Category: Healthcare

Healthcare Fraud and Abuse

Our healthcare valuation experts have extensive experience in fraud investigations for various types of situations.  Some of the areas we have experience investigating include medical record reviews, revenue reports and assessing the legitimacy of supporting documents, documentation and coding. We are experts in assessing situations involving provider and patient kickbacks such facilities offering services to patients at a discount or billing a different service, so it is “covered” by insurance.    We are experts in assessing provider relationships and potential provider to provider kickbacks whether it is discounted lease space, physician services agreements, pay to play, and much more.

 

Common Situations

• Billing for more services than capable in a work day
• Billing for one code/service but another was provided
• Billing for services not provided
• Billing higher than usual and customary to out of network benefits versus lower when billing in network benefits
• Document alteration
• Duplicate billing
• Embezzlement
• Forgery
• Improper coding – usually upcoding
• Omission of modifiers for higher rate of reimbursement, results in lower or denied payment
• Ordering services that are not medically necessary
• Providing services that are not medically necessary
• Unbundling services

Our Clients

• Legal Counsel representing healthcare entities or Federal/Commercial Payers (Medicare, Medicaid, FBI, OIG, Blue Cross, etc.)
• LTAC & Acute Care Hospitals and Health Systems
• Surgery Centers and Urgent Care Centers
• Physicians, Surgeons and Ancillary Providers
• See other list of client type/healthcare verticals

Healthcare Litigation Support

Our Healthcare litigation support services practice is focused on assisting clients who have complex and significant dispute and litigation matters. We have vast experience in healthcare valuation, healthcare fraud, and Stark Law.  We are able to provide clients with expert healthcare litigation services and support by differentiating ourselves due to the following reasons:

1. Our intensive focus on the healthcare industry for 10+ years.
2. We have numerous experiences in healthcare valuations and healthcare related transaction advisory services.
3. We are an industry leader in providing healthcare valuation services.
4. Our healthcare experts hold many prestigious professional credentials, including CFA, CPA, ABV, ASA, CVA, CGMA, CHC, and CMC designations.
5. We have a pro-active approach to our clients by having engagements lead and managed by our senior-level professionals. We work very closely with our clients and their attorneys throughout the entire engagement.

ValueScope’s healthcare experts provide value for clients needing healthcare litigation services in many areas. Our services include:

• Stark Law and Anti-Kickback Compliance
• Expert Testimony
• Expert Consulting
• Valuations of Business Interests, Intangible Assets, Real Estate, and Equipment
• Physician Compensation and Management Services Fees
• Post-acquisition Disputes
• Partner/Shareholder/Management Company Disputes
• Other Healthcare Regulatory Compliance
• IRS and Tax Court Disputes
• Bankruptcy Disputes

Anti Kickback Statute

Stark Law, Eliminating Kickbacks in Recovery Act of 2018 (EKRA), and Anti Kickback Statute are some of the most challenging issues in physician compensation today. ValueScope’s healthcare experts conduct full audits of billing and compensation processes to determine the effectiveness of Medicare/Medicaid, Workers Compensation, and other compliance efforts.  Our healthcare experts are adept at working with counsel and financial managers to identify problem areas and create billing, compensation, and compliance solutions.

On June 9, 2015, The Office of Inspector General (OIG) released an alert declaring physician compensation agreements that exceed fair market value may violate federal fraud statutes and be subject to stiff financial penalties and prosecution. For purposes of Stark Law in Title 42 of the Code of Federal Regulations, section 411.351, fair market value is defined as: “the value in arm’s length transactions, consistent with the general market value.  ‘General market value’ means the price that an asset or services would bring as a result of a bona fide bargaining between well-informed buyers and sellers who are not otherwise in a business to generate business for the other party . . . on the date of acquisition of the asset or services rendered.” To ensure compliance and protection from financial penalties and/or litigation, a comprehensive review of all existing and future compensation arrangements should be performed by a qualified and experienced appraiser.

