Both Stark Law and the Anti-Kickback Statute contain fair market value requirements. But what is fair market value? According to the Office of Inspector General (“OIG”), fair market value is more than just the amount that both parties agree on. If the OIG investigates a provider arrangement, the provider needs to prove that the fees exchanged are set at fair market value. For strict liability statutes like Stark, failing to satisfy the fair market value requirement results in a violation and severe penalties. As the OIG increases its scrutiny, make sure you and your providers include the following steps in your fair market value due diligence:
- Use experts to determine fair market value. If your office manager or accountant is not an expert in the service or product (e.g., real estate, technician's salary or equipment, etc.) related to your arrangement, find someone to analyze the pricing of your arrangement.
- Use external and objective surveys as a guide. Membership in several associations has relevant privileges. Use organizations like the Medical Group Management Association, Ohio State Medical Association, and American College of Radiology to find out what other providers in your geographic area are paying for services and products (e.g., billing, space, equipment and personnel).
- Understand the importance of fair market value. If you fail the fair market value criteria of an exception or safe harbor, your ability to meet any other criteria is likely moot.
- Document how fair market value was determined: Keep a file with your surveys, expert opinions and calculations, so it is ready as your defense if needed.
- Make reasonable comparisons. Compare equivalent items and equivalent factors (e.g., same time frames, size, service, exclusivity, etc.)
- If you are paying more or less than fair market value, you need to have a commercially reasonable explanation.