Do doctors employed by telemedicine providers work for that company, or are they independent contractors? A noted healthcare law firm says the answer might be a little tricky.
Writing in Health Care Law Today, Nathaniel M. Lacktman and Richard C. Werblow of Foley & Lardner, LLP, say companies like Teladoc are using an independent contractor model, which "can be a cost-effective way to engage physician providers." Treating doctors as independent contractors, they point out, lowers overhead costs, offers scalability for companies working in different states and reduces the provider's financial tax liability.
But to determine whether doctors are employees or independent contractors, Lacktman and Werblow say, a telemedicine company has to turn to the IRS.
"In Revenue Ruling 87-41, 1987-1 CB 296, the IRS developed 20 factors used to determine whether a worker is properly characterized as an independent contractor or an employee," they wrote. "These factors are not 100 percent conclusive, but provide a general framework for examining both types of relationships."
According to Lacktman and Werblow, the IRS offers the following 15 questions that should be asked:
1. Does the company instruct the doctor how, when and where he/she has to work?
2. Is training provided?
3. Are the doctor's services integrated with the company's business?
4. Does the doctor render those services personally?
5. Does the company hire, supervise and pay the doctor?
6. Does the company have a continuing relationship with the doctor?
7. Is there an established schedule of hours of work?
8. Does the doctor work what would be considered full-time for the company?
9. Is the work done on the company's property?
10. Does the company establish a sequence or order of services that the doctor must perform?
11. Are oral or written reports required?
12. Is the doctor paid by the hour, week or month?
13. Can the doctor be discharged at will by the company?
14. Can the doctor's job be terminated by the company without liability?
15. Are business or travelling expenses paid by the company?
If any of these questions are answered with a 'yes,' Lacktman and Werblow say, the doctor is employed by the telemedicine provider. On the other hand, according to the IRS, the doctor can be considered an independent contractor if any of the following conditions are met:
1. The doctor uses his/her own tools, materials and equipment;
2. The doctor has a significant investment in the facilities;
3. The doctor can profit or lose money through his/her services;
4. The doctor works for more than one company at a time; or
5. The doctor's services are available to the general public.
"Telehealth providers already offer an incredible benefit to employers and patients in the form of increased access, care coordination and lower overhead compared to many traditional brick and mortar practices," The lawyers concluded. "Using an independent contractor model for physician network development further augments these savings and can be a cost-effective way to engage physician providers. That said, when preparing a standard physician telehealth agreement for an independent contractor arrangement, be certain the terms of that agreement actually reflect the characteristics of independent contractors. The IRS’ 20-Factor Test is a useful guide for this assessment."