Are You Compliant with EKRA?

The Eliminating Kickbacks in Recovery Act of 2018 (EKRA) was a component of the Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities Act (SUPPORT Act), which was signed into law on October 24, 2018.  EKRA was intended to address brokering of patients, with commercial or private pay insurance, to treatment centers and sobriety facilities.  The Anti-kickback Statue (AKS) was generally not applicable in these cases because it did not involve federal healthcare dollars.  EKRA applies to referrals to clinical treatment facilities, recovery homes and laboratories, even if the referral is not related to the treatment of opioid addiction or recovery.

An EKRA violation is punishable by a fine of up to $200,000 and/or 10 years in prison for knowingly and willfully:

• soliciting or receiving remuneration for a patient referral to a recovery home, clinical treatment facility or laboratory
• pay or offer remuneration for a referral to a recovery home, clinical treatment facility or laboratory

The ambiguity in the scope of EKRA creates uncertainty as to how it will be enforced.  EKRA’s broad language raises concerns that federal prosecutors may charge individuals or entities for payments to referral sources for private-pay patients, regardless of the nature of the referral.  EKRA’s impact goes beyond just imprisonment and fines.  Felony convictions means no payments.  Thus, EKRA violations can have a long-term negative effect on an entity’s financials and reputation.  As a result of these concerns, The National Law Review recommended that “laboratories, clinical treatment facilities, and recovery homes should immediately consider reviewing all financial arrangements with healthcare providers, contractors, and employees who are in a position to generate referrals—including marketing personnel and sales reps.”

ValueScope can assist healthcare clients and attorneys in understanding the exceptions to EKRA to ensure compensation arrangements are within fair market value.

Are You Compliant with Stark Law?

Stark Law and Anti-Kickback Statute compliance are some of the most challenging issues in physician compensation today.  Compensation agreements in compliance with Stark Law generally include the following characteristics:

• Compensation for a specified term is set in advance.
• Compensation is consistent with fair market value in arms-length transactions.
• The agreement does not take into account the volume or value of referrals generated between the parties to the arrangement.
• Services rendered are necessary and commercially reasonable to accomplish the business purpose.

There are various arrangements, in which a physician may legally perform services in exchange for compensation, including:

• Professional services
• Technical services
• Administrative or managerial
• Clinical co-management

The key in valuing physician compensation arrangements is to match the compensation paid for services expected to be provided.  An appraiser must carefully consider factors such as time requirements, type of arrangement, administrative duties, and supervisory responsibilities.

Healthcare Valuation Methods—What Needs to be Done

Fair market value (FMV) reviews of physician service arrangements for clients range from large, multi-state health systems to independent physician practices.  Enlisting a firm that specializes in healthcare business valuations for buy-sell and joint venture transactions, tax, and financial reporting purposes can be beneficial.

Going through the valuation process that supports transactional healthcare FMV requirements entails performing:

• Detailed situational assessments
• In-depth fact-finding and interviews
• Market analysis, including compensation surveys and data
• Extensive financial modeling
• Rigorous valuation methodologies
• Understanding the value of healthcare claims and receivables

Market-Based Method:  A market-based method is often used in the fair market value appraisal of a physician compensation arrangement.  The best source of market data for comparative analysis is physician compensation surveys.  The surveys include data from physician-owned practices and those owned by a health system and are provided by location and type of service.  The major providers of survey data are Medical Group Management Association (MGMA), Sullivan, Cotter and Associates, Hospital & Healthcare Compensation Service, American Medical Group Association (AMGA), and Towers Watson Data Services.  An appraiser will assess the comparability of the market data with the subject agreement.  Productivity is often the primary factor in a benchmarking analysis.  Market-based methods based on productivity include the percentile matching technique, median rate technique, compensation by quartile technique, and workload analysis.

