Section 5.3: Core Terms: Scope, Compensation, and Performance Metrics

5.3.1 The “Why”: From Handshake to Ironclad Agreement

The initial conversations with a potential physician partner are often filled with excitement and shared clinical vision. You talk about improving patient care, the promise of team-based models, and the impact you can have together. This enthusiasm is vital, but it is not a contract. A verbal understanding or a vague, one-page “agreement” is a recipe for misunderstanding, disappointment, and professional failure. The transition from a promising dialogue to a sustainable professional relationship happens when you codify that vision into a precise, legally sound document.

The entire strength and stability of your future role rests upon a “three-legged stool” of core contractual terms: Scope of Work, Compensation, and Performance Metrics. If any one of these legs is weak, short, or missing, the entire stool will collapse. A clearly defined Scope without a fair Compensation structure leads to burnout and exploitation. A generous Compensation package for a poorly defined Scope leads to confusion and unmet expectations. And without objective Performance Metrics, neither party can prove value or justify the continuation of the agreement. These three elements are inextricably linked, each giving meaning and force to the others.

This section is the most granular and legally-focused part of this module. We will move beyond concepts and into the realm of clauses and specific language. This is your masterclass in contract architecture. You will learn how to draft and negotiate each of these core terms with the precision of a lawyer and the clinical insight of a pharmacist. We will provide sample language, highlight common pitfalls, and give you the tools to build an agreement that not only protects you but also serves as a clear, mutually-agreed-upon blueprint for a successful and lasting collaborative practice. Mastering these terms is the final and most critical step in transforming your clinical skills into a formal, respected, and sustainable professional role.

5.3.2 Masterclass: Defining Your Scope of Work – The Blueprint for Your Role

The Scope of Work clause is the heart of your contract. It is the section that defines your professional identity within the practice. A well-drafted scope protects you from being utilized as an overqualified technician, prevents the dreaded “scope creep” where you inherit duties far outside your role, and provides the legal foundation for you to practice at the top of your license. This clause should be as specific and detailed as possible, leaving no room for interpretation.

The most effective way to structure this is by breaking it into three components: a list of authorized activities (“Positive Scope”), a list of explicit exclusions (“Negative Scope”), and a direct link to your state-approved Collaborative Practice Agreement (CPA).

A. The “Positive Scope”: Your List of Authorized Clinical Activities

This is where you enumerate the specific clinical functions you will perform. The key is to use clear, action-oriented language and to group activities logically. The more detail, the better.

Masterclass Table: Sample Clauses for Scope of Work

Category	Sample Contract Language	Clinical Context & Importance
1. Direct Patient Care (Disease State Management)	“Pharmacist shall provide direct patient care services, under the general supervision of the collaborating physician(s), for patients with the following disease states: Type 2 Diabetes, Hypertension, Dyslipidemia, and Heart Failure. These services include, but are not limited to: Performing patient assessments and obtaining medication histories. Ordering, interpreting, and monitoring relevant laboratory tests as specified in the CPA. Initiating, adjusting, monitoring, and discontinuing medication therapy according to the protocols outlined in the CPA (Exhibit A). Providing comprehensive patient education on medications, lifestyle, and self-monitoring techniques. ”	This is the core of your clinical role. This clause explicitly authorizes you to act as a provider for specific conditions. Naming the disease states clearly sets boundaries and focuses your efforts. Crucially, it links your prescriptive authority directly to the CPA.
2. Direct Patient Care (Comprehensive Medication Management)	“Pharmacist shall conduct Comprehensive Medication Management (CMM) reviews for patients with complex polypharmacy, upon referral from a practice provider. The CMM process will include identifying, resolving, and preventing medication therapy problems, and developing a patient-specific care plan to be documented in the Electronic Health Record (EHR).”	This clause defines your role as a generalist expert for high-risk patients outside of the specific disease states mentioned above. It establishes you as the go-to provider for polypharmacy issues and defines the expected output (a care plan).
3. Indirect Patient Care & Consultation	“Pharmacist shall serve as a medication expert for the practice’s clinical staff. Responsibilities include: Answering drug information questions from physicians, nurses, and other staff. Performing medication reconciliation for high-risk patients post-hospital discharge. Reviewing patient charts on a proactive basis to identify potential medication-related issues and making recommendations to the primary provider. ”	This defines your “support” role. It carves out time for the essential, non-billable work that improves overall practice quality and safety. Without this clause, you could be pressured to only perform revenue-generating tasks.
4. Programmatic & Administrative Duties	“Pharmacist shall be responsible for the development, implementation, and maintenance of clinical pharmacy programs. Duties include: Developing and updating evidence-based medication use protocols and order sets for P&T committee review. Providing formal in-service education to clinical staff on new medications, guidelines, and protocols on a quarterly basis. Tracking and reporting on clinical, financial, and operational metrics related to pharmacy services, as detailed in the Performance Metrics section of this agreement. ”	This clause establishes you as a clinical leader, not just a practitioner. It gives you the authority and responsibility to build and manage the infrastructure of your own service, a key component of a sustainable practice.

