Also, any provider can be excluded from the Medicare and Medicaid programs. Whether a healthcare provider is a for-profit or not-for-profit entity, if they take payments from government programs, including Medicaid or Medicare, they must make sure that any exchange made between themselves or any other entity that involves money, space, or services is exchanged at Fair Market Value. Although it would still be considered a resource even if it has no value, transferring a resource with no value does not result in any uncompensated value. Although a determination of reasonableness or fair market value for these purposes depends on all of the relevant facts and circumstances, reasonable compensation is generally defined as the level of compensation that is consistent with the amount that would be paid by like organizations for like services under like circumstances. Fair Market Value and Healthcare Transactions. The Medicare Anti-Kickback Statute3 has a similar prohibition and requires that an arrangement is “consistent with fair market value in arms-length transactions and is not determined in a manner that takes into account the volume or value of any referrals or business otherwise generated between the parties for which payment may be made in whole or in part under Medicare, Medicaid or other Federal health care programs.” All decisions of treatment of a patient should be in the best interest of the patient, not in making sure the providers receive as much financial benefit as possible. Any violator of Section 4958, in particular the manager who makes the decision and the person who benefited, will face civil penalties. 1320a-7b) and the False Claims Act (31 U.S.C. Evolving market forces have created a new set of compliance standards for physician compensation arrangements. Home » Fair Market Value and Healthcare Transactions, An Informational Article Posted on December 11, 2015April 6, 2016. Nonprofit organizations are unique in that they are given tax exemptions because they do not give any of their earnings to private shareholders or individuals. The concept of Fair Market Value can be viewed as a regulation that is in place so that monetary value is removed from decisions involving patients and their medical care. Violations of the Anti-Kickback Statute can be punished with up to five years in prison, along with criminal fines up to $25,000 and civil fines up to $50,000 per violation, in addition to three times the illegal remuneration received. All Rights Reserved. Example: Calculating Medicaid Penalty Period Jim, who lives in Florida, applied for long term care Medicaid on August 15th of 2020.