Healthcare

Let's hear it for clarity! Thanks to the Department of Health and Human Services' (HHS) revision of the Physician Referral Law (aka Stark law) in November 2020, we now have more explicit guidance for the key definitions. And for physician compensation experts, it's about time.

An accountable care organization (“ACO”) is a healthcare delivery entity characterized by a payment model that facilitates coordination among providers — charged with the care of a specified patient population.

Participation in an ACO is voluntary, and participants must be willing to become accountable for the quality, cost, and overall care of the specified population. Commonly, ACOs receive capitated payments based on the size of the patient population served, though other reimbursement models exist. ACO participants are financially incentivized to lower healthcare costs while improving quality as they share in a portion of the excess between total capitated payments and total healthcare costs.

Determining fair market value (FMV) compensation in a healthcare setting generally requires the use of multiple, objective data points and an understanding of how to apply that information given the unique facts and circumstances of the subject arrangement relative to the overall market.

Understanding what the government considers as support for FMV, and what it does not, is critical to selecting and enacting policies and procedures for establishing FMV physician compensation.