Stark and AKS Appraisals The Department of Health and Human Services (HHS), on November 20, 2020, released final rules for the federal physician self-referral law (Stark) and the anti-kickback statute (“AKS”). Protections for value-based arrangements clarify existing Stark and AKS requirements to better coordinate value-based care and clarify confusion and burdens. Most of these changes have taken effect on January 19, 2021. The Centers for Medicare & Medicaid Services (“CMS”) changed definitions of “fair market value” under the new final rule 42- CFR 411.511. Fair market value is the value in an arm’s length transaction and would apply to both the rental of office space and rental of equipment. The definition is to stay consistent with the general market value of the subject transaction. The compensation must not take into account the volume or value of the referrals. It does not include the additional value the prospective lessee or lessor would attribute to the proximity or convenience to the lessor where the lessor is a potential source of patient referrals to the lessee. The “general market value” has been clarified with the respect to rental of office space and rental of equipment as the price that rental property would bring at the time the parties enter into the rental arrangement as the result of bona fide bargaining between a well-informed lessor and lessee that are not otherwise in a position to generate business for each other. However, the CMS will continue to allow valuation methodology that is commercially reasonable and provide evidence of compensation that is comparable to what is ordinarily paid for an item or service in a certain location by arm’s length parties. The definitions for fair market value and general market value is described below. Fair Market Value – Revenue Ruling 59-60 “The price, expressed in terms of cash equivalents, at which a property would change hands between a hypothetical willing and able buyer and a hypothetical willing and able seller, acting at arm’s length in an open and unrestricted market, In Archive May 2021 July 2020 June 2020 April 2020 March 2020 August 2017 August 2014 April 2014 Stark & AKS Appraisals when neither is under compulsion to buy nor to sell, and when both have reasonable knowledge of the relevant facts.” (IRS Rev Ruling 59-60) General Market Value – Stark Law (42 C.F.R. 411.351) With regards to the following categories, General Market Value means: 1Assets. With respect to the purchase of an asset, the price that an asset would bring on the date of acquisition of the asset as the result of bona fide bargaining between a well-informed buyer and seller that are not otherwise in a position to generate business for each other. Compensation. With respect to compensation for services, the compensation that would be paid at the time the parties enter into the service 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. Rental of equipment or office space. With respect to the rental of equipment or the rental of office space, the price that rental property would bring at the time the parties enter into rental arrangement as the result of bona fide bargaining between a well-informed lessor and lessee that are not otherwise in a position to generate business for each other. Under these statutes, it is important to remember that there is a new developing standard that appraisals are permitted to use. Commercial Reasonableness, 42- C.F.R. 411.351, means that a particular arrangement furthers a legitimate business purpose of the parties to the arrangement and is sensible, considering the characteristics of the parties, including their size, type, scope, and specialty. An arrangement may be commercially reasonable even if it does not result in profit for one or more of the parties. Federal Appraisal LLC performs valuations according to these methodologies for Clients who have concerns as to how these regulations apply to lease transactions and purchase transactions. In all cases, clients must make sure that these transactions fall under the fair market value definition mandated by the CMS. There are nuances and unique considerations that require qualified appraisers to sort out. Real estate transactions in the healthcare industry are more complex than general commercial transactions. Federal Appraisal LLC understands these statutes and can ensure consistency with these new definitions. If you have any additional questions, please do not hesitate to call us at 908-534- 3590 or email us at mark@federalappraisal.com. The Department of Health and Human Services (HHS), on November 20, 2020, released final rules for the federal physician self-referral law (Stark) and the antikickback statute (“AKS”). Protections for value-based arrangements clarify existing Stark and AKS requirements to better coordinate value-based care and clarify confusion and burdens. Most of these changes have taken effect on January 19, 2021. The changes will impact appraisals. Federal Appraisal LLC can provide appraisals that meet these new rules. The Centers for Medicare & Medicaid Services (“CMS”) changed definitions of “fair market value” under the new final rule 42- CFR 411.511. Fair market value is the value in an arm’s length transaction and would apply to both the rental of office space and rental of equipment. The definition is to stay consistent with the general market value of the subject transaction. The compensation must not take into account the volume or value of the referrals. It does not include the additional value the prospective lessee or lessor would attribute to the proximity or convenience to the lessor where the lessor is a potential source of patient referrals to the lessee. The term “general market value” has been clarified with the respect to rental of office space and rental of equipment as the price that rental property would bring at the time the parties enter