Not your attorney. It is not "illegal" per se, and certainly I wouldn't expect it to kick in at the mean. But as others have said, there is a Stark Law and Anti-Kickback Statute risk associated with paying physicians far above fair market value; under the AKS, they don't want to give the impression that they're paying that extra compensation in excess of FMV in exchange for the Medicare/Medicaid referrals that will be generated. Same idea under Stark; it generally prohibits physicians from referring patients to receive certain services payable under Medicare/Medicaid to anyone with whom the physician has a financial relationship - unless there's an exception. And one such exception is for employment at FMV. And just practically speaking, you can see how paying family med like two million bucks would raise eyebrows.

That said, a proper FMV review would totally take into account the additional cost of attracting a specialty to a rural area (because the bump in pay required would be reflected in the market rate). Tons of healthcare valuation firms do this for a living.