Medical Directors’ Compensation ≠ RCE Limits

caduceusMosby’s Medical Dictionary, 8th edition, defines a medical director as “a physician who is usually employed by a hospital to serve in a medical and administrative capacity as head of the organized medical staff. He or she also may serve as liaison for the medical staff with the hospital’s administration and governing board.”

This definition may seem a little old-fashioned in the current world of medicine. Today’s medical directors are likely to add service line management and financial goals to their responsibilities. Some organizations have multiple medical directors who manage a particular department or group of departments, or who have joint responsibility for the entire organization.

Given these differing roles and responsibilities, the compensation paid for directorships can vary widely. For the Medicare cost report, Reasonable Compensation Equivalent (RCE) limits are not applicable to a medical director, chief of medical staff, or to the compensation of a physician employed in a capacity not requiring the services of a physician and can be excluded from disclosure on Worksheet A-8-2.

Tip #17:

Exclude medical directors from A-8-2 as they are not subject to RCE limits (Pub. 15-2, §Section 4018).

Further guidance can be found on the Centers for Medicare and Medicaid Services (CMS) website:

Provider Reimbursement Manual 15-2, Chapter 40

Questions? Please contact Marie White at 612.253.6546 or


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