Under the Stark law’s recruitment exception, hospitals are permitted to offer certain financial incentives to medical practices to help them bring physicians into their communities, without violating anti-kickback rules, according to a recent blog post from Chelle Law.
Here are 10 things to know about recruitment agreements, according to the post.
1. These contracts allow hospitals to offer financial assistance to practices specifically for recruiting new physicians, without violating federal anti-kickback or referral laws. The Stark law recruitment exception makes this legally possible under a strict set of criteria.
2. Physicians typically sign two agreements: an employment contract with the practice and a recruitment agreement with the hospital. The recruitment agreement outlines the financial support being provided and the conditions attached to that support.
3. Common forms of assistance include guaranteed income for the first year, signing bonuses, relocation expenses, student loan repayment and help covering practice overhead.
4. Hospitals often provide these funds with the expectation that they will be “forgiven” over time. If the physician stays and practices in the designated service area for a specific number of years, usually three, the obligation is fully erased on a monthly pro-rata basis.
5. To qualify under the Stark law exception, the physician must move their practice into the hospital’s defined service area, according to the report. This is typically based on the smallest number of contiguous ZIP codes that generate 75% of the hospital;s patients.
6. In limited circumstances, such as rural areas or physicians completing training locally, relocation may not be required. However, most agreements still mandate a move of at least 25 miles into the defined service area.
7. If the physician leaves the practice or geographic area before the forgiveness period ends, they may have to repay any unforgiven funds. In some specialties, this repayment can total hundreds of thousands of dollars.
8.. Most recruitment agreements prohibit the practice from including a noncompete clause. If one is slipped into the employment agreement, and the physician is forced to leave the service area as a result, it could trigger repayment
9. Before signing, physicians should assess whether they want to stay in the area long-term and if there are other viable employment options nearby, according to the post.
10. Physicians should always have both the employment and recruitment agreements reviewed by an attorney to ensure they’re protected.
