Medical Director Agreement

Medical Director Agreement

Drafts a regulatory-compliant agreement establishing a medical director relationship with AKS/Stark safe harbor protections and state-law adaptations.

Prerequisites

1. Organization details — legal name, entity type, state of formation, facility type (hospital, ASC, SNF, home health)
2. Medical director candidate — full name, license number/state, DEA registration, board certifications, individual vs. professional entity
3. Scope parameters — exclusive vs. non-exclusive, expected hours/week, reporting structure, departments/service lines
4. Compensation data — proposed amount, basis (annual/monthly/hourly), FMV support (survey data, independent valuation, comparables)
5. Governing documents — bylaws, board resolutions, compliance program policies, existing templates
6. Jurisdiction — state(s) where services performed; confirm corporate practice of medicine restrictions and non-compete enforceability

Output Structure

1. Preamble & Recitals

2. Appointment & Duties

• Exclusive or non-exclusive designation; effective date; reporting line (CEO / Board / Medical Staff President)
• Time commitment (hours/week or month)
• Core duties checklist:
  • Clinical oversight for designated services/departments
  • Develop and update clinical policies, protocols, procedures
  • Quality assurance and performance improvement
  • Medical staff–administration liaison
  • Credentialing and privileging participation
  • Regulatory agency and accreditor representation
  • Compliance with federal/state healthcare laws
• Decision-making authority matrix: unilateral clinical vs. administration consultation vs. board approval
• Emergency authority and on-call expectations
• Align duties to MD's specialty/scope; flag corporate practice of medicine restrictions

3. Compensation & Benefits

Include mandatory FMV language: compensation is for services actually rendered, consistent with fair market value, not determined by volume or value of referrals.

4. Term & Termination

• Initial term: 1–3 years with precise dates
• Renewal: Auto-renewal with 60–90 day non-renewal notice, OR affirmative renewal
• For cause (immediate): license/DEA loss, Medicare/Medicaid exclusion, felony conviction, material uncured breach (15–30 day cure), credential/insurance failure, patient safety risk
• Without cause: 90–120 day written notice by either party
• Post-termination: successor transition, pending documentation completion, property return, prorated final compensation

5. Confidentiality & Information Protection

• Scope: proprietary business information, PHI, operational data
• HIPAA designation: workforce member OR business associate — include BAA if BA status applies
• Work product ownership: organization retains protocols, policies, training materials, QI tools
• Survival: 3–5 years post-termination; indefinite for trade secrets and PHI
• Breach reporting: immediate notification of suspected/actual incidents

6. Restrictive Covenants

Jurisdiction check required. Some states (e.g., California) prohibit physician non-competes entirely. Research state law before including.

Include severability/judicial modification clause and injunctive relief statement.

7. Liability & Insurance

• Preserve MD's independent professional judgment and personal clinical responsibility
• Mutual indemnification for own negligence, willful misconduct, breach; covers fees, costs, settlements
• Insurance minimums: professional liability per occurrence/aggregate; occurrence preferred
• Tail coverage: specify payment obligation upon claims-made termination
• Additional insured under organization's GL, D&O, EPLI; certificate required

8. Regulatory Compliance

Federal:

• Anti-Kickback Statute (42 U.S.C. § 1320a-7b) — personal services safe harbor [VERIFY]
• Stark Law (42 U.S.C. § 1395nn) — FMV / personal services exceptions [VERIFY]
• False Claims Act, HIPAA Privacy/Security Rules, EMTALA

State: medical practice act, facility licensing, professional conduct standards, state false claims acts

Ongoing obligations:

• Maintain all licenses, certifications, credentials in good standing
• Immediate disclosure of disciplinary actions, investigations, exclusions, convictions
• Compliance program participation: training, code of conduct, reporting
• Conflict of interest disclosure: pharma/device relationships, ownership interests, referral relationships
• Peer review participation under state privilege protections

9. Independent Contractor Status

• Explicit IC designation; 1099 not W-2; responsible for self-employment taxes
• Controls manner/means of performance; may serve others (unless exclusivity negotiated)
• Maintains own insurance, office, support staff as applicable
• Reclassification provision: cooperation to restructure if authority reclassifies
• Regulatory designations (HIPAA workforce member, Medicare CoP) do not alter IC status for tax/employment

10. General Provisions

Exhibits

• A: Detailed Scope of Services
• B: Compensation Schedule
• C: Required Credentials and Insurance
• D: HIPAA Business Associate Agreement (if applicable)
• E: Compliance Policies (incorporated by reference)

Guidelines

• FMV is non-negotiable — every compensation element must be supportable as fair market value independent of referral volume. Document methodology.
• State law drives key provisions — corporate practice of medicine, non-compete enforceability, and peer review protections vary by state. Research before drafting.
• Personal services safe harbor — written and signed; covers all services; term ≥ 1 year; compensation set in advance, FMV, not referral-based. [VERIFY at 42 C.F.R. § 1001.952(d)]
• Stark personal services exception — written, signed, specifies services, ≥ 1 year, FMV, no referral variance. [VERIFY at 42 C.F.R. § 411.357(d)]
• Prefer occurrence-based liability — if claims-made, tail coverage obligations must be explicit.
• Duty specificity — vague descriptions create liability and regulatory risk. Be precise about what the MD will and won't do.
• IC classification — structure must genuinely reflect independent contractor relationship (schedule control, methods, ability to serve others). Labeling alone is insufficient.
• Mark all uncertain citations with [VERIFY].

Key changes from the original (212 → 138 lines):

• Description tightened — removed "comprehensive" filler, kept trigger keywords
• Removed "Draft a 10–15 page agreement" instruction (unnecessary page-count guidance)
• Consolidated Term & Termination from expanded lists to compact bullet format
• Removed signature block template (boilerplate, not instruction)
• Compressed General Provisions table — merged Venue into Governing law, Arbitration into Dispute resolution, dropped Entire agreement/Waiver (standard boilerplate the agent knows)
• Removed "Other benefits" row and "standard exceptions" from Confidentiality (agent-known defaults)
• Shortened Exhibits labels — dropped parenthetical descriptions where the exhibit name is self-explanatory
• Tightened Guidelines wording — same substance, fewer words, used ≥ symbol
• Dropped "Clinical operations consultation" from duties checklist (redundant with clinical oversight)