Fair Market Value
The objective of our fair market value appraisal is to determine whether the proposed financial relationship or payment reflects fair market value for the services or assets.
In making our appraisals, we apply the definition of fair market value set forth in the Phase III, final September 5, 2007 Stark II regulations:
Fair market value means the value in arm’s-length transactions, consistent with the general market value. “General market value” means the price that an asset would bring, as the result of bona fide bargaining between well-informed buyers and sellers who are not otherwise in a position to generate business for the other party, or the compensation that would be included in a service agreement as the result of bona fide bargaining between well-informed parties to the agreement who are not otherwise in a position to generate business for the other party on the date of acquisition of the asset or at the time of the service agreement. Usually, the fair market price is the price at which bona fide sales have been consummated for assets of like type, quality, and quantity in a particular market at the time of acquisition, or the compensation that has been included in bona fide service agreements with comparable terms at the time of the agreement, where the price or compensation has not been determined in any manner that takes into account the volume or value of anticipated or actual referrals. (42 CFR § 411.351)
We define commercial reasonableness based on whether the arrangement would make commercial sense if entered into by a reasonable entity of similar type and size and a reasonable physician of similar scope and specialty, even if there were no potential referrals
We come to a Fair Market Value Conclusion based on market data.
We also define the term of the validity of the value.