B. The “Negative Scope”: What You Will NOT Do

This component is just as critical as the positive scope. It protects your professional time and ensures you are not slowly relegated to performing tasks that do not require a pharmacist’s expertise. It prevents the practice from viewing you as a “jack-of-all-trades” who can fill any operational gap. This must be a frank and professional conversation during negotiations.

C. The Legal Linchpin: Incorporating the CPA by Reference

Your contract is a business document; your Collaborative Practice Agreement (CPA) is a legal clinical document that defines your prescriptive authority under state law. The contract must explicitly and legally link itself to the CPA. This ensures that your scope of work is always in alignment with what you are legally permitted to do.

5.3.3 Masterclass: Structuring Your Compensation

This clause defines your financial relationship with the practice. The primary goal is to create a structure that is fair, sustainable, and aligns your financial incentives with the goals of the practice. A well-designed compensation clause motivates performance and reflects the true value you bring, while a poorly designed one can create conflict and lead to a sense of being undervalued.

We will explore the most common compensation models, providing sample language that can be adapted for your specific contract type (W-2, 1099, or PSA).

A. Fixed Compensation Models (Salary & Retainers)

These models provide predictable income for you and a predictable expense for the practice. They are simpler to administer and are common for W-2 employment or foundational PSA relationships.

Masterclass Table: Fixed Compensation Clauses

Model	Sample Contract Language	Key Negotiation Points
W-2 Base Salary	“The Practice shall pay the Employee an annual base salary of One Hundred Thirty-Five Thousand Dollars ($135,000.00), payable in bi-weekly installments in accordance with the Practice’s standard payroll procedures. This base salary will be reviewed annually and may be adjusted based on performance, cost of living, and prevailing market rates.”	The Base Amount: Research market rates for similar roles in your geographic area. Use data from AACP, ASHP, and other professional surveys. The Review Clause: Ensure the contract specifies an annual review. A salary that seems fair today may not be in three years. Linking it to performance and market rates provides a basis for future increases.
PSA/1099 Monthly Retainer	“Client shall pay Company a monthly retainer fee of Eight Thousand Dollars ($8,000.00) for the provision of the services outlined in the Scope of Work. This retainer covers up to a maximum of eighty (80) hours of professional services per calendar month. Hours worked in excess of eighty (80) per month shall be billed separately at a rate of One Hundred Twenty-Five Dollars ($125.00) per hour.”	The Retainer Amount: Calculate this based on your target income, factoring in all your overhead (taxes, benefits, insurance). The Hour Cap: This is critical. The retainer is not for unlimited access. The cap protects you from overwork. The Overage Rate: The rate for extra hours should be higher than your base retainer rate to discourage overuse.

B. Variable & Performance-Based Models

These models directly link your compensation to the volume, revenue, or quality you generate. They offer higher earning potential but come with greater income volatility. They are often used as a component of a compensation package (e.g., base salary + bonus) or in advanced 1099/PSA relationships.

