Your first attending offer arrives. You ask for more, and the recruiter answers with a sentence that sounds final: "We're capped at fair market value." The rule behind that sentence is real. It just doesn't mean what the sentence implies.
It comes from the federal physician self-referral law, known as Stark. Its exception for employed doctors requires that pay be consistent with "the fair market value of the services" and that the arrangement would be "commercially reasonable even if no referrals were made to the employer." Hospitals take the law seriously because Medicare won't pay for hospital services a doctor refers in violation of it.
Now read how Medicare's Stark regulations define fair market value: the value in an arm's-length transaction, "consistent with the general market value." For pay, general market value is the compensation that, when the parties enter into the arrangement, would result from "bona fide bargaining between well-informed parties that are not otherwise in a position to generate business for each other."
Fair market value is a market test, not a number the hospital chooses. Your pay must be consistent with what that market supports. If your ask is above that, the cap is real, and haggling alone won't move it. If the offer sits below that, the rule won't stop it from rising. And if you hear that Stark requires the job to pay for itself, the same regulations say an arrangement "may be commercially reasonable even if it does not result in profit for one or more of the parties."
What Stark forbids. Pay determined "in any manner that takes into account the volume or value of referrals." A bonus for steering imaging or admissions to the hospital is off the table, for both of you.
What Stark allows. That ban expressly does not prohibit "a productivity bonus based on services performed personally by the physician." Work you do yourself is fair to negotiate over; work you refer is not.
So the useful question isn't whether there is a cap. It's which market they measured. Before you counter, ask which data they used to set your number, whether those data reflect new attendings or all physicians, and where your offer falls within them. Ask what total pay the cap allows with any productivity bonus included and whether any signing bonus counts against it. Then bring your own evidence: a competing offer shows what another employer will pay, and the Bureau of Labor Statistics pay figures by specialty that Issue No. 17 used are free to anyone.
The definition assumes both sides are well informed. Make that true of your side.
The cap is set by the market. Bring the market with you.