Physician incentive bonuses are often a way a physician employer can provide a physician employee with a means of enhanced salary based upon the physician employee’s productivity. For a physician employer, if a part of their physician employee’s salary is based on a bonus, the physician employee is more likely to be productive as greater productivity leads to additional compensation. Such arrangements must be carefully scrutinized and structured so they comply with any professional misconduct guidelines, as well as any other regulations that govern compensation arrangements between physicians and healthcare providers.
In any such permitted arrangement, the physician employee and physician employer need to be aware of any tendencies to overutilize or bill improperly. They must do a proper accounting of what was billed versus any money that was received or recaptured during an insurance audit, for which the physician employee received a bonus, which an insurance company might have required the physician employer to later “reimburse” to the insurance company in connection with any audit findings.
Additionally, with these types of arrangements, a base salary that is usually paid should be given careful consideration, especially in light of new required vacation pay and vacation time requirements in New York, which affect businesses with five or more employees. Low or unrecorded base salaries, can also raise various concerns and claims could be brought to the Department of Labor if the physician employee is ever terminated and the exact financial arrangement was not reduced to an adequate writing. Also, attention should be given to providing a reasonable accounting of the bonus calculations so that there is no mystery as to how the bonus amount is arrived at.
Physician employers must make sure that their existing employment relationships with physician employees, who may receive an incentive bonus as well as a base or “flat” salary, are also compliant with any state labor regulations, as well as guidelines that affect health care professionals.
If you have any questions regarding physician incentive bonuses and any guidelines relating to fee splitting or physician compensation arrangements in New York, please contact us.