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Pitfalls in Analyzing Fair Market Value of Physician Compensation - Stacking

Posted 12:01 PM by

The issue of "stacking" compensation comes up as discussion point on fair market value engagements routinely. 

Simply put, stacking generally means being paid for two different services at the same time. For example, if a spine surgeon is receiving compensation for providing restricted call coverage to a hospital, the hospital is advised to not also pay the physician separately for performing teaching duties or medical direction. 

The compensation for both services can create a "stacking" effect that can result in total compensation outside of the range of fair market value, creating Stark compliance problems.

A great way to recognize the physician's teaching efforts while working on-call would be to clearly state the expanded scope of services in the call arrangement contract. This would allow an appraiser to capture the value of the teaching services in the on-call compensation. 

Typically, expanded scopes of service allow appraisers to increase the allowable amount of compensation relative to the market range of data. For example, a 15-hour per week teaching commitment included in an on-call arrangement may allow an appraiser to be comfortable that compensation at the median is appropriate, when, if the teaching was not included, the 25th percentile of market data may have otherwise been the high end of the range of fair market value.

Stacking can come in many forms, but it is always important to be careful that payments for any services do not overlap (are double counted) and do not stack.

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Katz, Sapper & Miller’s Healthcare Resources Group serves healthcare providers, including physicians, hospitals and health systems, surgery centers, and long-term care facilities. Our team of healthcare professionals has the scope and depth to meet client needs. Learn more.

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