Cost Approach:  The cost approach may be utilized to recreate the cost of providing the same or similar services as outlined in the compensation agreement.  A cost buildup method may include market-based data or historical costs that were previously negotiated in an arm’s length transaction.  An appraiser may rely upon the historical compensation of a physician as a comparison for compensation under an employment contract.  Adjustments can be made depending on similarities or differences in the scope of services provided in the past compared to the proposed arrangement.  For example, the employment agreement may include hospital call coverage or administrative responsibilities.

Earnings-Based Methods:  The earnings-based methods analyze the revenues associated with physician services less the cost of providing those services.  The physician’s net earnings can be an indication of the value of a physician’s services to an employer.  The income approach can be utilized to determine the present value of future economic benefits received by either party to the compensation agreement.

Healthcare Compensation/Stark Law/FCA Cases

 Drakeford v. Toumey Healthcare Systems, Inc.

• Summary – Toumey Hospital signed part-time employment agreements with 18 specialists with salary compensation that varied/fluctuated based on net cash collections.
• Outcome – The Court found if compensation takes into account additional revenue the hospital anticipates will result from physician referrals, then the compensation was set to consider the volume or value of the referrals anticipated from the arrangement (indirect compensation arrangement).
• Penalty – Potential judgment of $350 million

U.S. v. Campbell

• Summary – University of Medicine and Dentistry in New Jersey (UMDNJ) entered into a contract with Dr. Campbell for a fixed compensation for part-time services. In return, Campbell referred patients from his part-time practice to UMDNJ for cardiac procedures.
• Outcome – UMDNJ settled with the government for submitting claims it knew to be in violation of Stark Law. The U.S. government brought an action against Dr. Campbell personally, even though he was paid a fixed compensation, claiming his primary function for UMDNJ was referring patients because he did not perform most of the services in his employment agreement (the compensation paid to him was not commercially reasonable and did not constitute FMV).
• Penalty – UMDNJ paid $8.33 million in False Claims Act damages (twice the amount paid to UMDNJ in claims); Dr. Campbell’s lawsuit is still ongoing (settlements of 9 other cardiologists in same civil case with DOJ totaled $3.2 million).

OIG Case against Fairmont Diagnostic Center and Open MRI (Houston)

• Summary – OIG alleged that payments to 12 individual physicians took into account the volume and value of their referrals and did not reflect FMV for the service performed (violated Anti-Kickback Statute).
• Outcome – OIG determined that the physicians were a part of the scheme and subject to liability under the Civil Monetary Penalties law.
• Penalty – All 12 physicians settled with the OIG for penalties between $50K and $200K each. The diagnostic center was excluded from participating in Federal healthcare programs for a period of six years.

Baklid-Kunz v. Halifax Hospital Medical Center

• Summary – Halifax had payment agreements with oncologists for a base salary and participation in a bonus pool equal to 15% of the operating margin of the Halifax oncology program in proportion to each physician’s services performed.
• Outcome – The Government argued that the arrangement took into account the volume or value of the physicians’ referrals and failed to comply with Stark Law and the False Claims Act. The DOJ argued that the total compensation exceeded the collections received for the physician services, and therefore there was no defense for it being FMV or commercially reasonable.
• Penalty – Halifax settled with the DOJ for $85 million.

Parikh v. Citizens Medical Center

• Summary – Citizens paid bonuses to physicians as an inducement for referring patients to the Chest Pain Center. Compensation paid to Citizens’ employed cardiology groups included employee benefits and below-market rate office space.  Citizens paid bonus compensation to gastroenterologists based on patient referrals.
• Outcome – The DOJ alleged that Citizens’ compensation and bonuses were in excess of FMV and in violation of Stark Law and the False Claims Act.
• Penalty – Citizens agreed to pay the U.S. $21.75 million to settle the allegations.

