BVR Logo February 17, 2021 | Issue #221-3

BVWire is your go-to source for the latest in the business valuation profession. Highlights for this week include:

Is the new CMS rule that impacts healthcare valuations now at risk?

This past December, the Centers for Medicare & Medicaid Services (CMS) released a final rule that modernizes and clarifies the regulations that implemented the Medicare physician self-referral statute (the Stark Law). The new rule, effective Jan. 19, 2021, is designed to make it easier for hospitals and physicians to maintain compliance with the statute in the era of value-based care. The rule impacts healthcare valuations and includes guidance on how to determine whether the compensation being given to physicians is at fair market value.

We’ve read several articles (see one here) indicating that the new rule may be at risk of delay or replacement due to the GAO’s finding of a technical deficiency, i.e., CMS failed a required 60-day notice period for the new Stark regulations. As a result, the articles say the new rule may be impacted by President Biden’s memo of January 20 announcing a regulatory freeze, thus raising the possibility that the new administration may revisit and revise the final rule.

Tim Smith (TS Healthcare Consulting LLC) tells BVWire that, based on what he has heard within the healthcare community, it is unlikely that the new Stark regs will be changed or delayed, despite the technicalities of the notice period and the regulatory hold. Smith is the co-author of the BVR/AHLA Guide to Valuing Physician Compensation and Healthcare Service Arrangements.

Mollie Gelburd, associate director of government affairs at the Medical Group Management Association (MGMA), agrees that it is not likely that the new rule will be delayed or revised. While the GAO finding (see it here) says that the rule indeed failed the notice period that requires a 60-day delay from the date the rule is published to when it is effective, the Biden administration would have to make an argument that, because of that, the rule did not go into effect on January 19 and thus falls under the regulatory freeze signed one day later. That is unlikely, says Gelburd, for several reasons. “It is unclear whether President Biden has the authority to do that and the rule has bipartisan support,” she tells BVWire. “Also, the rule has the support of the healthcare provider community which has its hands full with the pandemic, so I don’t see President Biden trying to exert authority to have the new rule fall under the freeze memo.” Congress could strike down the rule under the Congressional Review Act (CRA), Gelburd explains, but that is also unlikely. “Congress has largely been supportive of the Stark regulations,” she points out, “so they are not likely to choose to undo the new rule.”

The position of CMS is that the regulations are in effect as scheduled. Smith reached out to CMS, which issued this statement: “The regulations finalized in CMS-1720-F (Medicare Program; Modernizing and Clarifying the Physician Self-Referral Regulations) are effective, except for the revisions to 42 CFR 411.352, which have the delayed effective date set forth in the final rule in order to give physician practices that qualify as ‘group practice’ time to comply with any changes that may affect their physician compensation models.”

Smith and Mark Dietrich (Mark O. Dietrich CPA PC), both of whom gave input to CMS during the development of the rule, conducted a BVR webinar that discussed its impact on healthcare valuation. A recording of their webinar is available if you click here (free for BVR Training Passport Pro holders).

NICE DLOM method gets a nice boost

The nonmarketable investment company evaluation (NICE) method for estimating a discount for lack of marketability (DLOM) first appeared in 2006 and is included in leading valuation books. But it has not gained much traction and had not appeared in any court cases—until now, according to an article in the upcoming March issue of Business Valuation Update. The article includes a portion of the Tax Court transcript in which the IRS expert gives his opinion of the method. The method’s developer, William H. Frazier (W.H. Frazier & Co. Inc.), was one of the experts in the case. Also, the article points out that a streamlined version of the model will be out soon.

While NICE is referred to in the context of estimating a DLOM, it does not determine DLOM as a separate and distinct amount. Instead, it is an income-based method that embodies the DLOM as well as discounts for control and lack of liquidity in the discount rate and views them as investment risks. The method is not designed for operating businesses. As its name implies, it is designed specifically for determining the fair market value of equity interests in closely held investment entities, such as family limited partnerships, S corporations, and limited liability companies.

Today! ‘Integrated Theory’ authors kick off webinar series

A very special BVR webinar series begins today with the authors of Business Valuation: An Integrated Theory, Z. Christopher Mercer and Travis W. Harms (both with Mercer Capital). They will present the first in a three-part series of webinars based on their acclaimed book, which is designed to demystify modern valuation theory and show how to apply fundamental valuation concepts. The first installment is today, February 17, and it will give a conceptual overview of the integrated theory and explore its fundamental principles. The authors will then describe the integrated theory on an equity basis, giving particular attention to the conceptual scaffolding that it provides to discussions of the levels of value and the associated valuation discounts and premiums. They will conclude this installment by extending the conceptual basis for the integrated theory to the enterprise value perspective.

