, so that all members of the group make more money).
By educating the consultant on your practice dynamics and internal workings, you will have a ready resource to help with any problems that may arise in the future, without the time and expense of repeating the process described above.

In the end, the challenge of compensation planning is not devising an intricate formula with lots of bells and whistles. This is not rocket science. A good formula will be easy to understand and implement. The challenge is determining which of the basic formulas is best suited to the group’s unique history, current situation, and physician personalities, and getting everyone to truly “buy-into” this new formula. * * * Addendum List of Common Compensation Formulae for Private Medical Groups

Equal sharing of revenue and overhead;
Productivity division of revenue and overhead;
Combination of equal and productivity sharing of revenue and overhead (e.g., 30% equal, and 70% on production);
Revenue divided on production, and overhead split equally (high producer’s favorite);
Revenue divided on production, and cost allocation of overhead (e.g., fixed expenses divided equally, and variable expenses divided on production);
Equal base salaries, and productivity division of bonus money;
Percentage of collections, for clinical work performed, with leftover bonus money divided on percentage ownership

Daniel M. Bernick,, Esq., M.B.A. is an Attorney, Consultant, and Principal of The Health Care Group and Health Care Law Associates, P.C. in Plymouth Meeting, Pennsylvania

How To Negotiate The Restrictive Covenant In Your Employment Contract

Physicians News — Mon, 01 Aug 2011 15:20:28 +0000

By Martha Swartz, M.S.S., J.D. With economic pressures on physicians mounting and regulatory incentives to affiliate with larger entities expanding, an increasing number of physicians are becoming employees of larger medical groups or health care systems. Restrictive covenants are becoming a mainstay of physician employment agreements. While the American Medical Association Council of Ethical and Judicial Affairs has found them to “disrupt continuity of care, and potentially deprive the public of medical services”, it has found them “unethical” only if they are “excessive in geographic scope or duration … or if they fail to make reasonable accommodation of patients’ choice of physician.” At least eight states have invalidated restrictive covenants, including three that have specifically enacted statutes banning them; however, courts in New Jersey and Pennsylvania have upheld them as recently as 2005. Restrictive covenants never benefit employees and in an ideal world, you would want to delete them entirely from your employment contract. However, in most cases, this cannot be achieved; therefore, if you are becoming an employee in Pennsylvania or New Jersey, you might benefit from some helpful pointers about how to negotiate restrictive covenants. What is a Restrictive Covenant? A restrictive covenant is a provision in an employment or purchase agreement that prohibits you from practicing medicine within a certain geographic area for a specified amount of time. Restrictive covenants are designed to protect the economic interest of your employer who is assumed to have spent time and money training you, introducing you to its patients and sharing confidential information to you. Pennsylvania and New Jersey Law. Both Pennsylvania and New Jersey recognize the validity of restrictive covenants under certain conditions. In Community Hospital Group, Inc. v. Jay More, M.D., 183 N.J. 36, 869 A.2d 884 (NJ 2005), Dr. More, a neurosurgeon, left his employment at Community Hospital Group and joined a neurosurgery practice within the geographic area and time restricted by the restrictive covenant in his employment contract. The New Jersey Supreme Court concluded that a physician’s employer had a protectable interest in "protecting the investment in the training of a physician" in addition to traditionally recognized interests in confidential business information and affirmed the contract’s 2 year time period restriction; however, it “bluelined” the agreement, that is, it modified the agreement, to reduce the 30 mile geographic restriction so that Dr. More would be permitted to cover the Somerset Hospital emergency room that relied on his coverage to be able to provide neurosurgery services to its patients, thus protecting what the court viewed as the public interest. The Pennsylvania Superior Court in Wellspan Health vs. Bayliss, 869 A. 2d 884(PA Super 2008) agreed that physician restrictive covenants are permissible and enjoined Dr. Bayliss, a perinatologist, from practicing in Adams and York counties where Wellspan drew many of its patients since it concluded that a patient referral base was a legitimate interest of Wellspan; however, it “bluelined” the restrictive covenant to permit Dr. Bayliss to practice in Lancaster County because Wellspan didn’t compete with him in Lancaster County for maternal-fetal patients; thus, Wellspan did not have a legitimate business interest in preventing Dr. Bayliss from practicing in Lancaster County. The bottom line is that, in Pennsylvania and New Jersey, restrictive covenants are likely to withstand judicial challenge if they protect a legitimate business interest of the employer, they don’t unduly harm the employed physician, they are “reasonable” in geographic scope and duration, and their enforcement won’t harm the public. However, many of the restrictive covenants proposed by employers arguably fail to satisfy these requirements and therein lies the negotiating opportunity. Legitimate Business Interest of Employer/Scope of Practice. Most restrictive covenants include some variation of language that restricts the employed physician from “directly or indirectly, as an employee, employer, contractor, consultant, agent, principal, shareholder, corporate officer, director, or in any other individual or representative capacity, engage or participate in any business or practice” that competes with the employer. Since protecting the employer’s legitimate business interest is at the core of the restrictive covenant, the first question to ask is what kind of business opportunities would “compete” with your employer? Not every form of medical practice or facility in which you might practice post-employment is likely to compete with your employer. For example, if, as an anesthesiologist you are employed by an anesthesiology group that limits its practice to hospital settings, you can argue that the group should not be able to prevent you from practicing at an outpatient pain clinic within the restricted area after you leave the practice. If you are a pulmonologist who is employed by a hospitalist group, the group arguably does not have a legitimate reason to prevent you from opening a general pulmonology practice within the restricted area. Thus, one approach is to list in the agreement the types of facilities that the employer considers to be a competitive threat. Another approach is to carve out certain types of facilities that don’t threaten your employer’s business. For example, if you are employed by a pediatric practice that provides outpatient care primarily, you should be able to practice as a facility-based pediatrician. If you are employed by an internal medicine group that provides outpatient and hospital inpatient services only, you should be able to become the medical director of a nursing home in the restricted area. You might also identify in the agreement specific institutions at which you would be permitted to work. Another approach is to propose, as the perinatologist defendant successfully argued in Wellspan, that your employer’s legitimate business interest does not extend to geographic areas from which it draws no patients. This might mean limiting the mileage restriction, the applicable counties, or some other geographic delineation in the restrictive covenant. Geographic scope. Restrictive covenants address geographic limitations in many ways: they might set a mileage radius from: 1) a group’s primary office; 2) each of the group’s offices; 3) each of the group’s offices currently existing or developed in the future; or 4) each of the hospitals or other facilities at which any member of the group practices. Or, rather than a mileage restriction, the restriction might be defined by counties. The first step is to map out the circumference of the restriction and note the medical facilities that are located within the proposed restricted area. Are there certain facilities or practices that you think you might want to join if this particular employment arrangement doesn’t work out? Note where these facilities or practices are located in relation to the proposed restricted area. For example, an employer might impose a 10 mile restriction from its primary office at 100 Montgomery Ave. in Ardmore, PA. If the facilities at which you might want to work post-employment are located 8 miles from the employer’s primary office, try to reduce the geographic scope to 7 miles. Once the restrictive covenant is measured from more than one central point, for example, from all of the practice’s offices, the geographic restriction is increased exponentially. Thus, you should try to limit the restriction either to the practice’s principal office or to those offices or hospitals in which you primarily practiced as an employee within the last 12 months of your employment. Be especially careful about agreeing to be restricted from practicing within a certain number of miles from the employer’s future offices since introduces a degree of uncertainty that makes it difficult for you to evaluate the impact of the restriction. What might be considered a “reasonable” geographic restriction in a rural area may not be considered “reasonable” in an urban area. Thus, while a Pennsylvania court upheld a 50 mile restriction in rural Pennsylvania in Geisinger Clinic v. DiCuccio, 414 Pa. Super. 85, 606 A.2d 509, 518 (1992), it is unlikely that such an expansive restricted area would be considered reasonable in an urban setting. Time. Most physician contracts restrict physicians from competing during the term of their employment and for one to two years thereafter; under most circumstances, this restriction would probably withstand a court challenge. However, if you have a one year contract, it might not be reasonable for the employer to impose a restrictive covenant that is longer than your initial agreement. Also, if you leave the practice within a short period of time, that is, before you’ve received the benefit of being trained by the employer, the restrictive covenant should not apply at all. You can argue for “tiered” applicability, that is, if you leave during the first year (especially if you are new to the area or just finishing your residency so that your ability to develop a significant practice within the first year is limited), no restrictive covenant should apply. If you leave during the second year, a one year restriction should apply; the two year restriction should apply only if you have been employed for at least 2 years by the employer imposing the restriction. Triggers. One point that many physicians fail to consider in negotiating restrictive covenants is the circumstances under which the restrictive covenant is triggered. It is arguably fair for the restrictive covenant to apply if: 1) the employed physician leaves without cause (thus arguably “leaving the employer in the lurch”); or 2) the employer terminates the physician with cause (other than alleged physician incompetence) since the physician may have been able to prevent her termination. However, if the employed physician leaves due to the employer’s breach of the agreement, the restrictive covenant should not apply. (This means that you also have to pay attention to the contract’s termination provisions since many physician agreements fail to include a provision permitting the physician to terminate for cause, a necessary prerequisite to invoking this trigger.) Similarly, if the employer terminates the physician for no reason, e.g. the employer overestimated its patient volume, the physician should not be penalized by being subject to a restrictive covenant. Finally, if the employer terminates the physician because the employer alleges that the physician was incompetent, no restrictive covenant should apply because an “incompetent” physician presumably cannot be a competitive threat to the employer. In addition, restrictive covenant should not apply if the employer ceases to provide the type of specialized services that the physician provides. For example, if a hospital discontinues its obstetrics services, the employed obstetrician-gynecologist should be able to practice obstetrics anywhere without being subject to a restrictive covenant. Public Interest. In contrast to the American Medical Association, the American Bar Association has a longstanding rule prohibiting restrictive covenants in lawyers’ contracts, concluding that they inappropriately intrude upon the lawyer-client relationship and restrict the public's right to choose an attorney. Several commentators have argued that the public’s right to choose a physician is at least as important as the public’s right to choose an attorney. However, while judges see themselves as appropriate arbiters of lawyers’ rights, they have usually deferred to the AMA’s judgment about what is ethical for physicians. Nevertheless, in deciding whether a restrictive covenant is enforceable, courts invariably consider whether enforcement of the restrictive covenant is likely to injure the public. The More court specifically reduced the mileage restriction in Dr. More’s restrictive covenant precisely because his skills as a neurosurgeon were needed to provide coverage in a particular hospital’s emergency room. In an earlier Pennsylvania case, New Castle Orthopedic Assoc. v. Burns, 481 Pa. 460, 469, 392 A.2d 1383, 1387 (1978), the Pennsylvania Supreme Court reversed the grant of a preliminary injunction that would have prevented an orthopedic surgeon from practicing within a certain geographic area because it concluded that there was a shortage of orthopedic specialists in the geographic area; the orthopedic surgeon was permitted to practice in the restricted area to avoid harm to the public. Considering the great weight often given to potential public harm by courts, you might be able to negotiate the complete elimination of a restrictive covenant if you are practicing in a rural area with a shortage of physicians in your specialty. Restrictive Covenants and Recruitment Agreements. If your compensation in your employment agreement with a medical practice is subsidized under a recruitment agreement with a local hospital, the restrictive covenant must comply with the Stark law. Under an older version of the Stark Law, a medical practice could not include a restrictive covenant in its employment agreement with a physician whose compensation was subsidized by a local hospital. However, after 2007, this requirement was modified, so that restrictions are now permitted provided that they do not unreasonably restrict the physician’s ability to practice in the geographic area served by the hospital. Failure to comply with state law would be considered evidence that the restrictive covenant is not “reasonable.” Liquidated Damages. An increasingly number of restrictive covenants include liquidated damages clauses. These clauses permit the physician to “buy her way out of the restrictive covenant.” The amount required to be paid should relate to the costs incurred by the employer in terms of patients lost due to the physician’s departure and recruitment and training of a replacement physician. One possible way of calculating these damages is to relate them to the physician’s annual compensation while she was an employee. Consideration. Restrictive covenants are valid only if they are part of another agreement, e.g. a purchase agreement or an employment agreement, because they must be accompanied by adequate consideration, i.e. payment. Generally, the salary offered by the employer in the initial employment agreement is considered adequate consideration. However, if an employer subsequently tries to add a restrictive covenant to an employment agreement, it will not be upheld unless the employer provides additional payment to the employee. Dispute Resolution. Litigation is expensive and time-consuming. It is generally in all of the parties’ interests to expedite the resolution of disputes involving restrictive covenants. The American Health Lawyer Association has dispute resolution services that include both mediation and arbitration. Starting with mediation in these types of disputes often means a faster and more equitable resolution. ### The Law Office of Martha Swartz (www.swartzhealthlaw.com) concentrates on the regulatory and business aspects on health care.

