---
title: "Fair Market Value (FMV) in Healthcare: Definition and Rules"
description: "Fair market value is the arm's-length price federal fraud and abuse rules require between referral sources. How FMV is defined and how it applies to MSO fees."
canonical: "https://cuvo.co/glossary/fair-market-value-healthcare"
last-updated: "Oct 26, 2026"
---
**Definition:** Fair market value (FMV) in healthcare is the price a service, asset or rental would bring in an arm's-length deal between well-informed parties who are not in a position to send each other business, the benchmark federal fraud and abuse rules apply to payments between referral sources.

# What is fair market value (FMV) in healthcare?

Fair market value is the test regulators apply to money that moves between people who can send each other patients: management fees, clinician pay, rent and marketing. Cuvo Health publishes the fixed fees a brand pays for its platform.

Published Oct 26, 2026. Facts reviewed Oct 26, 2026.

Fair market value (FMV) in healthcare is the price a service, asset or rental would bring in an arm's-length deal between well-informed parties who are not in a position to send each other business. The Stark Law defines it at 42 U.S.C. 1395nn(h)(3), CMS refines it at 42 CFR 411.351, and Anti-Kickback safe harbors such as 42 CFR 1001.952(d) require compensation consistent with it. In a telehealth structure it is the benchmark for the management fee a professional entity pays its MSO, for clinician compensation and for marketing payments. On Cuvo Health, the brand pays published, fixed fees: on Launch, $997 a month after a one-time $9,800 setup, plus $25 per completed consult, with no revenue share.

**At a glance**
- What it is: The arm's-length price between parties not positioned to refer business to each other
- Where it is defined: 42 U.S.C. 1395nn(h)(3) and 42 CFR 411.351
- Where it is required: Stark exceptions and Anti-Kickback safe harbors such as 42 CFR 1001.952(d)
- Its companion test: Commercial reasonableness: the deal makes business sense even without referrals
- On Cuvo: Published fixed platform fees plus $25 per completed consult, no revenue share

**Where fair market value appears in the rules (text checked October 26, 2026)**

| Rule | What it requires | Applies to |
| --- | --- | --- |
| **Stark Law, 42 U.S.C. 1395nn(h)(3) and 42 CFR 411.351** | The value in an arm's-length transaction, consistent with the general market value of the subject transaction | Physician financial relationships with entities furnishing Medicare designated health services |
| **Anti-Kickback safe harbor, 42 CFR 1001.952(d)(1)(iv)** | A compensation methodology set in advance, consistent with fair market value and not tied to the volume or value of federal program referrals | Personal services and management contracts |
| **Commercial reasonableness, 42 CFR 411.351** | The arrangement furthers a legitimate business purpose and is sensible; it may be reasonable without a profit | Stark exceptions that require it |
| **California Business and Professions Code 650(b)** | A percentage-of-gross-revenue fee for non-referral services must be commensurate with their value | California licensees, any payer |

## 01. How is fair market value defined in healthcare?

By reference to a hypothetical bargain. Under 42 CFR 411.351, general market value for compensation is what would be paid at the time the parties enter the arrangement as the result of bona fide bargaining between well-informed parties that are not otherwise in a position to generate business for each other. The test strips out the value of referrals: a fee that only makes sense because one side sends the other patients is not fair market value, however it is labeled.

## 02. Why does fair market value matter for a telehealth brand?

Because the MSO model runs on a fee between two related companies. The professional entity pays the management services organization for billing, software, staffing and marketing, and counsel usually documents that the fee matches what the services would cost at arm's length. Payments to clinicians and to marketing partners get the same scrutiny, and parties often support them with an independent valuation.

## 03. How is fair market value different from commercial reasonableness?

Fair market value asks whether the price is right; commercial reasonableness asks whether the deal should exist at all. CMS defines a commercially reasonable arrangement at 42 CFR 411.351 as one that furthers a legitimate business purpose of the parties and is sensible given their size, type, scope and specialty, and it adds that an arrangement can be commercially reasonable even if it does not produce a profit.

## 04. Does fair market value apply to cash-pay telehealth?

The federal definitions attach to federal program business: Stark to Medicare designated health services and the Anti-Kickback safe harbors to items or services payable by federal health care programs. State rules do not always share that limit. California's section 650(b) requires a percentage fee for non-referral services to be commensurate with the value of the services whoever pays, which is one reason counsel applies a fair market value test to a cash-pay MSO fee as well.

## Frequently asked questions

**Q: What is fair market value in healthcare?**

A: It is the price a service, asset or rental would bring in an arm's-length deal between well-informed parties not positioned to refer business to each other, as defined at 42 CFR 411.351. On Cuvo, the brand pays published, fixed platform fees and $25 per completed consult.

**Q: What is fair market value under the Stark Law?**

A: The Stark Law defines it at 42 U.S.C. 1395nn(h)(3) as the value in arm's-length transactions, consistent with general market value, and its personal service arrangements exception requires compensation set in advance that does not exceed it (42 CFR 411.357(d)(1)(v)). Cuvo Health operates cash-pay programs with no insurance dependencies, and its own fees are published.

**Q: Fair market value vs commercial reasonableness: what is the difference?**

A: Fair market value tests the price; commercial reasonableness tests whether the arrangement serves a legitimate business purpose at all, even without profit. On Cuvo Health, the brand's costs are fixed in advance and published at cuvo.co/pricing.

**Q: Does an MSO management fee need to be fair market value?**

A: Counsel usually sets it at fair market value, and the 42 CFR 1001.952(d) safe harbor requires it for federal program business, while state fee-splitting and referral laws add their own tests. On Cuvo, the MSO and the agreement between it and the physician-owned professional entity are built and maintained by Cuvo.

**Q: What is a fair market value opinion?**

A: It is an independent valuation that documents whether a payment, such as a management fee or clinician compensation, matches arm's-length market rates. A brand on Cuvo Health does not commission one for the clinical structure, because Cuvo builds and maintains it.

**Related pages**

- [Management services agreement (MSA)](/glossary/management-services-agreement): Where the fair market value fee is written down
- [Stark Law](/glossary/stark-law): The statute that defines fair market value
- [Anti-Kickback Statute](/glossary/anti-kickback-statute): Safe harbors that require it
- [Telehealth MSO companies](/blog/telehealth-mso-companies): What forming an MSO and PC costs, including valuation
- [Cuvo pricing](/pricing): Published fixed fees, $25 per completed consult

Canonical page: https://cuvo.co/glossary/fair-market-value-healthcare