Recently, the DOJ expressed its renewed enforcement action against COVID-19-related fraud with the creation of the COVID-19 Fraud Enforcement Task Force. https://www.justice.gov/opa/pr/attorney-general-announces-task-force-combat-covid-19-fraud Most of the DOJ’s enforcement activity to date has focused on criminal prosecutions relating to the Paycheck Protection Program, Economic Injury Disaster Loans, and unemployment insurance benefit claims. However, they are now focusing on other areas, such as AKS violations, medically unnecessary testing, telehealth, vaccine-related fraud, and covid relief fraud.One of the main areas ripe for kickback violations is in the COVID testing … [Read more...]
FMV of a Physician’s Personal Goodwill
Often times when a physician group sells their practice, they will also sell their “personal goodwill” as a result of entering into an employment contract and a non-compete agreement with the new owners. In order to avoid double-taxation, the physicians personally (not a c-corp asset) sell their personal goodwill and this oftentimes requires a formal valuation for income tax purposes (see U.S. Tax Court case, Martin Ice Cream Co. v. Commissioner, 110 T.C. 189 (1998)). Valuing nebulous things, like goodwill and other intangible assets can be a little sticky and confusing. A physician's practice is comprised of tangible and intangible assets. The tangible stuff consists of cash, accounts … [Read more...]
Updates on Physician Compensation
Medscape and Physicians Thrive have recently issued their 2021 Physician Compensation Report. Here are a few highlights: Most physicians experienced an increase in their income in 2021. On average, PCPs earned $260K and specialists earned $368K.All specialties experienced an increase in income.Since 2015, physician compensation has increased by 29% overall and 33% for primary care physicians.In Q4 of 2021 physician recruitment engagements hit an all-time high.The income gap between men and women physicians has remained constant. Male PCPs earned 25% more than female PCPs.Oncologists and plastic surgeons experienced the highest increase in salaries at 7% and 10%, … [Read more...]
Specialty Pharmacy – Industry Overview
Based on our latest transaction data research, specialty pharmacies seem to be more valuable than traditional retail pharmacies. Here is HVG’s latest industry report: Market Size and Forecast The U.S. pharmacy market was valued at $534.21 billion in 2020. The market is projected to grow at a CAGR of 6.3% from $560 billion in 2021 to $861.67 billion by 2028. The impact of COVID-19 has been unprecedented, with the industry witnessing a positive impact on demand across the U.S. amid the pandemic.[1] Source: Fortune Business Insights According to a report by Fortune Business Insights, “Increase in prevalence of diseases in the U.S., aging population, and increasing healthcare … [Read more...]
What’s the FMV of a PSA
A professional service agreement (“PSA”) is generally defined as a financial relationship between a physician practice and a hospital in which the physician practice remains an autonomous entity but the physicians are compensated by the hospital at fair market value compensation for their professional services. In many cases, the physician group provides substantially all of the specific/specialty clinical services demanded by the community.Since the hospital is required to pay the physician group an FMV rate for their services, the need for an independent FMV opinion is quite common. But, the valuation analysis of these, sometimes complex, arrangements is not easy or … [Read more...]
An Independent FMV Opinion Does Not Always Save You
On April 11, 2022, the DOJ announced that it had intervened in an ongoing qui tam suit against a number of health system-owned cancer centers and a series of MSAs in place with a local physician group. The DOJ basically alleges that the health system paid the physician group for management services under a bona fide MSA, but that many of the management services were not actually provided. Although the health system obtained numerous third-party FMV opinions from several different appraisal firms, the litigation continues. Allegedly there was no documentation or exhibits that set forth the duties and responsibilities of the numerous medical directors. Plus, the hospital never … [Read more...]
PHARMACY INDUSTRY OVERVIEW
Market Size and Forecast The US pharmacy market was valued at $534.21 billion in 2020. The market is projected to grow at a CAGR of 6.3% from $560 billion in 2021 to $861.67 billion by 2028. The impact of COVID-19 has been unprecedented with the industry witnessing a positive impact on demand across the US amid the pandemic.[1] Source: Fortune Business Insights According to a report by Fortune Business Insights, “Increase in prevalence of diseases in the US, aging population, and increasing healthcare expenditures are some of the major factors driving the growth of the industry. The increasing number of prescription drugs being introduced in the market, along with the rising … [Read more...]
Recent Study on Physician Compensation Reveals a Slow Adoption of Value-Based Care
A recent study conducted by the RAND Corporation and published in the January 2022 issue of JAMA revealed some interesting tidbits. Here is a summary: Volume-based care has been, and still is, the default method of care and payment model in the U.S.Since the 2010 Patient Protection and Affordable Care Act’s (ACA) passage, physician hires and the size of health systems have increased.Beyond volume-based compensation methods, capitation and salary were the next most common forms of physician payment, leaving value-based reimbursement (VBR) models at the bottom.Compensation models that include some form of incentives based on quality and cost-effectiveness, account for only 9% of a … [Read more...]
FMV of Clinical Study – What is the Biggest Area of Risk?
When an appraiser develops an FMV opinion of the value of a clinic study, there are generally 3 main elements: Use of clinical staffUse of facility overheadUse of supplies The appraiser can develop an FMV hourly rate for each level of medical staff/personnel. And the appraiser can estimate an appropriate overhead rate for the use of a facility and the supplies to be used. But, the difficult and risky part is estimating a reasonable amount of time it should take to complete a particular stage/level/task within the protocols of the clinical study. Plus, it must be determined which level of medical staff is most appropriate to carry out a particular task of the clinical study. Even a … [Read more...]
FMV Payments Don’t Always Protect from AKS Violations – Food for Thought
I found this to be an interesting ruling. In the case of United States ex rel. Chao v. Medtronic PLC, No. 17-cv-1903 (C.D. Cal.), the court said: “even some fair-market-value payments will qualify as illegal kickbacks”. As such, the Central District of California denied the defendant’s motion to dismiss a qui tam suit premised on alleged Anti-Kickback Statute (“AKS”) violations. I’m not sure how this is. If a payment to a referral source is FMV, then it really comes down to whether the payment was even necessary. Doesn’t this touch on commercial reasonableness? The relator alleged that defendants (Medtronic) made offers or payments with at least one purpose to induce referrals … [Read more...]
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