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Physician recruitment and retention

There is an exception for remuneration provided by a hospital, federally qualified health center (FQHC) or rural health clinic to recruit a physician that is intended to induce the physician to relocate to the geographic area served by the hospital, FQHC or rural health clinic and become a member of the organization’s medical staff. 

The final rule provides two discrete recruitment exceptions:
  1. Direct recruitment arrangements with a recruited physician which applies when the recruited physician is creating an entirely new practice, and will not join or work for an established physician or physician practice.  Under these arrangements the entity providing recruitment support has a direct compensation arrangement with the new recruit; and 
  2. Indirect recruitment arrangements in which the recruited physician joins an established practice.  Under these arrangements the entity providing recruitment support may have a direct or indirect compensation arrangement with the new recruit and the physicians in the medical practice joined by the recruited physician.
Recruitment support may only be furnished by hospitals, FQHCs and rural health clinics.  The standards applicable to direct recruitment arrangements are also applicable to indirect arrangements where the recruit joins an established practice (although the requirements applicable to indirect arrangements are not applicable to direct arrangements).

Where recruitment support is being provided, CMS stated in the phase III final rule that bona fide recruitment arrangements must comply with either the direct or indirect recruitment arrangements exceptions described below.  In addition, in the phase III final rule CMS clarified that in the case of an income guarantee provided in connection with an indirect recruitment arrangement when the recruited physician joins an established physician or practice, the income guarantee means any type of income guarantee – regardless how calculated or characterized. 

CMS also provides a specific exception for retention payments that are paid by a hospital or FQHC directly to a physician.
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