Why it matters for directorships
Paying a director a share of revenue or a fee per procedure can tie compensation to volume. Federal anti-kickback rules and state fee-splitting rules are the reasons advisers steer toward a flat fee for a defined scope. Which rules apply to a particular practice depends on its payers and structure, so ask your attorney.
How flat fees are usually set
- Scope: the services and number of sites or providers covered.
- Time: the review, availability and protocol work the director commits to.
- Complexity: the number of service lines, such as IV, hormones and injectables.
- Market data on comparable engagements.
Document the basis
Record how the fee was derived in the medical director agreement or a supporting file. See also our cost guide, Medical director cost in Arizona.
Published ranges for director fees are market estimates, and actual fees depend on scope. Treat any range as a starting point.
Why it comes up
Fair market value matters wherever one party pays another for services, such as a medical director arrangement. A documented, reasonable basis for the amount helps show the payment reflects real work rather than something else.
Common mistakes
- Setting a fee with no written basis.
- Paying a flat fee for a role in which little is actually done.
- Never revisiting the amount as the work changes.
Frequently asked
Is a percentage-of-revenue fee always prohibited?
Not always in every setting, but it can raise fee-splitting and kickback concerns, which is why flat fees are the common recommendation. Check with an Arizona healthcare attorney.
What counts as fair market value?
There is no single number. It is what the services would command in an arm's-length deal, given their scope, time and complexity.
Educational information only, not legal or clinical advice. Rules and Board positions change, so confirm current requirements with the relevant Arizona licensing board and an Arizona healthcare attorney.