Preferred Provider Contracting: Beware Of Rental Networks And Third Party Guarantors

Physicians News — Thu, 14 Jul 2011 11:54:28 +0000

By Martha Swartz, M.S.S., J.D. What is a PPO? As a health care institution or individual provider, it is difficult to provide services in Pennsylvania and New Jersey without participating in at least one preferred provider network (PPO). PPOs are a form of managed care in which: an intermediary (PPO) forms a network of health care providers and connects the health care providers to third party payers such as insurance companies, employers, and third party administrators (Payers). The providers offer their services to the PPO at a discounted rate because they expect Payers to steer patients to them as a result and thus, to increase their patient volume. The health care providers that are on the PPO’s panel of providers are “in-network” and, because of the negotiated discounts, patients who go to them for services pay less than they pay for similar services offered by health care providers who are not on the PPO panel, or are “out of network”. A PPO can be a “win-win” for patients and health care providers in that individual patients who seek services from in-network providers save money and in-network providers potentially receive increased revenues as the result of increased patient volume which results from the PPO’s marketing of their services as being “in-network” and thus less expensive. What is a Rental Network? The above arrangement falls apart if the PPO fails to market the health care provider’s services as “in network” or if the PPO makes the discounts available to Payers that are not part of the health care provider’s marketing plan, that is, if the PPO “rents out” the provider’s discount without the provider’s knowledge or consent. When this happens, health care providers find themselves providing services to individuals for which they expect to receive a certain reimbursement amount, only to find out at time of payment that the individual’s Payer has accessed a discount to which it is not entitled. The PPO may even have made your discount available or “rented out” your discounts to Payers with which you already have a negotiated an agreement at a higher rate. Providers thereby end up with the “short end” of the bargain, that is, they give discounts, but don’t receive a higher volume of patients in return. Back in 2005, a number of commentators began to warn physicians of “silent PPOs”, that is, arrangements in which a PPO with which a physician contracts to be on a PPO panel makes the discounts the physician negotiated with that PPO available to other Payers, without the Physician’s consent. However, many times a physician unwittingly agrees to make her negotiated discounts available to other Payers in a PPO’s “rental network” because the physician fails to read the fine print in the contract proposed by the PPO. Are Rental Networks “legal”? In 2008, to avoid the regulation and possible banning of “silent PPO”s, the American Medical Association and the American Association of Preferred Provider Organizations lobbied the National Conference of Insurance Legislators (NCOIL) to adopt a Model Act to Regulate the Secondary Market in Physician Discounts. Under the model law, an intermediary contracting with a physician who wishes to make the terms of its contract available to other Payers must state in its contract with the physician that the intermediary contracting entity:

is permitted to enter into an agreement with a Payer allowing the Payer to access the physician’s discounted rates;
will contractually obligate the Payer renting access to a provider network to abide by the terms of the original contract between the intermediary and the physician; .
will provide the Payer with the relevant terms of the original contract with the physician with which the Payer is obligated to comply;
will provide the physician with a continually updated list of entities that have access to the physician’s discounts, including all additions and deletions;
will obligate all Payers to note on their Explanation of Benefit forms the source of their contractual discounts.

