The Complete Guide to Fair Market Value Under the Stark Regulations

Guide to Fair Market Value

August 2022 PDF, Softcover

Timothy Smith

Business Valuation Resources, LLC

Published in collaboration with American Association of Provider Compensation Professionals (AAPCP), this timely new Guide by healthcare valuation expert Timothy Smith delivers a critical and in-depth assessment of the new definitions of fair market value (FMV) under the recently updated regulations for the federal physician self-referral law – the Stark law.  The updated regulations make critical changes in how accepted valuation principles and practices are used to determine Stark FMV. 


One unique feature of this new Guide is that it provides the actual text of the public comments the Center for Medicare & Medicaid Services (CMS) responded to in the preamble commentary to the final Stark regulations. The Guide makes it easy for readers to understand the full extent of all issues brought to CMS in response to the agency’s proposed regulations on FMV. The Guide also presents CMS’ summary of these public comments and its responses to them. 

There is an entire section devoted to the examination all of the CMS commentary on various topics and issues, along with insightful analysis and discussion of its implications for healthcare valuation practice. 

This publication is a collaboration with the American Association of Provider Compensation Professionals (AAPCP)
This publication and many more are also available for download with a subscription to the Digital Library or BVResearch Pro.
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Categories: healthcare

PART I. INTRODUCTION

Editor’s Introduction: How to Use This Guide.
  1. Introduction to This Guide.
  2. The Role of the Public Comments in Developing the New Stark FMV.
  3. Approaching the New Stark FMV Thematically and Holistically.
  4. An Educational and Desk Reference Resource.
The History of FMV in the Stark Regulations.
  1. Introduction.
  2. CMS’ History of the Stark Regulations
  3. CMS’ Update to the Stark Regulations (2020).
  4. The Historical Development of the Definitions of FMV and GMV.

PART II. PUBLIC COMMENTS AND CMS RESPONSES

Chapter 1. Comments on the Definition of GMV: Buyers and Sellers Without Business Relationships
  1. Background to the Public Comments: CMS’ Proposed Regulations
  2. Public Comments to CMS
  3. CMS Response to the Comments.
Chapter 2. Comments on Fair Market Value and Practice Losses.
  1. Introduction.
  2. Public Comments to CMS.
  3. CMS’ Response to the Comments.
  4. CMS’ Commentary on Losses and Commercial Reasonableness.
Chapter 3. Commentary on Market Value and Valuation Methodology.
  1. Introduction.
  2. Public Comments to CMS.
  3. CMS’ Response to the Comments.
Chapter 4. Usage of Survey Data.
  1. Introduction.
  2. Public Comments to CMS.
  3. CMS’ Response to the Comments.
Chapter 5. GMV vs. FMV Under Business Valuation Principles.
  1. Introduction.
  2. Public Comments to CMS.
  3. CMS’ Response to the Comments.
Chapter 6. Commentary on Requests for a Rebuttable Presumption.
  1. Introduction.
  2. Public Comments to CMS.
  3. CMS’ Response to the Comments.

PART III. CMS REVISIONS AND THE PUBLIC COMMENTS:

THE HIDDEN STORY

Chapter 7. The Retracted Definition of FMV: We Don’t Like ‘Likes’
  1. Introduction.
  2. CMS’ Retracted Definition of FMV.
  3. Public Comments on the Definition of FMV and ‘Likes’.
Chapter 8. The Retraction of FMV as a Hypothetical Transaction Value.
  1. Introduction.
  2. CMS Commentary on FMV as a Hypothetical Transaction Value.
  3. Public Comments on FMV as a Hypothetical Value.
Chapter 9. Contributors to Buyer Neutrality and the Economics of the Subject Transaction.
  1. Introduction.
  2. The Economics of the Subject Transaction.
  3. Buyer Neutrality.
Chapter 10. Sec 3. Valuation Practice Under the Current Regulations: A Perspectival


White Paper.

I. Introduction.
II. Fair Market Value under the Current Regulatory Definition.
III. Valuation Practice under Current Stark Preamble Commentary.
IV. Conclusion.