Schubert v. All Children’s Hospital System

• Summary – ACHS set a base physician salary range between the 25th and 75th nationwide percentile. Two corporate officers independently ignored the plan and hired physicians in excess of the 75th percentile.  Each hire resulted in a net operating loss to the physician group but were a financial boon to the hospital due to referrals.
• Outcome – The Government alleged a program of overpaying physicians, overpaying in the purchase of practices, and paying bonuses based on the number of Medicaid referrals. All acts violated Stark Law and the False Claims Act.
• Penalty – ACHS settled for $7 million.

Ameritox, Ltd. v. Millennium Laboratories, Inc.

• Summary – Millennium offered physicians free urine sample cups (worth $11) in exchange for test samples to be brought to Millennium.
• Outcome – A competitor brought an unfair competition suit alleging that the free cups constituted remuneration and violated Stark Law.
• Penalty – Millennium was ordered to pay $2.75 million in actual damages and $8.5 million in punitive damages.

 How ValueScope Can Help

ValueScope’s knowledge of the broader healthcare industry adds valuable insight to the risks and benefits of a sale, acquisition, or services agreements.

ValueScope’s team conducts full audits of billing and compensation processes to determine the effectiveness of Medicare/Medicaid compliance efforts. The healthcare team is adept at working with counsel and financial managers to identify problem areas and create billing, compensation, and compliance solutions. Our team includes experienced economists (PhDs, MSs, and MBAs), Certified Public Accountants, Chartered Financial Analysts, and Certified Valuation Analysts.  We are active members in the National Society of Certified Healthcare Business Consultants and the Medical Group Management Association.

ValueScope’s clients include:

• Physician practices
• Hospitals
• Surgery centers
• MRI centers
• Home healthcare
• Hospice agencies
• Nursing homes
• Ambulatory outpatient care facilities
• Group purchasing organizations (GPOs)

We have dealt with critical issues such as Medicare cost reporting, cost shifting, reimbursement rate adjustments, beneficiary limits, sequential billing rules, CMS/RAC Audits, “Operation Restore Trust,” platform holding rules, line item limitation rules, HIPAA rules, OIG issues, Stark Law, prospective payment systems, HMO/PPO reimbursement structures, and the continued restructuring of government eligibility and payment rules.

[i] Bloomberg Healthcare Fraud Report, Outlook 2015: Uptick Expected in Stark, Anti-Kickback FCA Cases, Self-Disclosures

[ii] Ibid

ValueScope healthcare compliance experts understand programs such as HIPAA Privacy & Security Programs, Training, Auditing & Claims Review, Billing & Cash Flow Management, IT Networks, All Lines of Insurance, Accounting & Tax, Accreditation, Accreditation, Chronic Care Management, and more. ValueScope’s healthcare compliance experts have experience in testifying in front of the MAC and ALJ on claims denial cases as well as healthcare fraud and abuse coding defense.

A key component of an effective compliance program is ensuring accurate coding and billing, including proper training of responsible staff and regular auditing of coding practices.

Our healthcare coding and compliance experts provide healthcare audit and compliance services, including internal and external coding audits across all healthcare verticals. Our team works with Compliance Officers and Corporate Counsel to perform periodic, monthly, quarterly as well as focused services based upon client needs.

• Our compliance experts have experience assisting with implementation and management of Corporate Integrity Agreements as well as responding to Centers for Medicare and Medicaid Services reviews associated with pre- and post-payment audits, Medical Reviews, Program Integrity/ZPIC audits, RAC audits, and quality reviews.
• With our collective years of experience both in provider as well as payer settings, our team of professionals have expansive knowledge to address internal and external compliance risk areas and concerns. We have been invaluable in developing risk models and action plans based on specific issues and need to improve cash flow and reduce staff and external audit risks.  As part of that, we develop a flow chart and task assignment, so the project is completed timely and within specifications.  Previous Centers for Medicare and Medicaid Services contractor experience has been instrumental in assisting organizations in understanding Medicare Administrative Contractor requirements as well as developing strategic initiatives designed to respond to ongoing changes in a dynamic healthcare environment.
• Our healthcare experts have extensive experience with third party commercial payer audits as well as Federal and State program compliance. We review third party determinations, appeal payment denials or other adverse actions.  We also assess why a provider may be experiencing slow payment by a payer through risk analysis.

