lev-os Medical Director Agreement
Drafts a regulatory-compliant agreement establishing a medical director relationship with AKS/Stark safe harbor protections and state-law adaptations.
Prerequisites
- Organization details — legal name, entity type, state of formation, facility type (hospital, ASC, SNF, home health)
- Medical director candidate — full name, license number/state, DEA registration, board certifications, individual vs. professional entity
- Scope parameters — exclusive vs. non-exclusive, expected hours/week, reporting structure, departments/service lines
- Compensation data — proposed amount, basis (annual/monthly/hourly), FMV support (survey data, independent valuation, comparables)
- Governing documents — bylaws, board resolutions, compliance program policies, existing templates
- Jurisdiction — state(s) where services performed; confirm corporate practice of medicine restrictions and non-compete enforceability
Output Structure
1. Preamble & Recitals
| Element | Content |
|---|---|
| Parties | Full legal names, entity types, formation state, addresses; MD license #, DEA, board certs |
| Recitals | Organization's operational need; regulatory requirement for medical director; candidate qualifications; mutual intent for compliant arrangement preserving independent medical judgment |
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.
| Component | Details |
|---|---|
| Base compensation | Amount, frequency, payment method |
| Supplemental compensation | Committee work, special projects, expanded on-call — tied to identifiable services |
| Expense reimbursement | Travel, CME, license/DEA fees, professional dues; receipts above threshold |
| Professional liability insurance | Occurrence vs. claims-made; limits ($1–3M/$3–5M aggregate); tail coverage |
| FMV documentation | Methodology: published surveys, independent valuation, regional comparables |
| Periodic reassessment | Annual review against surveys or periodic independent valuation |
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.
| Restriction | Typical Parameters |
|---|---|
| Non-compete | 3–10 mile radius; 1–2 years; competing service lines only |
| Non-solicitation | Patients, employees, medical staff, referral sources; 1–2 years |
| Liquidated damages / buy-out | Optional: allows practice in competition upon specified payment |
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
| Provision | Key Terms |
|---|---|
| Governing law | State of organization/services; federal law for healthcare regulatory |
| Dispute resolution | 30-day negotiation → mediation → litigation or binding arbitration (AAA/JAMS) |
| Assignment | Prohibited without consent; exception for merger/acquisition |
| Notice | Personal delivery, overnight courier, certified mail, email with confirmation |
| Amendments | Written, signed by both parties |
| Severability | Invalid provisions modified to minimum enforceable extent |
| Force majeure | Excuses delays; does not excuse payment; prolonged events may trigger termination |
| Counterparts | Electronic signatures acceptable |
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)