Discount offer: Webinar attendees get a special $30 discount on the book. For details on the webinar and how to register, click here (this webinar is included in BVR’s Training Passport Pro holders).

FASB OKs goodwill triggering standard update for private firms

The Financial Accounting Standards Board has decided to give private companies and not for profits the option to assess at a later point a situation that might trigger a goodwill impairment. This change is designed to address the cost and complexity of having to perform triggering event evaluations and measure potential impairment in interim periods although they only prepare GAAP financial statements annually. FASB expects to publish the new standard in late March and entities that exercise this option don’t have to monitor for triggering events in between reporting periods. This is part of the FASB’s efforts to advise companies on how to account for the impact of the pandemic, and it has delayed implementation of certain rules. Separately, FASB is working on a new standard that will require companies to write down a portion of goodwill each year, instead of doing annual impairment testing.

ASA announces hybrid annual conference for
Las Vegas

The American Society of Appraisers (ASA) has announced that this year’s International Appraisers Conference will be held October 24-26. This will be a hybrid event featuring a “live” in-person event at a physical location in Las Vegas combined with a simultaneous “virtual” online option for remote attendees. BVWire has been a regular attendee of this conference, and it has always had a strong agenda featuring the latest trends presented by top thought leaders in the profession. Conference details will be available soon.

IVSC roundtable on new standards for
financial instruments

The International Valuation Standards Council (IVSC) will hold a virtual roundtable on February 18 on the proposed new international standards governing the valuation of financial instruments. The IVSC’s Financial Instruments Board issued an exposure draft, and comments are due April 19. During the webinar, members of the board, led by Gavin Francis, will discuss the background to the initiative and share details of the current exposure draft. You can register for the webinar if you click here.

Extra: The IVSC is looking to recruit new members for its Financial Instruments Standard Board. Applications are due by March 31. For details, click here.

BV movers . . .

People: Shivam Jadeja, CPA/CGMA, ABV, CFE, ASA, has joined BKHM (Winter Park, Fla.) as the director of the firm’s forensic and valuation services practice; he brings over 12 years of experience in providing business valuation, forensic accounting, and litigation services … Miami-based Kaufman Rossin has announced the promotion of José Cúneo, CPA, CFF, CVA, CFE, to principal; he is a leader in the firm’s forensic, advisory, and valuation practice and provides consulting and expert witness testimony on accounting and general commercial matters, as well as financial fraud investigations, embezzlement investigations, and various due diligence matters … Christopher (Chris) Owen, CPA/ABV, CEIV, CFE, has been promoted to manager in the transaction advisory and litigation support services practice at Brown Smith Wallace (St. Louis); he has served clients in various industries including financial services, technology, healthcare, life sciences, and consumer and industrial.

Firms: New York-based EisnerAmper LLP is adding Merchantville, N.J.-based St. Clair CPAs, a firm with more than 40 practice areas including franchises, construction, employee benefit plans, manufacturing, mortgage banking, service industries, nonprofits and schools, real estate, and several other areas; the firm has five partners and 58 professionals across two offices … Indianapolis-based Somerset CPAs is adding Rowley & Co. of Michigan City, Ind., a firm that provides accounting, tax, and consulting services to clients throughout northwest Indiana, southwest Michigan, and the greater Chicago area … One River CPAs of Maine has added Gibson LeClair LLC, which gives the firm a larger presence in the Augusta area.

Please send your professional and firm news to us at

CPE events

Not to be missed! This is the first webinar in a three-part series on the integrated theory of business valuation presented by the authors of the acclaimed book that describes a framework to help valuation analysts develop base valuation conclusions, discounts, and premiums that are rooted in a shared perspective of the subject company and the subject ownership interest.

Using forensic accounting analysis, the speaker will address “rose-colored” projections and how to increase confidence levels of the projections using macro and micro market data along with statistical analysis.

We welcome your feedback and comments. Contact Andy Dzamba (Executive Editor) or Sylvia Golden, Esq. (Executive Legal Editor) at:


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