A number of state legislatures have adopted forms of the NCOIL Model Act, including Connecticut, Colorado, Florida, Indiana and Ohio. Other states including Arkansas, California, Kentucky, Louisiana, Maryland, Minnesota, North Carolina, Oklahoma, South Carolina, Texas and Virginia, have enacted laws that limit or prohibit silent PPOs. So far, there is no similar legislation in either Pennsylvania or New Jersey. In addition to legislature-passed laws, several state and federal courts have issued decisions rejecting a Payer’s right to make discounted payments to a health care provider when the discount was “sold” to the Payer without the health care provider’s knowledge. Although none of these cases arose in either New Jersey or Pennsylvania, they provide insights as to how a local court might view this issue. In at least two of the cases, HCA Health Services of Georgia v. Employers Health Insurance Company, 240 F. 3d 982 (11^th Cir 2001) and Mitzan v. Medview Services, Inc., 1999 WL 33105613 (Mass. Super, June 16, 1999), the courts based their analyses on whether the insurer that had accessed the provider’s discounts had been in the position to steer patients to the provider, thus providing the physicians with the “benefits of their bargain”. What can physicians do to gain the benefits but avoid the risks caused by rental networks? Review your PPO agreements carefully, preferably with the assistance of an attorney, to ascertain if the PPO intends to “rent” your negotiated discounts to Payers. If it is determined that the agreement does permit the “renting” of your discounts, make sure that your agreement with the PPO:

makes it clear that the discount you’re offering the PPO is in exchange for the PPO requiring the Payers with which it contracts to steer patients to you as an “in network” participating provider
obligates the PPO to require all Payers to identify you in all of their written material as an “in network” provider
makes it clear that the payment terms that you agree to in the PPO agreement are confidential and may not be disclosed without your express written consent, except to a list of Payers that you have approved
obligates the PPO to provide you with a list of all Payers, updated throughout the term of the contract
obligates the PPO to refrain from contracting with any entities with which you have an existing agreement that provides higher payment rates
requires the PPO to contractually obligate all of its Payers to comply with the terms of the PPO’s agreement with you, including payment procedures, UR procedures, underpayment recoupment, etc.
obligates Payers to note on their EOBs the source of their discounts
clarifies which UR procedures applies to your contract, i.e. those of the intermediary or those of the Payer
obligates the PPO to conduct financial due diligence regarding the Payers to which it makes your discounts available to you to reduce the chances that a Payer will fail to make timely and accurate payments
obligates the PPO to advocate on your behalf if a Payer fails to make timely and accurate payments
requires Payers to pay your full charges if they fail to pay you within the agreed upon time limit
permits you to discontinue discounts to, and to terminate your relationship with, any Payer or any Payer’s product if the Payer fails to make timely and accurate payments

Third party Guarantors of Copayments. Another type of arrangement that recently has been introduced locally can also be a “win-win” for patients and health care providers. At least one local PPO is now offering a program in which a patient’s copayment is paid by the Payer, thus relieving the provider of the expense and inconvenience of collecting the copayment from the patient itself. Because their costs will be reduced, some providers may be willing to accept lower reimbursement rates as a result of this arrangement. Since physicians don’t refer patients to insurers, the promise of such a potential benefit to physicians doesn’t implicate state or federal anti-kickback statutes. However, practical problems can arise if it is unclear to the provider or the patient that an entity other than the provider will be seeking the copayment from the patient. Thus, the provider’s agreement with the PPO should require the PPO to obligate its Payers to: 1) inform the patients in writing to expect a bill for the copayment from the Payer; and 2) specify on the patient’s ID card the Payer that is responsible for paying the patient’s copayment, so that the provider is aware that it is not responsible for collecting the patient’s copayment. Also, since the provider has no direct contract with the Payer that is paying the patient’s copayment, the provider must rely on the PPO to obligate the Payer contractually to pay the patient’s copayment to the provider in a timely fashion. Furthermore, the PPO’s agreement with the provider should confirm that the provider is no longer obligated to collect these copayments. Negotiating your PPO Agreement. Many physicians fail to read their PPO (and other types of third party payer) contracts carefully because they assume they have no ability to negotiate with large insurance companies and other payers. Remember, however, if a Payer needs the type of specialty or subspecialty services that you provide in the geographic area in which you provide services, you may have more leverage than you think. ### The Law Office of Martha Swartz (www.swartzhealthlaw.com) concentrates on the regulatory and business aspects on health care.

New Jersey Physicians: Beware!

