Fair Market Value (FMV) Value-Based Care Distribution Models

We are pleased to announce that BuckheadFMV has published a new primer on assessing value-based care distribution models for FMV compliance.

The purpose of the primer is to outline the framework we use to assess provider distributions for FMV compliance to help attorneys, physician groups, and MPN leadership teams structure value-based care distribution models that further their business goals while remaining compliant with healthcare fraud and abuse laws and regulations. There is no singular benchmark or rule of thumb like (60% of shared savings revenue or $20 per attributed beneficiary) , that reflects fair market value for provider distributions, as each arrangement is truly unique. This is why we refer to this as an "FMV framework.”

Developing a value-based care distribution model that will result in FMV payments for these types of arrangements is particularly challenging for several reasons:

1. Payments Are Not Tied Directly to Services with Measurable Effort: Unlike other forms of physician compensation, shared savings distributions are not tied to services that can be quantified through wRVUs, hours worked, or other productivity-based metric. The value-based nature of these arrangements offers considerably greater flexibility than other physician compensation arrangements, but also less clarity.

2. Wide Variety of Organizational and Operational Structures: Drawing comparisons between different MPNs is difficult, as organizational structures and funding sources differ widely, with ownership ranges from 100% physician-owned, to 100% health system-owned, to 100% corporate-owned, and everything in between. Further, MPN’s may generate revenue from a variety of sources beyond risk-based bonus payments, such as care management fees (typically PMPM), HIE access fees, and participant dues, each of which may or may not be shared with the provider network. Finally, provider distribution models vary in structure, as some are based on shared savings revenue, some on profits, and others are based on a more complicated formula, which can include different payment structures for different classes of providers (primary care vs. specialists vs. facilities, etc.).

3. Revenue Uncertainty: Shared savings and other quality and performance -based bonus payments, which are usually the primary source of revenue for an MPN, are highly uncertain. Many contracts, such as the Medicare Shared Savings Program (“MSSP”), are binary: no payments are made (or losses may even be incurred) if cost-based goals are not achieved by the MPN. As has been widely reported, only around 30% of MSSP ACOs have historically earned shared savings bonuses in any given year. MPN operating expenses, on the other hand, are mostly fixed.

Download Value-Based Care Distribution FMV Primer

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If you would like valuation assistance related to your value-based care distribution model, please contact Darcy Devine at ddevine@buckheadfmv.com.