Free CPRP Physician Compensation and Contracts Questions and Answers

Question 1

Which of the following physician compensation models is most directly scrutinized under the Stark Law for potential non-compliance due to its inherent structure?

Accepted Answer

A model where compensation is based directly on the volume or value of referrals for designated health services (DHS).

Answer

The Stark Law is a strict liability statute prohibiting physicians from referring Medicare or Medicaid patients for designated health services (DHS) to an entity with which they have a financial relationship, unless an exception applies. A compensation model tied directly to the volume or value of referrals for DHS is the classic example of a prohibited financial relationship under Stark. While other models must be structured carefully, this one most directly implicates the core prohibition of the law.

Question 2

A rural hospital is recruiting a highly experienced orthopedic surgeon to a competitive market. The proposed compensation package is at the 90th percentile of national survey data. To defend this compensation level as Fair Market Value (FMV) and commercially reasonable, what is the most critical documentation the hospital must secure?

Accepted Answer

An independent, third-party FMV opinion that analyzes the candidate's specific experience, subspecialty, and the unique needs and realities of the local market.

Answer

Regulatory bodies require that physician compensation be at Fair Market Value (FMV) and commercially reasonable. For a compensation package at a high percentile, it is crucial to have an independent, third-party valuation. This provides an objective, defensible analysis that considers factors beyond just national survey data, such as the specific candidate's qualifications, the strategic need of the hospital, and local market conditions, which is essential for regulatory compliance.

Question 3

In a physician employment agreement, what is the primary purpose of a restrictive covenant, also known as a non-compete clause?

Accepted Answer

To protect the employer's legitimate business interests, such as its patient base and referral sources, for a reasonable time and within a specific geographic area after the physician leaves.

Answer

A restrictive covenant is designed to protect the employer's investment in building a practice by preventing a departing physician from immediately setting up a competing practice nearby and soliciting former patients and staff. To be legally enforceable, these clauses must be reasonable in their time duration, geographic scope, and the activities they restrict. They are not meant to be punitive or to prevent a physician from practicing altogether.

Question 4

A primary care physician's contract includes a compensation model with a base salary for meeting a 4,500 wRVU threshold and a conversion factor of $55.00 for all subsequent wRVUs. If the physician generates 5,200 wRVUs in a year, how is their productivity incentive bonus calculated?

Accepted Answer

The 700 wRVUs generated above the threshold are multiplied by the $55.00 conversion factor.

Answer

In a typical wRVU-based productivity model, the incentive is based on work performed *beyond* a set threshold. The calculation takes the number of wRVUs generated in excess of the threshold (5,200 - 4,500 = 700) and multiplies that number by the agreed-upon conversion factor to determine the bonus amount (700 x $55.00 = $38,500).

Question 5

Which of the following best describes the function of 'tail coverage' in a claims-made medical malpractice insurance policy?

Accepted Answer

It is an extended reporting endorsement that covers claims made *after* the policy is terminated for incidents that occurred *during* the policy period.

Answer

A standard claims-made malpractice policy only covers claims that are made and reported while the policy is active. If a physician leaves an employer, their coverage ends. 'Tail coverage' is a separate endorsement that must be purchased to cover any claims that are filed *after* the physician's departure for incidents that took place while they were employed and covered by the original policy. Negotiation of who pays for tail coverage is a critical part of the contract process.

CPRP - Certified Physician Provider Recruitment Professional Practice Test

CPRP - Certified Physician Provider Recruitment Professional Practice Test

Free CPRP Physician Compensation and Contracts Questions and Answers