Physicians News — Fri, 17 Jun 2011 14:11:09 +0000

By Joseph M. Gorrell The New Jersey State Board of Medical Examiners, often considered by New Jersey physicians as difficult and unreasonable, has adopted a more aggressive approach than ever before in disciplining physicians. This new hard line attitude of the Board can be traced to public statements claiming that the Board had disregarded its mission to protect the public, that it was too soft on physicians. At a regularly scheduled Board meeting of September 10, 2008, Dr. Joseph Gluck, its former Medical Director, came before the Board complaining that it was not strong enough in disciplining many physicians that came before it. Dr. Gluck’s remarks were widely reported in the news media, which cited his example of a physician whose license was suspended for six months, who he contended should have received a suspension for several years. More recently, the public interest group Public Citizen published a report, and the Director of its Public Citizens Health Research Group testified before a committee of the New Jersey Legislature, alleging that New Jersey ranked low on the list of states imposing discipline on physicians. An example of the Board’s newly aggressive stance is a case involving a surgeon who mishandled two surgeries in the winter of 2004. In one case, the surgeon inadvertently inserted a chest tube in the right lung of a patient, when it was the left lung which required the tube. In that instance, he immediately recognized the problem, removed the tube and reinserted it in the correct lung. The patient suffered no permanent damage. In the other instance, during major thoracic surgery the physician inadvertently severed an artery, leading to the patient’s demise. Not unlike other matters which have languished for many years, the administrative complaint was not filed for 2 ½ years, and the case was not presented before an Administrative Law Judge until 2008. A decision in the case was not rendered by the Board until May 2009, more than 5 years after the fact. In the meantime, the physician could have continued practicing thoracic surgery. Rather than doing so, however, immediately after the second surgery, he voluntarily decided to stop performing thoracic surgery, limiting his practice to wound healing. At the hearing before the Administrative Law Judge, the physician did not contest that fact that he had mishandled the two surgeries, and there was no evidence presented that his errors were anything but inadvertent. Uncontroverted evidence was presented demonstrating that the physician had performed his wound healing responsibilities in a highly competent fashion during the four years that had elapsed. Weighing all the evidence, the Administrative Law Judge found that the two surgeries had not been handled competently, and recommended that the physician’s practice be limited to wound healing. Having once represented the Board, and having appeared before the Board for 27 years, this writer can say with confidence that until recently the Board would have accepted the Initial Decision of the Administrative Law Judge. However, the Board declined to do so. Rather, in addition to requiring the physician to limit his practice to wound healing, the Board imposed an active suspension of the physician’s license for 3 months. In doing so, the Board asserted that an active period of suspension was necessary to deter physicians from engaging in such negligent practices. The Board never explained, however, how this punishment could act as a deterrent against negligence. The concept of negligence is that a physician has unknowingly failed to meet the accepted standard of medical practice. Given the fact that physicians know very well that they are obliged to practice medicine within accepted standards -- witness their fear of malpractice litigation -- it is speculative at best, to believe that the imposition of a three month active suspension in these circumstances could serve as a deterrent against negligent medical practice. Rather, it is this writer’s belief and the belief of other attorneys who practice regularly before the Board, that the attendant publicity that has resulted from reports in the news media has put pressure on members of the Board to toughen their stance. Moreover for those physicians who come before the Board, this newly aggressive posture of the Board can have severe, albeit perhaps unintended, consequences. The example of the physician described above is illustrative. Because the physician had trained originally in Europe and South Africa (under the tutelage of Dr. Christian Barnard), and the physician had come to America to assume a position to establish a heart transplant program, the physician never acquired American board certification, which would have been required him to undertake a residency program in the United States. The hospital where he was providing wound healing services had a Board certification requirement, but the physician had been grandfathered. When his license was suspended for the three month period, the hospital took the position that he was not only automatically suspended from its Medical Staff, but when he applied for reinstatement he was treated as a newly applying physician. He was therefore denied reinstatement for lack of Board certification. Moreover, when he requested a hearing under the Medical Staff Bylaws to contest that decision, the hospital refused. The Court that reviewed that decision initially denied an application for a preliminary injunction, and it took one and a half years for the Court to enter an order requiring the hospital to provide the physician with a hearing. In the meantime, his earnings have dwindled, with devastating financial consequences for him. The Board’s newly aggressive position is also reflected in settlement positions that the Board has taken prior to initiating an Administrative Complaint. One example, is the case of a physician who established a neurophysiological testing company because he was receiving substandard service for his surgical patients. His legal counsel sought advice from the Board whether the arrangement was lawful. After more than a year the Board declined to provide any advice to him. It is now being alleged that the arrangement violated New Jersey’s prohibition against self-referral, the so-called Codey Law. In addition, it is claimed that various administrative functions were carried out in a negligent fashion. While in the past, in a case like this, the Board would likely have settled the matter for a public reprimand, civil penalty and perhaps a requirement that the physician undertake an ethics course, the Board has taken a settlement position insisting on an 18 month active suspension, notwithstanding the fact that the physician has an exemplary surgical record. Finally, in informal settings, the Board has articulated a more aggressive stance than in previous years. Going back as far as the 1980s, the Board advised the healthcare community that it was not interested in hospitals reporting to the Board when physicians on their medical staffs were suspended due to failure to compete medical records on a timely basis. Recently in public comments, Board members have made statements to the effect that the Board considered such suspensions to require reporting to the Board under regulations adopted by the New Jersey Department of Health and Senior Services. Given the publicity that has surrounded the Board’s record, at least as presented by its critics, it can be anticipated that the Board will continue to take a strong adversarial position in disciplinary matters. Physicians would therefore be wise to acquaint themselves with regulations adopted by the Board and to obtain professional assistance in ensuring that they are operating their practices within the confines of the law and to ensure that they are practicing within accepted standards of medical practice. ### Joseph M. Gorrell is a member of the health law practice of Brach Eichler L.L.C, based in Roseland, New Jersey. Contact him at jgorrell@bracheichler.com.

“Reservation Of Rights” In Disability Insurance Claims: Right Or Wrong?

Physicians News — Fri, 10 Jun 2011 15:02:56 +0000

By Mark F. Seltzer, Esq. You are a physician who has been suffering from a medical condition, for which you have asked your Disability Insurance Company to pay you benefits, under your Disability Insurance Policy. You have contacted your Company, you have provided it with all the pertinent information that it requested in a timely fashion; you have done “everything by the book”. You may have met with its Field Representative, or even been evaluated by one or more of your Company’s chosen Independent Medical Examination doctors. But, notwithstanding your compliance, the Company has methodically asked for endless amounts of additional information, or “dragged its heels” considering your claim. After months of requests for payment of your benefits, in your greatest time of need, the day finally comes when you receive your back-benefits check. But, to your surprise, it comes with a peculiar twist - Your benefits are being paid with “Reservation of Rights”. And, you ask yourself - what is this?; what does this mean? The short and simple answer is that the Company has not accepted liability for your claim, and it is not acknowledging responsibility to pay you under your policy for the claim that you have filed. Rather, it is paying you money for some “other” reason, often with the right to recapture the benefits should the Company ultimately fail to accept liability for your claim. “Reservation of Rights”, your Company would argue, allows it to satisfy pertinent insurance regulations, its own contractual obligations, avoid actionable Bad Faith, and not accept liability for your claim, simultaneously. It effectively allows the Company to attempt to “buy” more time, in order to further investigate and access your claim, with the intention to avoid the negative legal consequences, had it continued to do so without paying you benefits. However, in some claims, payment in this way can be a very useful and positive tool in order to assure receipt of badly needed benefits when the Company requires extended time to appropriately assess and consider complex or difficult claims. But, it can really be a “claim purgatory” - Neither accepting nor rejecting your claim, theoretically without any legal consequences, in return for “lending” you a little money, while specifically retaining the “right of return” of any money it has paid you, when it so chooses to call in your “loan”. Of course, claims manuals or other legal guidelines may “restrict” the time frame for use of this “tactic”. But, if your Company employs this strategy, it may define its own responsive duration rules along the way. For, you see, “the term of art” is all really a fiction created by your Company. We have seen, in our practice, especially as the economy has gone South, that the Companies have reacted to the new economic paradigm in their assessment and payment of claims. And, that’s usually not in a “charitable” way toward their policy holders: you the disabled physician. As the Companies have reacted to the economic realities by scrutinizing claims more carefully, with an even higher level of vigilance, they have continued to perfect the techniques and tools which they have employed, in order to either avoid payment of claims, or to reduce the amounts of benefits that they pay. “Reservation of Rights” is not a new technique, but it is being “effectively” used by your Company as part of this global strategy. But, even if you are being paid, and your Company has accepted liability for your claim, don’t think that you are “out of the woods” yet. For, the “vampire” may rear its ugly head at anytime during the claims process. Let me explain to you, the disabled physician, how the “vampire” potentially strikes. Your Company, after having accepted liability on your claim, and having paid you benefits, possibly for years, without warning, changes its position by denying or questioning liability for any further payment on your claim. However, it chooses to “tactfully” continue paying your claim, potentially hundreds of thousands of dollars of benefits, with “Reservation of Rights”. Then, it files a Federal Court action against you seeking termination of your claim, as of the date it began payment with “Reservation of Rights”, and in addition, seeking restitution or return of the hundreds of thousands of dollars it paid you in that regard. You would have effectively become a Defendant in a huge Federal Court case, requiring legal representation, potentially owing hundreds of thousands of dollars, and faced with the possibility of losing any future benefits on your claim. You would have become the victim of a calculated vulnerability, smitten by a strategy that only Bela Lugosi would love. So what is the “moral” of this “story”? You must understand your contract, and what you need to prove in order to obligate your Company to pay you benefits. You must cooperate with your Company in providing it with the pertinent information which it has requested. You must satisfy your contractual obligations. But, you must always accept the harsh reality that even if your Company has accepted liability for your claim, and paid you benefits, there is no guarantee that it will continue to do so. Never allow yourself to be lulled into a “false sense of security” during any step of the claims process. The more vulnerable you allow yourself to become, the greater the risk of your claim being challenged or terminated. Don’t let your Company sink its teeth into your benefits and use “Reservation of Rights” in the “wrong” way. ### The law offices of Mark F. Seltzer & Associates dedicates its practice to representing physicians, health care practitioners, and professionals in all aspects of disability insurance claims and cases, and professional licensure matters. The firm is located at 1515 Market Street, Suite 1100, Philadelphia, Pennsylvania, 19102. Mr. Seltzer can be reached at #215-735-4222 or 888-699-4222. Please access our website at www.seltzerlegal.com

Health Care Reform Adds Requirements for Physicians

Physicians News — Wed, 01 Feb 2012 19:07:18 +0000

How to Protect Your Practice From Your Spouse

Physicians News — Tue, 06 Dec 2011 15:28:48 +0000

By Deborah B. Miller, Esq.

