Fair Market Value · Physician Compensation
Physician compensation & FMV compliance software
Fair market value is one of three separate tests — and an FMV opinion drifts stale over a contract's life while compensation stays fixed. ArrowISE monitors FMV currency, alerts on drift, and keeps the documentation contemporaneous.
Fair market value is one test of three
The 2021 CMS final rule clarified that fair market value, commercial reasonableness, and the volume-or-value standard are separate and distinct concepts — a physician compensation arrangement has to satisfy each on its own terms, and a strong showing on one does not cover a gap in another.
- Fair market value is the price question — the value in an arm's-length transaction, consistent with the general market value of the arrangement.
- Commercial reasonableness is the business-sense question — whether the arrangement furthers a legitimate business purpose and is sensible for the parties. CMS made explicit that an arrangement can be commercially reasonable even if it does not result in a profit.
- The volume-or-value standard is the referral question — whether compensation takes into account the volume or value of a physician's referrals, tested by how the formula behaves, not how it is labeled.
And fair market value is necessary but not sufficient. The April 2026 OIG guidance restated that an FMV opinion and a satisfied Stark exception do not, by themselves, resolve Anti-Kickback intent. A market-rate number on the file answers the price question and leaves the others open.
The problem is drift, not just the opinion
Most compliance programs obtain an FMV opinion when an arrangement is signed. The exposure accumulates afterward:
- The opinion goes stale. An opinion current at signing lapses over a three- or five-year term as survey benchmarks move and the physician's productivity shifts — while the contracted compensation stays fixed. A portfolio can be several opinions past due before anyone notices, because a spreadsheet records the opinion date but never flags its age.
- The opinion's conditions go unmet. Outside valuation opinions are frequently conditioned on documentation or productivity assumptions that the organization never enforces. An FMV opinion whose conditions were not met is a thinner defense than it appears — a point the Erlanger Health System litigation put on display.
- Compensation strays above the benchmark. Pay set at or above the 90th percentile, or wRVU rates above market, draw scrutiny. Halifax Health's $85 million settlement turned on employed-physician compensation that strayed from a defensible basis.
What ArrowISE does for FMV and physician compensation
ArrowISE does not produce valuations or set pay. It keeps the fair market value support current and the record contemporaneous across a contract's life:
- FMV currency monitoring. ArrowISE tracks the age of every fair market value opinion in the portfolio and surfaces the ones approaching or past a refresh threshold — turning FMV drift from something discovered at audit into something flagged in advance.
- Drift alerts. When an opinion lapses, a benchmark moves, or compensation crosses a threshold relative to the opinion, ArrowISE raises it as an alert rather than leaving it buried in a spreadsheet cell.
- Contemporaneous documentation. FMV opinions, their conditions, and the surrounding analysis are captured as the arrangement is built and preserved on a tamper-evident, hash-chained record — the contemporaneous documentation an external review distinguishes from a file assembled after the fact.
- A refresh cadence, in policy not in practice. ArrowISE makes the FMV refresh cadence an explicit, tracked workflow rather than an ad hoc habit that exists only until the person who ran it leaves.
Frequently asked questions
Is an FMV opinion enough?
Not on its own. FMV is one of three separate tests, and the April 2026 OIG guidance restated that fair market value does not by itself resolve Anti-Kickback intent. It is necessary but not sufficient.
What is FMV drift?
An FMV opinion current at signing going stale over a multi-year contract while compensation stays fixed. ArrowISE tracks opinion age and flags drift before it becomes exposure.
How is commercial reasonableness different from FMV?
FMV is the price; commercial reasonableness is whether the arrangement makes business sense — and it can be reasonable even if it does not produce a profit. The two are distinct, and an arrangement must pass both.
Does ArrowISE set or determine fair market value?
No. ArrowISE tracks FMV opinion currency, conditions, and documentation. It does not produce valuations — that remains the work of a qualified valuation professional. ArrowISE is compliance workflow, not legal advice.