Mid-Atlantic Health Law TOPICS

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The Six Sources of Fair Market Value

The federal Stark law prohibits physicians from referring patients to entities in which they have an ownership interest or with which they have a compensation relationship. However, there are several exceptions to the Stark law. One often used exception pertains to physicians who are hired to perform legitimate services by an entity to which the physicians refer patients. Among other requirements, payments made to physicians under such arrangements must be set at "fair market value."
In the most recent revision to the regulations promulgated under the Stark law, the Centers for Medicare and Medicaid Services (CMS) issued guidance on the calculation of fair market value. One permitted method is to set the physician's hourly compensation equal to the average of the 50th percentile national annual compensation level for physicians within the same specialty, as reported by at least four of six designated physician compensation surveys, divided by 2,000 hours.
One of the most often asked questions by physicians and consultants is what are the names of the six surveys recognized by CMS. They are:
1. Sullivan, Cotter & Associates, Inc., Physician Compensation and Productivity Survey;
2. Hay Group, Physicians Compensation Survey;
3. Hospital and Healthcare Compensation Services, Physician Salary Survey Report;
4. Medical Group Management Association, Physician Compensation and Productivity Survey;
5. ECS Watson Wyatt, Hospital and Health Care Management Compensation Report; and
6. William M. Mercer, Integrated Health Networks Compensation Survey.


June 22, 2005




Rosen, Barry F.


Health Care