Resolutions Reflect the Changing Influences On Our Profession

Physicians News — Thu, 17 Nov 2011 14:59:06 +0000

By Lynn Lucas-Fehm, MD, JD

The Art of Negotiating Physician Employment Agreements

Physicians News — Mon, 07 Nov 2011 14:07:30 +0000

Conditions of Employment (State Licensure, DEA, Credentialing and Hospital Privileges);
Term (Length of Contract), Renewal or Future Negotiations;
Termination (At Will v. For Cause, Notice Period, Payment and Post-Termination Obligations);
Compensation Package (Base Salary, Percent of Collections, Bonuses, etc.);
Business Expenses (CMEs, Professional Dues, Staff Fees, Journals, Stipends, etc.);
Fringe Benefits (Health / Life Insurance, Retirement Plans, etc.);
Malpractice Insurance (Occurrence or Claims Made and Tail Coverage);
Paid Time Off (Vacation, Sick Leave, Maternity, Disability, etc.);
Restrictive Covenants (Non-Competition, Non-Solicitation); and
Co-Ownership (Partnership, Buy-Ins, Pay- Outs).

[2] Gail Garfinkel Weiss, Group Practice: How to keep the new guy. Modern Medicine (June 2010)

How to Develop a Fair Physician Compensation Plan

Physicians News — Tue, 27 Sep 2011 17:04:38 +0000

The consultant is provided with Practice financial information, including profit and loss statements, physician productivity, and other data.
Each shareholder provides the consultant with responses to a confidential questionnaire.
The consultant visits the Practice office and interviews the shareholders individually and privately.
The consultant prepares a report outlining a recommended new formula, the reasons for same, and proforma of the new formula, as applied to the last year’s financials.
The consultant comes back to the office to meet with the group, discuss, and hopefully make a decision.

The individual interviews, followed by discussion of the key internal dynamics of the group, on a non-attributed basis, in the consultant’s report, all serve to allow the shareholders to “vent” their frustrations and concerns (at first privately, and then, in the group setting, on a more limited basis) and are thus “therapeutic.”
The proforma quantifies the new formula’s impact on each shareholder. A pay cut which is quantified -- even if the cut is significant -- is often less threatening than a pay cut whose dimensions are unknown.
The perspective and credibility of an experienced outsider, who has been involved with other medical groups, can help tip the scale towards one approach or another, for a group that has become paralyzed by the compensation-related conflict.
By allowing expressions of individual views, in confidential interviews and questionnaires, there is a greater chance that the new formula will have “buy-in” by each shareholder. It’s a little bit like an election. You vote, you have your say, but if the process has validity, you must abide by and accept the outcome, which in this case the consultant’s recommendations.
The consultant, having been educated on the inner workings of the Practice, can suggest remedial measures that the “loser” under the new formula can take to improve his financial outcome under the new formula. This can include financial support from the group. For instance, if the new formula introduces a greater production component, perhaps the low producer needs additional outside training to enable him to do a new lucrative procedure. Perhaps he needs a greater marketing budget, to develop a stronger flow of patients. Perhaps he is being shorted in terms of technical staff support. The consultant can evaluate these various possibilities and help convert a “win-lose” change in the formula to a “win-and-stay even” outcome, or even (hopefully) a “win-win” (total compensation pool grows, so that all members of the group make more money).
By educating the consultant on your practice dynamics and internal workings, you will have a ready resource to help with any problems that may arise in the future, without the time and expense of repeating the process described above.

Equal sharing of revenue and overhead;
Productivity division of revenue and overhead;
Combination of equal and productivity sharing of revenue and overhead (e.g., 30% equal, and 70% on production);
Revenue divided on production, and overhead split equally (high producer’s favorite);
Revenue divided on production, and cost allocation of overhead (e.g., fixed expenses divided equally, and variable expenses divided on production);
Equal base salaries, and productivity division of bonus money;
Percentage of collections, for clinical work performed, with leftover bonus money divided on percentage ownership

Daniel M. Bernick,, Esq., M.B.A. is an Attorney, Consultant, and Principal of The Health Care Group and Health Care Law Associates, P.C. in Plymouth Meeting, Pennsylvania

How To Negotiate The Restrictive Covenant In Your Employment Contract

Physicians News — Mon, 01 Aug 2011 15:20:28 +0000

Preferred Provider Contracting: Beware Of Rental Networks And Third Party Guarantors

Physicians News — Thu, 14 Jul 2011 11:54:28 +0000

is permitted to enter into an agreement with a Payer allowing the Payer to access the physician’s discounted rates;
will contractually obligate the Payer renting access to a provider network to abide by the terms of the original contract between the intermediary and the physician; .
will provide the Payer with the relevant terms of the original contract with the physician with which the Payer is obligated to comply;
will provide the physician with a continually updated list of entities that have access to the physician’s discounts, including all additions and deletions;
will obligate all Payers to note on their Explanation of Benefit forms the source of their contractual discounts.

makes it clear that the discount you’re offering the PPO is in exchange for the PPO requiring the Payers with which it contracts to steer patients to you as an “in network” participating provider
obligates the PPO to require all Payers to identify you in all of their written material as an “in network” provider
makes it clear that the payment terms that you agree to in the PPO agreement are confidential and may not be disclosed without your express written consent, except to a list of Payers that you have approved
obligates the PPO to provide you with a list of all Payers, updated throughout the term of the contract
obligates the PPO to refrain from contracting with any entities with which you have an existing agreement that provides higher payment rates
requires the PPO to contractually obligate all of its Payers to comply with the terms of the PPO’s agreement with you, including payment procedures, UR procedures, underpayment recoupment, etc.
obligates Payers to note on their EOBs the source of their discounts
clarifies which UR procedures applies to your contract, i.e. those of the intermediary or those of the Payer
obligates the PPO to conduct financial due diligence regarding the Payers to which it makes your discounts available to you to reduce the chances that a Payer will fail to make timely and accurate payments
obligates the PPO to advocate on your behalf if a Payer fails to make timely and accurate payments
requires Payers to pay your full charges if they fail to pay you within the agreed upon time limit
permits you to discontinue discounts to, and to terminate your relationship with, any Payer or any Payer’s product if the Payer fails to make timely and accurate payments

New Jersey Physicians: Beware!

Physicians News — Fri, 17 Jun 2011 14:11:09 +0000

“Reservation Of Rights” In Disability Insurance Claims: Right Or Wrong?

Physicians News — Fri, 10 Jun 2011 15:02:56 +0000

Health Care Reform Adds Requirements for Physicians

Physicians News — Wed, 01 Feb 2012 19:07:18 +0000

Physicians News » Medicine & the Law

Physicians News — Wed, 01 Feb 2012 19:07:18 +0000

How to Protect Your Practice From Your Spouse

Physicians News — Tue, 06 Dec 2011 15:28:48 +0000

By Deborah B. Miller, Esq.

Resolutions Reflect the Changing Influences On Our Profession

Physicians News — Thu, 17 Nov 2011 14:59:06 +0000

By Lynn Lucas-Fehm, MD, JD

The Art of Negotiating Physician Employment Agreements

Physicians News — Mon, 07 Nov 2011 14:07:30 +0000

Conditions of Employment (State Licensure, DEA, Credentialing and Hospital Privileges);
Term (Length of Contract), Renewal or Future Negotiations;
Termination (At Will v. For Cause, Notice Period, Payment and Post-Termination Obligations);
Compensation Package (Base Salary, Percent of Collections, Bonuses, etc.);
Business Expenses (CMEs, Professional Dues, Staff Fees, Journals, Stipends, etc.);
Fringe Benefits (Health / Life Insurance, Retirement Plans, etc.);
Malpractice Insurance (Occurrence or Claims Made and Tail Coverage);
Paid Time Off (Vacation, Sick Leave, Maternity, Disability, etc.);
Restrictive Covenants (Non-Competition, Non-Solicitation); and
Co-Ownership (Partnership, Buy-Ins, Pay- Outs).

