Fair market value is a pinnacle issue for compliance under the Stark Law and Anti-Kickback Statute. Compensation arrangements that are required to be representative of fair market value under Stark/AKS include employment, independent contractor, medical directorships, exclusive service arrangements, call coverage, quality reviews, medical staff officer stipends, etc.

Many consulting firms provide fair market value opinions relying extensively on the application of benchmark data. Based upon CMS’s statements in the Stark Law Final Rules, although application of benchmark data is a resource that can be utilized, fair market value can and should include the application of market/service area issues (i.e., deficiency of specialty) or physician-specific issues (i.e., expertise, productivity).

Commercial reasonableness is a separate concept from fair market value under Stark/AKS. Commercial reasonableness also entails whether the application of benchmark/market factors are defensible.

When analyzing the defensibility of compensation arrangements, it is important to view fair market value and commercial reasonableness as if advocating the facts and circumstances of the proposed compensation arrangement before a governmental entity (i.e., CMS, OIG, DOJ). When an attorney is rendering a fair market value defensibility analysis, not only will the analysis be protected under the attorney-client privilege, but the analysis will also include references and attachments to all of the applicable documentation and relevant information in case the compensation arrangement is ever required to be defended.

Bob Wade is a healthcare partner at Nelson Mullins who performs fair market value defensibility analyses. As a lawyer, Wade has extensive experience in working with the application of fair market value and commercial reasonableness in compensation arrangements with referring physicians. Wade takes a fair market value analysis one step further when compared with fair market value opinions. Because fair market value and commercial reasonableness have legal definitions under the Stark Law and with his extensive experience analyzing fair market value and commercial reasonableness, Wade not only provides a fair market value reasoned analysis but also, as a lawyer, assesses the potential defensibility of a proposed compensation arrangement.

In effect, the fair market value defensibility analysis is written from Wade’s experience in this area to attorneys who may be in a position to review the basis of the compensation arrangement (CMS, OIG, or DOJ).

For further information regarding the distinction between a fair market value review and a fair market value defensibility analysis, listen to Bob’s Stark Integrity Podcast. (January 18, 2022 Episode) or contact wade at Bob.Wade@NelsonMullins.com and 615.664.5326.