Our healthcare experts have many years of experience educating co-workers, healthcare providers and staff, as well as all aspects of the appeals or litigation process because without education your points will not be made.  Education is key to having a successful business, compliance program or making a defense case.  We present defense and audit services as a thorough education of accusations, the policies associated with allegations and the solutions and or why those allegations cannot be true.  Educating staff on business processes is key to being efficient as well as ensuring compliance with state and federal regulations.  We provide training one on one or in group settings.  We have professionals that are trained in various coding methodologies from Evaluation and Management, MS-DRGs, APCs, CPT, ICD-10 CM and ICD-10 PCS.  We have professionals that are certified medical coders through PMIMD and certified healthcare compliance professional through HCCA.

Coding Services

Our overall process can include, but is not limited to and based on client needs, the following:

• Provide an initial coding audit and documentation related to a selection of charts (single admit) the results of our audits will serve as the basis for our Baseline Audit Report.
• Provide audits of denied claims and prepare written results report to outline process problems and other resolutions to reduce denials which will reduce audit risk
• Each report will include our observations and recommendations related to:
• Policies & procedures, if provided for review, processes, education, and protocols designed to eliminate the likelihood of future occurrences of billing errors;
• Changes to billing practices that may be necessary or appropriate to comply with federal and state laws, rules, regulations and guidelines.

Such observations and recommendations will serve as our basis for providing quarterly audits and/or in-service/education training.

• Meet state and federal requirements, national coding standards and other regulatory rules and payor contract terms. Wherever applicable, we will utilize guidelines and standards approved by the Centers for Medicare and Medicaid Services (CMS), which may include, without limitation, Medicare Manuals and Medicare’s National Correct Coding Initiative, fiscal intermediary program memoranda and bulletins, Local Medical Review Policies, and guidelines published by professional organizations.
• Identify and document potential over- or underpayment (billing errors) and calculate/ extrapolate the potential error rates just as Federal payers would to demonstrate full risk
• Utilize current codes, such as ICD-10-CM, CPT, HCPCS and any others whenever applicable.

Inpatient and Outpatient Line of Businesses

ValueScope’s healthcare compliance experts have compiled patient hospital bills for out of country claims and several hospital claim charge reviews on behalf of patients and injury attorneys, in the past. Since that time, ValueScope healthcare experts have completed the AAPC’s course on Certified Inpatient Coding.  We have tools we use to input claim data to provide possible errors based on the information provided.

  DRG (Diagnosis Related Groups) Validation

• No matter what payer, any claims reviewed will include a comparison of clinical records to coding records to ensure the proper diagnosis, procedure, DRG, APC along with assigned co-morbidity which has been established to validate billing. We will compare as appropriate for that payer.
• Clinical and procedure information will be reviewed against any edits and exclusion to ensure proper payment. At the same time our tools will provide us appropriate RVUs, base rate to ensure the appropriate amount was billed.
• As part of the clinical review, we will track all diagnosis at admission and discharge to ensure proper indicators are noted for Present on Admission (POA) versus Hospital Acquired Condition (HAC) as these impact payments.
• We will utilize, in a spreadsheet, claims that are coded much like a Medicare audit billed versus what we confirm the coding to be. This detailed spreadsheet will be scored, can track trends in coding and documentation.  If the information is provided in the claim data – we can track the coder as well.  This can be expanded to track many aspects of a business model.
• To accurately compare DRG distribution to national rates, we will take the full claims data to compare totals per DRG to the national numbers.
• Review clinical records for diagnoses and procedure codes to ensure compliance with appropriate assignment of the Medicare Severity Diagnosis Related Groups (“DRG”) for correct reimbursement.
• Review Medicare inpatient claims in order to evaluate coding accuracy per industry standard coding guidelines and the validation of the principle diagnosis selection, secondary diagnoses, principle procedure and secondary procedures with an emphasis on the complications/co-morbid conditions (CCs) and major CCs.
• Evaluate the accuracy of the coding for Present on Admission (POA) indicators as well as Hospital Acquired Conditions (HACs).
• Utilize scorecards to trend coding errors by type and by coder in order to implement educational programs after completion of the audit.
• For non-DRG third party payors, verify that the appropriate documentation is present in the medical record to support the charges and medical necessity, and that all procedures, tests and services have an appropriate order/documentation.
• Compare DRG distribution to national rates.