[2] Gail Garfinkel Weiss, Group Practice: How to keep the new guy. Modern Medicine (June 2010)

How to Develop a Fair Physician Compensation Plan

Physicians News — Tue, 27 Sep 2011 17:04:38 +0000

The consultant is provided with Practice financial information, including profit and loss statements, physician productivity, and other data.
Each shareholder provides the consultant with responses to a confidential questionnaire.
The consultant visits the Practice office and interviews the shareholders individually and privately.
The consultant prepares a report outlining a recommended new formula, the reasons for same, and proforma of the new formula, as applied to the last year’s financials.
The consultant comes back to the office to meet with the group, discuss, and hopefully make a decision.

The individual interviews, followed by discussion of the key internal dynamics of the group, on a non-attributed basis, in the consultant’s report, all serve to allow the shareholders to “vent” their frustrations and concerns (at first privately, and then, in the group setting, on a more limited basis) and are thus “therapeutic.”
The proforma quantifies the new formula’s impact on each shareholder. A pay cut which is quantified -- even if the cut is significant -- is often less threatening than a pay cut whose dimensions are unknown.
The perspective and credibility of an experienced outsider, who has been involved with other medical groups, can help tip the scale towards one approach or another, for a group that has become paralyzed by the compensation-related conflict.
By allowing expressions of individual views, in confidential interviews and questionnaires, there is a greater chance that the new formula will have “buy-in” by each shareholder. It’s a little bit like an election. You vote, you have your say, but if the process has validity, you must abide by and accept the outcome, which in this case the consultant’s recommendations.
The consultant, having been educated on the inner workings of the Practice, can suggest remedial measures that the “loser” under the new formula can take to improve his financial outcome under the new formula. This can include financial support from the group. For instance, if the new formula introduces a greater production component, perhaps the low producer needs additional outside training to enable him to do a new lucrative procedure. Perhaps he needs a greater marketing budget, to develop a stronger flow of patients. Perhaps he is being shorted in terms of technical staff support. The consultant can evaluate these various possibilities and help convert a “win-lose” change in the formula to a “win-and-stay even” outcome, or even (hopefully) a “win-win” (total compensation pool grows, so that all members of the group make more money).
By educating the consultant on your practice dynamics and internal workings, you will have a ready resource to help with any problems that may arise in the future, without the time and expense of repeating the process described above.

Equal sharing of revenue and overhead;
Productivity division of revenue and overhead;
Combination of equal and productivity sharing of revenue and overhead (e.g., 30% equal, and 70% on production);
Revenue divided on production, and overhead split equally (high producer’s favorite);
Revenue divided on production, and cost allocation of overhead (e.g., fixed expenses divided equally, and variable expenses divided on production);
Equal base salaries, and productivity division of bonus money;
Percentage of collections, for clinical work performed, with leftover bonus money divided on percentage ownership

Daniel M. Bernick,, Esq., M.B.A. is an Attorney, Consultant, and Principal of The Health Care Group and Health Care Law Associates, P.C. in Plymouth Meeting, Pennsylvania

How To Negotiate The Restrictive Covenant In Your Employment Contract

Physicians News — Mon, 01 Aug 2011 15:20:28 +0000

Preferred Provider Contracting: Beware Of Rental Networks And Third Party Guarantors

Physicians News — Thu, 14 Jul 2011 11:54:28 +0000

is permitted to enter into an agreement with a Payer allowing the Payer to access the physician’s discounted rates;
will contractually obligate the Payer renting access to a provider network to abide by the terms of the original contract between the intermediary and the physician; .
will provide the Payer with the relevant terms of the original contract with the physician with which the Payer is obligated to comply;
will provide the physician with a continually updated list of entities that have access to the physician’s discounts, including all additions and deletions;
will obligate all Payers to note on their Explanation of Benefit forms the source of their contractual discounts.

makes it clear that the discount you’re offering the PPO is in exchange for the PPO requiring the Payers with which it contracts to steer patients to you as an “in network” participating provider
obligates the PPO to require all Payers to identify you in all of their written material as an “in network” provider
makes it clear that the payment terms that you agree to in the PPO agreement are confidential and may not be disclosed without your express written consent, except to a list of Payers that you have approved
obligates the PPO to provide you with a list of all Payers, updated throughout the term of the contract
obligates the PPO to refrain from contracting with any entities with which you have an existing agreement that provides higher payment rates
requires the PPO to contractually obligate all of its Payers to comply with the terms of the PPO’s agreement with you, including payment procedures, UR procedures, underpayment recoupment, etc.
obligates Payers to note on their EOBs the source of their discounts
clarifies which UR procedures applies to your contract, i.e. those of the intermediary or those of the Payer
obligates the PPO to conduct financial due diligence regarding the Payers to which it makes your discounts available to you to reduce the chances that a Payer will fail to make timely and accurate payments
obligates the PPO to advocate on your behalf if a Payer fails to make timely and accurate payments
requires Payers to pay your full charges if they fail to pay you within the agreed upon time limit
permits you to discontinue discounts to, and to terminate your relationship with, any Payer or any Payer’s product if the Payer fails to make timely and accurate payments

New Jersey Physicians: Beware!

Physicians News — Fri, 17 Jun 2011 14:11:09 +0000

“Reservation Of Rights” In Disability Insurance Claims: Right Or Wrong?

Physicians News — Fri, 10 Jun 2011 15:02:56 +0000

Health Care Reform Adds Requirements for Physicians

Physicians News — Tue, 06 Dec 2011 15:28:48 +0000

By Deborah B. Miller, Esq.

