Telemedicine has spread rapidly over the past several years due to strides in technology, growing commercial
insurance coverage, and the continued shortage in the supply of physicians. Consumers
increasingly turn to telemedicine as an alternative or addition to in-person medical care.
Telemedicine is used by hospitals, health systems, provider groups, and entrepreneurial
start-ups across the world to connect directly
to patients in their own homes and on their
own schedule. Through virtual consultations
and digital health applications, providers can
extend their reach to offer remote monitoring
and medical consultations to a larger patient
base. The benefits to patients and providers
Despite new advances in healthcare tech-
nology and innovations in service delivery,
telemedicine providers and entre-
preneurs must still heed traditional
federal and state healthcare compli-
ance laws, such as the Stark Law
and Anti-Kickback Statute (AKS).
An important, but not-so-obvious,
element of structuring a compliant arrangement is to ensure the
compensation between the parties
is consistent with fair market value
(FMV) and the terms are commercially reasonable. This article
discusses the importance of FMV
and commercial reasonableness
assessments, specifically related to
telemedicine service arrangements,
and applies the concepts to four
example telemedicine offerings.
What is FMV and commercial
Government regulators expect that
any contract or arrangement between
parties who may potentially refer
healthcare items or services to each
by Christopher Fete, JD, MHA; Alianna Goff; and Nathaniel M. Lacktman, JD, CCEP
arrangements and fair
market value assessments
» The use and implementation of telemedicine is growing.
» Important compliance issues should be considered when entering into telemedicine arrangements.
» Fair market value (FMV) and commercial reasonableness are important pieces of the puzzle.
» Telemedicine arrangements vary by service type and organizational objective.
» The structure of the arrangement impacts the assessment of FMV and commercial reasonableness.
Christopher Fete ( firstname.lastname@example.org) is a manager at Pinnacle Healthcare
Consulting in St. Louis, MO. Alianna Goff ( email@example.com) is a consultant
at Pinnacle Healthcare Consulting in Houston, TX. Nathaniel M. Lacktman
( firstname.lastname@example.org) is a healthcare lawyer and partner in Foley & Lardner’s
Tampa, FL office. He serves as Chair of the firm’s Telemedicine Industry Team
and Co-Chair of the Digital Health Practice.