  Medical Necessity

• Review inpatient documentation to ensure that claims are based on complete medical records and that the medical records support the levels of service on claims submitted for payment.
• Medical necessity is the backbone to all coding and must be documented and complete to support diagnosis, procedure, DRG, APC, labs, prescriptions, etc. This will be including in all claims review.  Medical necessity will be based on the payer’s coverage determination or Medicare guidelines, if payer guidelines are not available.

  Coding Validation

• Validation of inpatient coding shall include, at a minimum, the validation of ICD-10-CM diagnosis and procedure codes, MS-DRG, DRG, and/or other mandated prospective payment group assignment, based on supporting medical record documentation. ValueScope will identify and document identified query opportunities. At a minimum, the below listed coding areas will be reviewed:
• APR-DRG
• MS-DRG
• Medical necessity
• Review the facility/resource allocation and assignment of the Evaluation and Management (E/M) code selection.
• Review claims to ensure documentation meets the Hospital’s defined criteria for assignment of code for outpatient departments, including the Emergency Department.

  Chart Documentation to Billing & Coding Audits

• Our healthcare experts are familiar with Medicare and Medicaid payment systems. All outpatient department claims will be reviewed in the same format clinical documentation to support billing record from diagnosis and procedure to CPT codes.  Any audit includes notes on deficiencies, areas for improvement, and suggestions, if applicable.  By taking the detail of all claims, we can provide claims detail by code, payer, payments compared to your allowables noted in the data set.
• Our healthcare experts will review samples of outpatient claims from various departments to determine if the services billed are adequately documented in the medical record. All audits will include a review of coding abstracts and remittance advices.
• Our healthcare experts will verify that the charges and procedure codes as well as diagnosis codes reported on the claim form are consistent with documentation in the medical record.
• Reviews will address claim form completion, coding detail, billing for covered services and billing accuracy.
• Our healthcare experts can provide quarterly audits and reports detailing findings, financial impacts and reasons for any proposed changes in coding assignment.
• Upon completion of the medical record review, our healthcare experts will calculate impact and reimbursement implications of any proposed changes.
• Detailed knowledge of the Medicare Payment Methodologies, Texas Medicaid Payment System as well as clear understanding of Commercial plans as well as other Federal Payers. Reports will include follow-up from previous findings, analysis, trends, and comparison with state and national data.

Cash Flow Analysis

We will review various reports from your billing system to identify potential process improvement areas to improve collections and over all practice efficiencies.  With these reports, we can develop a risk assessment and areas for potential lost revenue.

 Common Problems:

• Failure to properly verify insurance benefits
• Failure to get or follow-up on renewal authorizations
• Bad business processes, usually because staff don’t know or stopped the process because they didn’t see the point
• Not working accounts receivable timely
• One to two payers as main source of income
• No benchmarking internally to know if business is performing well
• Coding problems or payer focused audits

 Corporate Integrity Agreement Audits

Our healthcare experts assist healthcare providers in providing an independent review of their corporate integrity agreement.