From a personal perspective, prenuptial agreements are not very appealing, but from a common sense and legal point of view, they can be essential. Getting married is the biggest financial decision in most people’s lives, but many do not consider the financial entanglements that marriage creates. Just ask anyone who has lost a house or retirement plan in a divorce. Despite reading articles about the importance of using a prenuptial agreement as a tool for planning, plenty of people feel uncomfortable with prenuptial agreements. Luckily, there are secondary measures, not all as good as a prenuptial agreement, but perhaps more in line with your personal views and the realities of your relationship. For example, there are ways to structure corporate documents to insulate your medical practice from divorce proceedings, whether your own divorce or that of another physician in your practice. Buy-sell agreements among shareholders and corporate insurance policies in the event of a forced buyout can be effective tools to protect the practice. Likewise, postnuptial agreements are an option, even if the prenuptial agreement seemed awkward at the time of marriage. A postnuptial agreement can be limited to a spouse relinquishing claims on your interest in your medical practice. This can be a mandatory prerequisite for membership in a practice group, essentially forcing all group members to enter either prenuptial or postnuptial agreements to protect the medical practice from divorce. This can be effective, as the pressure to enter such an agreement is external, and the blame for needing a postnuptial agreement can be shifted to the attorney for the medical practice. It’s easy to blame the attorney, just give it a try. Everyone (whether married or not) should make sure their estate plans are up to date and there are a variety of situations in which prenuptial agreements should part of those estate plans. The most important of these situations are a second marriage, or where at least one spouse has children before the marriage. Let’s start with what happens in a second marriage from a social perspective. Statistics tell us that 2 out of 3 second marriages fail. Yet hope springs eternal, as does love, and plenty of divorced folks get remarried. Those who remarry are more experienced than the first time around, having learned either personally or through a friend the expense and stress associated with a difficult divorce. Most people have heard about prenuptial agreements, but may not understand how a prenuptial agreement can help them avoid a long and costly divorce, while also protecting their Estate for their children. Essentially, a prenuptial agreement should streamline a divorce in the event the marriage does not work out, having resolved the marital financial issues before the marriage. The prenuptial agreement, however, will not address the issues as to any children of the marriage, such as child support and custody. What it can do for you is to protect your medical practice, your salary, your pension and your retirement account. It can state how the marital home is to be handled and what property is separate property. The significance of protecting your medical practice from equitable distribution during a divorce, and your salary from years of alimony cannot be understated. A prenuptial agreement can set forth the financial parameters of the marriage from the day of the wedding up through and including how your Estate is handled after you die. It can state whether your spouse has a right to an interest in your retirement benefits and your medical practice. It can state whether or not your spouse waives the right to claim spousal support or alimony. Some couples do not agree on a straightforward waiver of rights, but instead agree on a sliding scale—the longer the marriage lasts, the greater a dependent spouse’s entitlement to a portion of specified marital property. In addition to setting the financial parameters of your marital relationship, a prenuptial agreement is the best tool to prevent your Estate from ending up in the hands of someone else’s children. Let’s consider Mom, who at 65 looks great (because she follows her family physician’s advice). Last year, she married Bob. Mom has a son and a daughter, but Mom did not get around to having a pre-nuptial agreement...so what happens when Mom dies before Bob and she does not have a will? If Mom is a resident of Pennsylvania, we need to consider Bob’s statutory right of election. This law allows, but does not require, Bob to “elect” to take 1/3 of Mom’s Estate. The right of election exists whether or not Mom has a Will, and regardless of what Mom leaves Bob in her Will. The only way to cancel this right is by agreement between Mom and Bob. If Bob elects against Mom’s will, he gets 1/3 of Mom’s assets that pass through her Will. Let’s say Mom’s Estate assets are a $200,000 investment account, and her house worth $400,000—a total of $600,000—essentially the money Dad made through hard work and careful saving. This means that Bob gets $200,000, Mom’s son inherits $200,000, and Mom’s daughter inherits $200,000. Did Mom want Bob to get $200,000 from her Estate? Didn’t Mom always say she would leave everything to her children 50/50? A simple solution would have been a prenuptial agreement stating that Mom and Bob mutually waive their rights to each other’s Estates, including a waiver of their statutory right to claim an Elective Share. Or, if there was no prenuptial agreement, a post-nuptial agreement is another option. The agreement to waive the elective share need not occur before the marriage. In the event Mom does not want to leave Bob without anything, Mom and Bob can explore options that express loyalty and respect for her late husband and their children, as well as for Bob’s well-being after she dies. For example, Mom may wish to grant Bob a life estate in her home, so long as he pays upkeep and taxes or may want to fund a testamentary trust from which Bob can obtain income and support after her death. Depending on Mom’s wishes and the situation, this can be accomplished in a prenuptial agreement, a Will or by Deed. In second marriages, using Mom above as the ongoing example, there is a particular need to address where Mom will be buried. If she does not make her intentions as to her remains firmly known, then Pennsylvania law allows Bob as the surviving spouse the unfettered right to decide where she will be buried. Bob might want her to be buried in Florida near his winter condo. Mom’s children, however, may want Mom to be buried next to Dad in the established family plot in Pennsylvania. To resolve this issue, Mom can state her intentions as to her remains in her Will. There are plenty of other marital issues that can be addressed with other proper estate planning tools. For example, a prenuptial agreement cannot protect Bob’s Estate from bills owed to third parties who provided Mom with “necessaries” such as a hospital care. Nor can a prenuptial agreement protect Bob’s Estate from the Commonwealth of Pennsylvania seeking dollar-for-dollar reimbursement for all Medicaid benefits provided to Mom. Depending on which issues are relevant to each couple, there are estate planning tools that can be used to address the various concerns, including placing monies in an irrevocable inter vivos trust. Second marriages involving younger couples are equally fraught with their own types of financial concerns that benefit from a prenuptial agreement. In the case of younger couples who remarry with children from a prior marriage, the prenuptial agreement should address the thorny issues of how income and assets will be allocated to children and step-children for things ranging from medical expenses, to college tuition, to legal fees for custody and child support proceedings. ### Deborah B. Miller, Esquire, is a partner at Strong, Stevens, Miller & Wyant, P.C. (www.strongfirm.com). For follow up, please contact Debbie directly at (610) 239-8600 x 234 or dmiller@strongfirm.com

Physicians News » Medicine & the Law

Physicians News — Wed, 01 Feb 2012 19:07:18 +0000

How to Protect Your Practice From Your Spouse

Physicians News — Tue, 06 Dec 2011 15:28:48 +0000

By Deborah B. Miller, Esq.

Resolutions Reflect the Changing Influences On Our Profession

Physicians News — Thu, 17 Nov 2011 14:59:06 +0000

By Lynn Lucas-Fehm, MD, JD

The Art of Negotiating Physician Employment Agreements

Physicians News — Mon, 07 Nov 2011 14:07:30 +0000

Conditions of Employment (State Licensure, DEA, Credentialing and Hospital Privileges);
Term (Length of Contract), Renewal or Future Negotiations;
Termination (At Will v. For Cause, Notice Period, Payment and Post-Termination Obligations);
Compensation Package (Base Salary, Percent of Collections, Bonuses, etc.);
Business Expenses (CMEs, Professional Dues, Staff Fees, Journals, Stipends, etc.);
Fringe Benefits (Health / Life Insurance, Retirement Plans, etc.);
Malpractice Insurance (Occurrence or Claims Made and Tail Coverage);
Paid Time Off (Vacation, Sick Leave, Maternity, Disability, etc.);
Restrictive Covenants (Non-Competition, Non-Solicitation); and
Co-Ownership (Partnership, Buy-Ins, Pay- Outs).

[2] Gail Garfinkel Weiss, Group Practice: How to keep the new guy. Modern Medicine (June 2010)

How to Develop a Fair Physician Compensation Plan

Physicians News — Tue, 27 Sep 2011 17:04:38 +0000

The consultant is provided with Practice financial information, including profit and loss statements, physician productivity, and other data.
Each shareholder provides the consultant with responses to a confidential questionnaire.
The consultant visits the Practice office and interviews the shareholders individually and privately.
The consultant prepares a report outlining a recommended new formula, the reasons for same, and proforma of the new formula, as applied to the last year’s financials.
The consultant comes back to the office to meet with the group, discuss, and hopefully make a decision.

The individual interviews, followed by discussion of the key internal dynamics of the group, on a non-attributed basis, in the consultant’s report, all serve to allow the shareholders to “vent” their frustrations and concerns (at first privately, and then, in the group setting, on a more limited basis) and are thus “therapeutic.”
The proforma quantifies the new formula’s impact on each shareholder. A pay cut which is quantified -- even if the cut is significant -- is often less threatening than a pay cut whose dimensions are unknown.
The perspective and credibility of an experienced outsider, who has been involved with other medical groups, can help tip the scale towards one approach or another, for a group that has become paralyzed by the compensation-related conflict.
By allowing expressions of individual views, in confidential interviews and questionnaires, there is a greater chance that the new formula will have “buy-in” by each shareholder. It’s a little bit like an election. You vote, you have your say, but if the process has validity, you must abide by and accept the outcome, which in this case the consultant’s recommendations.
The consultant, having been educated on the inner workings of the Practice, can suggest remedial measures that the “loser” under the new formula can take to improve his financial outcome under the new formula. This can include financial support from the group. For instance, if the new formula introduces a greater production component, perhaps the low producer needs additional outside training to enable him to do a new lucrative procedure. Perhaps he needs a greater marketing budget, to develop a stronger flow of patients. Perhaps he is being shorted in terms of technical staff support. The consultant can evaluate these various possibilities and help convert a “win-lose” change in the formula to a “win-and-stay even” outcome, or even (hopefully) a “win-win” (total compensation pool grows, so that all members of the group make more money).
By educating the consultant on your practice dynamics and internal workings, you will have a ready resource to help with any problems that may arise in the future, without the time and expense of repeating the process described above.