into the rental arrangement as the result of bona fide bargaining between a well-informed lessor and lessee that are not otherwise in a position to generate business for each other. However, the CMS will continue to allow valuation methodology that is commercially reasonable and provides evidence of compensation that is comparable to what is ordinarily paid for an item or service in a certain location by arm’s length parties. The definitions for fair market value and general market value are described below. Fair Market Value – Revenue Ruling 59-60 “The price, expressed in terms of cash equivalents, at which a property would change hands between a hypothetical willing and able buyer and a hypothetical willing and able seller, acting at arm’s length in an open and unrestricted market, when neither is under compulsion to buy nor to sell, and when both have reasonable knowledge of the relevant facts.” (IRS Rev Ruling 59-60) General Market Value – Stark Law (42 C.F.R. 411.351) With regards to the following categories, General Market Value means: Assets. With respect to the purchase of an asset, the price that an asset would bring on the date of acquisition of the asset as the result of bona fide bargaining between a well-informed buyer and seller that are not otherwise in a position to generate business for each other. Compensation. With respect to compensation for services, the compensation that would be paid at the time the parties enter into the service 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. Rental of equipment or office space. With respect to the rental of equipment or the rental of office space, the price that rental property would bring at the time the parties enter into rental arrangement as the result of bona fide bargaining between a well-informed lessor and lessee that are not otherwise in a position to generate business for each other. Under these new statutes, it is important to remember that there is a new developing standard that appraisals are permitted to use, “commercial reasonableness”. Commercial Reasonableness, 42- C.F.R. 411.351, means that a particular arrangement furthers a legitimate business purpose of the parties to the arrangement and is sensible, considering the characteristics of the parties, including their size, type, scope, and specialty. An arrangement may be commercially reasonable even if it does not result in profit for one or more of the parties. Federal Appraisal LLC performs valuations according to these methodologies for Clients who have concerns as to how these regulations apply to lease transactions and purchase transactions. In all cases, clients must make sure that these transactions fall under the fair market value definition mandated by the CMS. There are nuances and unique considerations that require qualified appraisers to sort out. Real estate transactions in the healthcare industry are more complex than general commercial transactions. Federal Appraisal LLC understands these statutes and can ensure consistency with these new definitions. If you have any additional questions, please do not hesitate to call us at 908-534- 3590 or email us at mark@federalappraisal.com.

International Financial Reporting Standards Federal Appraisal, LLC has appraisal experts to support your company’s transition and yearly International Financial Reporting Standards (“IFRS”) valuation requirements.  FAC has long been a provider of appraisal services to the accounting industry, and to those in need of complex appraisal services. The main benefit of IFRS is harmonization.  Global businesses and international investors need to have accounting information that they can understand when running businesses and making investment decisions. Convergence to IFRS however presents two major valuation reporting challenges: 1. Valuation variances from reporting period to period, which could increase the volatility of reported earnings from period to period. 2. Cost of appraisals and appraisal management. Under IFRS (if elected), companies will need to revalue certain assets on a regular (yearly) basis.  Therefore, market valuations will vary from period to period and sometimes substantially.  This will result in an increase in volatility of the reported earnings, compared to some current reporting methods.  While reporting the actual market value of the assets owned by a company is one of the main goals of IFRS, special efforts are needed to limit or eliminate earnings volatility that could result from unwise or unnecessary appraisal and appraisal management practices.  FAC offers the appraisal and appraisal management best practices needed to control and minimize the possible volatility in reported values and earnings while keeping costs down. Recommendations to IFRS Adapters and Managers 1. Plan a company-wide integration. IFRS impacts more than just the central business financial reporting; it will impact departmental and subsidiary activities.  Also it will impact more than just investor reporting; it will impact merger and acquisitions (M&A), tax reporting, treasury/borrowing functions, and legal and compliance due diligence. 2. Allocate proper resources. Valuation and appraisal is a specialized professional service.  Adequate IFRS appraisal expertise is often not available within a company. 3. Confirm independence as required in IFRS reporting. Like the need for independent audit services, IFRS appraisal services must be independent and objective, and certified as such. 4. Establish best practices policies and procedures. IFRS, as a principles-based system, allows for significant interpretation. Understanding the implications of various interpretations will require the services of professionals with advanced knowledge and experience.  The advanced knowledge and experience should be utilized early in order to avoid later changes which will impact the volatility of reported earnings.