OIG negotiates corporate integrity agreements (CIA) with health care providers and other entities as part of the settlement of Federal health care program investigations arising under a variety of civil false claims statutes. Providers or entities agree to the obligations, and in exchange, OIG agrees not to seek their exclusion from participation in Medicare, Medicaid, or other Federal health care programs.

CIAs have many common elements, but each one addresses the specific facts at issue and often attempts to accommodate and recognize many of the elements of preexisting voluntary compliance programs.

A comprehensive CIA typically lasts 5 years and includes requirements to:

• hire a compliance officer/appoint a compliance committee;
• develop written standards and policies;
• implement a comprehensive employee training program;
• retain an independent review organization to conduct annual reviews;
• establish a confidential disclosure program;
• restrict employment of ineligible persons;
• report overpayments, reportable events, and ongoing investigations/legal proceedings; and provide an implementation report and annual reports to OIG on the status of the entity’s compliance activities.

Fair Market Valuation

Our healthcare valuation experts are at the leading edge of all the healthcare business valuation methods. It was our experts who brought rigorous, empirical, cutting edge methodologies to the profession. The accuracy and independence of our work, our ability to defend our opinions, along with sophisticated methods and robust analysis are proven before various State and Federal government regulators and the courts.

ValueScope is the “go to” firm at some of the nation’s most prestigious healthcare attorneys and companies.

FAIR MARKET VALUE (FMV) OPINIONS

Our healthcare valuation experts perform FMV reviews of physician service arrangements for clients that range from large, multi-state health systems to independent physician and optical practices.  We specialize in healthcare business valuations for buy-sell and joint venture (JV) transactions, tax, and financial reporting purposes.

Our healthcare experts provide valuation services that support transactional healthcare fair market value (FMV) requirements with a process that includes:

• Detailed situational assessments
• In-depth fact-finding and interviews
• Clinical contracts and clinical assessment agreements
• Market analysis, including co-management agreements
• Extensive financial modeling
• Rigorous valuation methodologies
• Understanding the value of healthcare claims and receivables

COMPENSATION VALUATIONS

ValueScope’s team of healthcare valuation experts have the experience and data base resources to help with complex compensation valuations for a complete range of compensation structures and issues.  Our valuation experts are equipped to provide the highest level of expertise that meets legal and regulatory requirements.

Compensation reviews of service arrangements for clients range from large, multi-state health systems to independent physician practices.  Our healthcare valuation experts utilize approaches that are tailored to our client’s situation and comply with the unique requirements of the healthcare regulatory environment.

Going through the valuation process that supports transactional healthcare compensation requirements entails performing:

• Detailed situational assessments
• In-depth fact-finding and interviews
• Market analysis, including compensation surveys and data
• Extensive financial modeling
• Rigorous valuation methodologies
• Understanding the value of healthcare claims and receivables

Our healthcare valuation experts follow standards and methods that are consistent with the professional practice of appraisal.  We utilize the following approaches:

Market-Based Method:  A market-based method is often used in the fair market value appraisal of a physician compensation arrangement.  The best source of market data for comparative analysis is physician compensation surveys.  The surveys include data from physician-owned practices and those owned by a health system and are provided by location and type of service.  The major providers of survey data are Medical Group Management Association (MGMA), Sullivan, Cotter and Associates, Hospital & Healthcare Compensation Service, American Medical Group Association (AMGA), and Towers Watson Data Services.  An appraiser will assess the comparability of the market data with the subject agreement.  Productivity is often the primary factor in a benchmarking analysis.  Market-based methods based on productivity include the percentile matching technique, median rate technique, compensation by quartile technique, and workload analysis.

Cost Approach:  The cost approach may be utilized to recreate the cost of providing the same or similar services as outlined in the compensation agreement.  A cost buildup method may include market-based data or historical costs that were previously negotiated in an arm’s length transaction.  An appraiser may rely upon the historical compensation of a physician as a comparison for compensation under an employment contract.  Adjustments can be made depending on similarities or differences in the scope of services provided in the past compared to the proposed arrangement.  For example, the employment agreement may include hospital call coverage or administrative responsibilities.