Equal sharing of revenue and overhead;
Productivity division of revenue and overhead;
Combination of equal and productivity sharing of revenue and overhead (e.g., 30% equal, and 70% on production);
Revenue divided on production, and overhead split equally (high producer’s favorite);
Revenue divided on production, and cost allocation of overhead (e.g., fixed expenses divided equally, and variable expenses divided on production);
Equal base salaries, and productivity division of bonus money;
Percentage of collections, for clinical work performed, with leftover bonus money divided on percentage ownership

Daniel M. Bernick,, Esq., M.B.A. is an Attorney, Consultant, and Principal of The Health Care Group and Health Care Law Associates, P.C. in Plymouth Meeting, Pennsylvania

How To Negotiate The Restrictive Covenant In Your Employment Contract

Physicians News — Mon, 01 Aug 2011 15:20:28 +0000

Preferred Provider Contracting: Beware Of Rental Networks And Third Party Guarantors

Physicians News — Thu, 14 Jul 2011 11:54:28 +0000

is permitted to enter into an agreement with a Payer allowing the Payer to access the physician’s discounted rates;
will contractually obligate the Payer renting access to a provider network to abide by the terms of the original contract between the intermediary and the physician; .
will provide the Payer with the relevant terms of the original contract with the physician with which the Payer is obligated to comply;
will provide the physician with a continually updated list of entities that have access to the physician’s discounts, including all additions and deletions;
will obligate all Payers to note on their Explanation of Benefit forms the source of their contractual discounts.

makes it clear that the discount you’re offering the PPO is in exchange for the PPO requiring the Payers with which it contracts to steer patients to you as an “in network” participating provider
obligates the PPO to require all Payers to identify you in all of their written material as an “in network” provider
makes it clear that the payment terms that you agree to in the PPO agreement are confidential and may not be disclosed without your express written consent, except to a list of Payers that you have approved
obligates the PPO to provide you with a list of all Payers, updated throughout the term of the contract
obligates the PPO to refrain from contracting with any entities with which you have an existing agreement that provides higher payment rates
requires the PPO to contractually obligate all of its Payers to comply with the terms of the PPO’s agreement with you, including payment procedures, UR procedures, underpayment recoupment, etc.
obligates Payers to note on their EOBs the source of their discounts
clarifies which UR procedures applies to your contract, i.e. those of the intermediary or those of the Payer
obligates the PPO to conduct financial due diligence regarding the Payers to which it makes your discounts available to you to reduce the chances that a Payer will fail to make timely and accurate payments
obligates the PPO to advocate on your behalf if a Payer fails to make timely and accurate payments
requires Payers to pay your full charges if they fail to pay you within the agreed upon time limit
permits you to discontinue discounts to, and to terminate your relationship with, any Payer or any Payer’s product if the Payer fails to make timely and accurate payments

New Jersey Physicians: Beware!

Physicians News — Fri, 17 Jun 2011 14:11:09 +0000

“Reservation Of Rights” In Disability Insurance Claims: Right Or Wrong?

Physicians News — Fri, 10 Jun 2011 15:02:56 +0000

Health Care Reform Adds Requirements for Physicians

Physicians News — Thu, 17 Nov 2011 14:59:06 +0000

By Lynn Lucas-Fehm, MD, JD

Physicians News » Medicine & the Law

Physicians News — Wed, 01 Feb 2012 19:07:18 +0000

How to Protect Your Practice From Your Spouse

Physicians News — Tue, 06 Dec 2011 15:28:48 +0000

By Deborah B. Miller, Esq.

Resolutions Reflect the Changing Influences On Our Profession

Physicians News — Thu, 17 Nov 2011 14:59:06 +0000

By Lynn Lucas-Fehm, MD, JD

The Art of Negotiating Physician Employment Agreements

Physicians News — Mon, 07 Nov 2011 14:07:30 +0000

Conditions of Employment (State Licensure, DEA, Credentialing and Hospital Privileges);
Term (Length of Contract), Renewal or Future Negotiations;
Termination (At Will v. For Cause, Notice Period, Payment and Post-Termination Obligations);
Compensation Package (Base Salary, Percent of Collections, Bonuses, etc.);
Business Expenses (CMEs, Professional Dues, Staff Fees, Journals, Stipends, etc.);
Fringe Benefits (Health / Life Insurance, Retirement Plans, etc.);
Malpractice Insurance (Occurrence or Claims Made and Tail Coverage);
Paid Time Off (Vacation, Sick Leave, Maternity, Disability, etc.);
Restrictive Covenants (Non-Competition, Non-Solicitation); and
Co-Ownership (Partnership, Buy-Ins, Pay- Outs).

[2] Gail Garfinkel Weiss, Group Practice: How to keep the new guy. Modern Medicine (June 2010)

How to Develop a Fair Physician Compensation Plan

Physicians News — Tue, 27 Sep 2011 17:04:38 +0000

The consultant is provided with Practice financial information, including profit and loss statements, physician productivity, and other data.
Each shareholder provides the consultant with responses to a confidential questionnaire.
The consultant visits the Practice office and interviews the shareholders individually and privately.
The consultant prepares a report outlining a recommended new formula, the reasons for same, and proforma of the new formula, as applied to the last year’s financials.
The consultant comes back to the office to meet with the group, discuss, and hopefully make a decision.

The individual interviews, followed by discussion of the key internal dynamics of the group, on a non-attributed basis, in the consultant’s report, all serve to allow the shareholders to “vent” their frustrations and concerns (at first privately, and then, in the group setting, on a more limited basis) and are thus “therapeutic.”
The proforma quantifies the new formula’s impact on each shareholder. A pay cut which is quantified -- even if the cut is significant -- is often less threatening than a pay cut whose dimensions are unknown.
The perspective and credibility of an experienced outsider, who has been involved with other medical groups, can help tip the scale towards one approach or another, for a group that has become paralyzed by the compensation-related conflict.
By allowing expressions of individual views, in confidential interviews and questionnaires, there is a greater chance that the new formula will have “buy-in” by each shareholder. It’s a little bit like an election. You vote, you have your say, but if the process has validity, you must abide by and accept the outcome, which in this case the consultant’s recommendations.
The consultant, having been educated on the inner workings of the Practice, can suggest remedial measures that the “loser” under the new formula can take to improve his financial outcome under the new formula. This can include financial support from the group. For instance, if the new formula introduces a greater production component, perhaps the low producer needs additional outside training to enable him to do a new lucrative procedure. Perhaps he needs a greater marketing budget, to develop a stronger flow of patients. Perhaps he is being shorted in terms of technical staff support. The consultant can evaluate these various possibilities and help convert a “win-lose” change in the formula to a “win-and-stay even” outcome, or even (hopefully) a “win-win” (total compensation pool grows, so that all members of the group make more money).
By educating the consultant on your practice dynamics and internal workings, you will have a ready resource to help with any problems that may arise in the future, without the time and expense of repeating the process described above.

Equal sharing of revenue and overhead;
Productivity division of revenue and overhead;
Combination of equal and productivity sharing of revenue and overhead (e.g., 30% equal, and 70% on production);
Revenue divided on production, and overhead split equally (high producer’s favorite);
Revenue divided on production, and cost allocation of overhead (e.g., fixed expenses divided equally, and variable expenses divided on production);
Equal base salaries, and productivity division of bonus money;
Percentage of collections, for clinical work performed, with leftover bonus money divided on percentage ownership

Daniel M. Bernick,, Esq., M.B.A. is an Attorney, Consultant, and Principal of The Health Care Group and Health Care Law Associates, P.C. in Plymouth Meeting, Pennsylvania