PART IV. TOPICAL DISCUSSIONS

Chapter 11. The Fair Market Value of the Subject Transaction.
  1. Introduction.
  2. ‘Of the Subject Transaction’ in the Stark Regulations.
  3. Analysis and Evaluation of the Regulatory Text and Commentary.
  4. Application and Implications for Valuation Practice.
Chapter 12. How Stark FMV Functions as a Standard of Value.
  1. Introduction.
  2. How a Standard of Value Functions in Valuation.
  3. Identifying the Elements in the Stark Definition of FMV.
  4. Analyzing the Stark Definition of FMV as a Standard of Value.
  5. Implications and Applications for Valuation Practice.
Chapter 13. Making Sense of the Commercially Reasonable Method Standard.
  1. Introduction.
  2. CMS’ Discussion of a ‘Commercially Reasonable’ Valuation Method.
  3. Analysis and Evaluation of the Commercially Reasonable Method Standard.
  4. Implications and Applications for Valuation Practice.
Chapter 14. Precluded Reliance on Market Data From Business-Related Parties.
  1. Introduction.
  2. The Doctrine of Precluded Reliance.
  3. Analysis of the Precluded Reliance Doctrine.
  4. Implication and Applications for Valuation Practice.
Chapter 15. Methodological Neutrality.
  1. Introduction.
  2. Historical Background: ‘CMS Favors the Market Approach’.
  3. New Stark Regulations: CMS Policy Is FMV Methodological Neutrality.
  4. Analysis and Evaluation of CMS’ Commentary.
Chapter 16. Using Survey Data for Stark FMV—Part 1
  1. Introduction.
  2. CMS Commentary on Survey Data Usage.
  3. Analysis and Evaluation of CMS’ Commentary.
  4. Implications and Applications for Valuation Practice.
    1. Appendix. CMS on ‘Survey Says’ in the Halifax Case. 
Chapter 17. Using Survey Data for Stark FMV—Part 2.
  1. Introduction.
  2. Using Survey Data Consistent With the Precluded Reliance Doctrine.
  3. Meeting the Stark Criteria for Valuation Methods.
  4. Addressing Practice Losses.
  5. Conclusion.
Chapter 18. On the Concepts and Principles of the Valuation Community.
  1. Introduction.
  2. The New Status of Valuation Concepts and Principles for Stark FMV.
  3. Analysis and Evaluation of CMS’ Commentary.
  4. Implications and Applications for Valuation Practice.
Chapter 19. The Economics of the Subject Transaction.
  1. Introduction.
  2. CMS Commentary on the Economics of the Subject Transaction.
  3. Analysis and Evaluation of CMS’ Commentary.
  4. Implications and Applications for Valuation Practice.
Chapter 20. Buyer Neutrality.
  1. Introduction.
  2. CMS’ Commentary on Buyer Neutrality.
  3. Analysis and Evaluation of CMS’ Commentary.
  4. Implications and Applications for Valuation Practice.
  5. Evaluating the Willing Buyer in Stark and Traditional FMV.
Chapter 21. Losing Money as an FMV Issue.
  1. Introduction.
  2. CMS Commentary on Losses as a FMV Issue.
  3. CMS Commentary on Losses as a CR Issue.
  4. Analysis and Evaluation of CMS’ Commentary.
  5. Implications and Applications for Valuation Practice.
Chapter 22. Understanding the Compensation Examples.
  1. Introduction.
  2. CMS’ Background for the Compensation Examples.
  3. The Orthopedic Surgeon.
  4. The Family Physician.
  5. The Cardiothoracic Surgeon.
  6. Key Takeaways From the Compensation Examples.
Chapter 23. The New Valuation Date for Stark FMV.
  1. Introduction.
  2. The Valuation Dates in the New Stark Regulations.
  3. Analysis and Evaluation of the New Valuation Dates for FMV.
  4. Implications and Applications for Valuation Practice.
Chapter 24. Reflecting on Recent Regulatory Changes to the Stark Law: A Real Estate and Equipment Valuation Perspective, Part 1.
  1. Introduction.
  2. Previous Definition of Fair Market Value (42 U.S.C. § 1395nn).
  3. Current, Three-Part Definition of Fair Market Value (42 C.F.R. § 411.354).
  4. Current Definition of General Market Value (42 C.F.R. § 411.354).
Chapter 25. Reflecting on Recent Regulatory Changes to the Stark Law: A Real Estate and Equipment Valuation Perspective, Part 2.
  1. Introduction.
  2. Subject Transaction.
  3. Buyer-Neutral.
  4. Conclusion.

PART V. ARRANGEMENTS NOT SUBJECT TO FMV

Chapter 26. An Overview of Compensation Plans That Do Not Require FMV Compliance
  1. In-Office Ancillary Services Exception (IOASE).
  2. Value-Based Payment Exceptions.
Chapter 27. Value-Based Activities Compensation: Can We Throw Fair Market Value Out the Window?.
  1. Introduction.
  2. The VBE Final Rule.
  3. VBE Compliance.
  4. Conclusion.

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Guide to Fair Market Value