Earnings-Based Methods:  The earnings-based methods analyze the revenues associated with physician services less the cost of providing those services.  The physician’s net earnings can be an indication of the value of a physician’s services to an employer.  The income approach can be utilized to determine the present value of future economic benefits received by either party to the compensation agreement.

Our healthcare valuation experts opine on all types of compensation arrangements.  These compensation service arrangements include the following:

• Physician services
• Employment contracts
• Medical Director services
• Overall management services
• Marketing services
• On-call services
• Tele-medicine arrangements
• Performance Pay arrangements
• Clinical integration network
• Management service organizations
• Co-management arrangements
• Employee leasing services
• Pay “per click” arrangements
• Clinical research and trial activities
• Billing and collection services
• Recruitment service fee arrangements
• Other types of professional services

TRANSFER PRICING

ValueScope’s transfer pricing group includes an experienced team of economists (Ph.Ds., MSs, and MBAs) and valuation specialists.  Our team has a broad understanding of the U.S. Internal Revenue Service and other tax authorities necessary to implement defensible transfer pricing policies and procedures.   ValueScope’s team of professionals extends this expertise to help healthcare service companies develop arms-length agreements between and among separate healthcare organizations.  We specialize in creating optimal financial analytics to support compliance requirements.

FAIR VALUE FOR FINANCIAL REPORTING (COMPLIANCE)

ValueScope provides a combination of in-depth healthcare industry knowledge with a strong understanding of the nuances and best practices surrounding fair value in a GAAP reporting environment, including purchase price allocations, intangible asset and goodwill impairment testing, not-for-profit entities, and other assets, liabilities, and equity securities.

Our team of Chartered Financial Analysts, CPAs, appraisers and corporate finance experts help you successfully navigate mergers, offers, unusual transactions, reporting requirements and other difficult challenges. We’re known for taking on and solving the most difficult problems — the ones our competitors aren’t sure how to handle.

INTELLECTUAL PROPERTY AND INTANGIBLE ASSET VALUATION

ValueScope has extensive experience in valuing intellectual property and other types of intangible assets. Having analyzed and overseen the valuation of hundreds of businesses, our healthcare valuation experts have gained the technical background necessary to analyze complex intellectual property valuations including:

• Contract-related (e.g., favorable supplier or other product/service contracts)
• Customer-related (e.g., customer lists and customer relationships)
• Data processing-related (e.g., computer software, automated databases)
• Engineering-related (e.g., patents, trade secrets)
• Goodwill-related (e.g., going-concern value)
• Human capital-related (e.g., employment agreements, a trained and assembled workforce)
• Internet-related (e.g., domain names, process applications, services, and delivery systems)
• Literary-related (e.g., literary copyrights, musical composition copyrights)
• Location-related (e.g., leasehold interests, certificates of need)
• Marketing-related (e.g., trademarks and trade names)
• Technology-related (e.g., engineering drawings and technical documentation)

FIXED ASSET VALUATIONS

ValueScope’s healthcare valuation experts are recognized for their knowledge and expertise performing FMV fixed asset valuations for transactions and other financial schemes taken part in by physicians, hospitals and other healthcare organizations.  As medical equipment plays an important role in the healthcare industry, reliable and defensible FMV opinions are crucial.  Our healthcare valuation experts offer our clients peace of mind on each project.

Fixed asset valuations include fair market value, orderly and forced liquidation valuations of medical equipment, office and computer equipment, software, leasehold improvements and supplies inventory.

Our fixed asset valuation services serve a variety of purposes for our clients, including:

• Anti-Kickback Statute and Stark Law Compliance
• Medical Equipment Leasing and Financing
• Impairment of Fixed Assets
• Loan Collateralization and Support
• Strategic Planning
• Mergers and Acquisitions
• Purchase Price Allocation
• Tax Purposes