Bankruptcy Federal Appraisal provides full support to accountants, attorneys, and their clients, be they creditors or debtors. We provide appraisals for fair market valuation, fresh start accounting, damages, and lost income computations, and we provide expert testimony and litigation support. We provide real property, personal property, and business appraisals/services for use in bankruptcy contexts.

Litigation Federal Appraisal, LLC provides expert testimony, dispute resolution, litigation and technical support for complex real estate and business litigation issues.  We provide our clients with both geographical and topical dispute resolution support expertise, regardless of where the assets are located, what type of assets are involved, and what kind of issues are involved. Our services include: Expert Testimony Property Tax Appeals Bankruptcies and Reorganizations Support for Partnership Disputes Support for Landlord/Tenant disputes Traditional and Non-Traditional Valuation and Appraisal Services Value, Income and Yield Analyses Business Interruptions and Damages Estimates Environment Issues Lease Audit & Analysis Financial or Operations Analysis Support for the Cross Examination of Experts Fairness Opinions and Comfort Letters Research Services, including Economic, Demographic and GIS Statistical Analysis Services, including Regression Analysis, Options Pricing Market Positioning Strategies Arbitration and Mediation Because real estate and business appraisal issues are often complex, dispute resolution sometimes requires the coordination of multidisciplinary teams.  We strongly recommend to our clients that they engage valuation experts as early as possible in the dispute resolution process.  We are convinced the great number of lengthy and costly disputes could be avoided or could be resolved more quickly, if the parties to dispute were in possession of proper valuation services earlier in the process.  Unfortunately, all too often, parties to the dispute are under the mistaken impression, that because of the cost, valuation services should not be obtained until late into the process.  There are, in fact, numerous consulting services available to the parties involved in the dispute that are both appropriate for use early in the dispute and are relatively inexpensive. Click Considerations for Valuation and Litigation  for an article written by Mark Pomykacz, the Managing Partner of Federal Appraisal, LLC, on the topic of litigation and real estate appraisal expert. Business Interruption Consulting, Damages Estimates Federal Appraisal, LLC provides consulting and appraisal services to individuals and companies suffering from business interruptions and damages from natural and man-made disasters and accidents.  If the loss or diminution of the use of your real estate is causing a loss in business income and/or is reducing the utility or value of your real estate, then Federal Appraisal, LLC may be able to help you recoup your damages.  Even tenants in damaged or reduced utility space can benefit from our services. The actual or alleged loss or damage might be from contractual breaches, environmental conditions, weather, physical damages, from external-to-the-site conditions, or from malfeasance or non-feasance. Federal Appraisal, LLC provides appraisals of damages, lost income and stigma for negotiations, and court testimony for or against insurance companies, property owners and defendants. Management Consulting Issues and Solutions for Attorneys Federal Appraisal provides user-defined scopes of services and agreed upon procedures services relating to attorneys. Securities and Exchange Commission (SEC) Federal Appraisal, LLC provides the real estate and business appraisals and valuation reporting support required by the SEC.  See our SEC page for more information. Internal Revenue Service (IRS) Federal Appraisal, LLC provides the real estate and business appraisals and valuation reporting support required by the IRS.  See our IRS page for more information. Federal Appraisal, LLC is not a law firm or an accounting firm.  As such it does not offer legal or audit opinions.  Federal Appraisal can obtain and/or manage those services for its clients, and Federal Appraisal can offer referral to law firms and/or accounting firms for such services.