Masterclass Table: Variable Compensation Clauses

Model	Sample Contract Language	Key Negotiation Points & Risks
Fee-for-Service (FFS) Revenue Split	“Company shall receive forty percent (40%) of the Net Collections attributable to CPT codes billed for services performed by the Company’s pharmacist. ‘Net Collections’ is defined as the actual revenue received by the Client from payers or patients, after all adjustments, refunds, and collection fees. Payment shall be made to the Company within thirty (30) days of the close of the month in which the revenue was collected.”	The Percentage: This is highly negotiable (30-60%) and depends on how much overhead the practice provides. “Net Collections” Definition: This is the most critical risk. You are paid on what the practice *collects*, not what it *bills*. If the practice has a poor billing department, your income will suffer. You must have the right to audit the billing records.
Clinical Quality Bonus	“In addition to the base salary, the Employee shall be eligible for an annual quality bonus of up to Ten Thousand Dollars ($10,000.00), contingent upon meeting the Performance Metrics outlined in Exhibit B. The bonus will be paid out proportionally based on the percentage of targets met, as determined by the annual performance review.”	Objective Metrics: The bonus must be tied to the objective, measurable KPIs in the Performance Metrics section. Avoid subjective language like “satisfactory performance.” The “All or Nothing” Trap: Negotiate for a proportional or tiered bonus structure. An “all or nothing” bonus for hitting a difficult target is demotivating.
Shared Savings Bonus (ACO/VBC)	“If the Practice receives a shared savings distribution from its participation in the [Name of ACO], the Pharmacist/Company shall be entitled to receive five percent (5%) of the total distribution received by the Practice for the performance year. This payment shall be made within 45 days of the Practice’s receipt of funds from the ACO.”	Attribution: This model works best when your services are clearly linked to the metrics that generate the savings (e.g., you manage the exact patient panel that the ACO is measuring). Transparency: You must have a contractual right to see the official ACO performance reports and distribution statements to verify the bonus amount.

5.3.4 Masterclass: Measuring Success – Performance Metrics

This clause answers the critical question: “How do we know if this is working?” It defines how your value will be measured, reported, and evaluated. A strong performance metrics section is your greatest tool for demonstrating ROI, justifying your salary, and securing contract renewals. It transforms your role from a perceived “cost center” to a proven “value generator.” These metrics must be a balanced scorecard of clinical, financial, and operational KPIs.

A. The Framework: Using SMART Goals for KPIs

Every metric in your contract should adhere to the SMART framework to ensure clarity and objectivity.

B. The KPI Catalogue: Building Your Performance Dashboard

Your contract should reference an “Exhibit” that lists the specific metrics you will be evaluated on. This allows the list to be updated annually without amending the entire contract.

Masterclass Table: Sample Performance Metrics (Exhibit B)

Category	Key Performance Indicator (KPI)	Data Source	Target for Year 1
Clinical Outcomes	Mean decrease in HbA1c for managed diabetes patients with baseline A1c > 9.0%.	EHR Patient Registry Report	1.5% absolute reduction
	Percentage of managed hypertension patients at goal BP (<130/80 mmHg).	EHR Patient Registry Report	Achieve 75% at goal
	Percentage of warfarin patients with a Time in Therapeutic Range (TTR) > 70%.	Anticoagulation software report	Achieve 80% of panel with TTR > 70%
Financial Impact	Total “incident-to” (99211-99213) and CCM revenue generated per quarter.	Practice Billing Report	$25,000 per quarter
	30-day all-cause hospital readmission rate for patients receiving post-discharge CMM.	EHR and Hospital Claims Data	Rate < 10% (vs. practice baseline of 18%)
Operational Volume	Number of unique patient encounters per month.	EHR Scheduling Report	Average of 75/month by end of Q2
	Provider satisfaction score regarding pharmacy services (annual survey).	Internal Practice Survey	Average score > 4.5 / 5.0

C. The Reporting and Review Clause

The final piece is to contractually define how and when you will report on these metrics and how they will be used to evaluate your performance. This creates a formal feedback loop and accountability for both parties.