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.

USPAP Services USPAP describes two kinds of appraisal analysis and three kinds of appraisal reporting formats. Appraisal Analyses Complete Appraisals AKA:Complete Analysis Appraisals, Full Analysis Appraisals, Full AppraisalsIncludes:All applicable analyses and approaches to valueExample:Appraisals for mortgage underwriting at the federally insured bank Limited Appraisals AKA:Limited Analysis Appraisals, Appraisals prepared using the Departure Provision, Agreed-upon Procedure and Analysis Appraisals, Client-Defined Scopes of Services AppraisalsIncludes:Only those applicable analyses and approaches to value to that the client reasonably requestsExample:A cost analysis of an office building to determine insurable value for insurance underwriting Appraisal Reporting Formats Self-Contained AKA:Full Narrative Reports, Full NarrativesIncludes:Full descriptions throughout the appraisal reporting processExample:Appraisals for mortgage underwriting at the federally insured bank Summary Reports   AKA:Executive Summary ReportsIncludes:Summary descriptions of critical appraisal processesExample:Update Appraisals, Appraisals and Consulting for Tax and Audit Purposes Restricted Use Reports AKA:Letter AppraisalsIncludes:Lists critical appraisal processesExample:Acquisition or Disposition Due Diligence Support Appraisal and Consulting Services These appraisal analysis and reporting format types can be used for traditional appraisals of real estate, personal property or businesses, as well as for appraisal reviews, appraisal consulting, feasibility studies, market studies, mass appraisals, appraisals using automatic valuation models and others. Links to USPAP Statement on Appraisal Standards No. 7 (SMT-7) and Advisory Opinion 15 (AO-15) provide advice and description of Complete Appraisal and Limited Appraisals. Advisory Opinion 11 (AO-11) provides a summary description of the three reporting formats. USPAP Compliant Page

You may be pleasantly surprised to find that Federal Appraisal, LLC has standardized services and products tailored for professionals from specific disciplines and their needs. In particular, our firm is focused on services for attorneys and accountants. Nonetheless, we are uniquely qualified and fully capable of providing services for nearly any professional client type. It is strongly recommended that clients call us to discuss their particular needs for each project or issue, so that we may propose the most appropriate, cost-effective service or product. In addition to our standard appraisals, we are able to customize services and products for each client and engagement. Please see our other Services and Solutions pages. The following links list typical clients for Federal Appraisal LLC. Accountants Attorneys and Courts Government Agencies, Authorities, and Representatives Corporation and Businesses, Large and Small Investors and Property Managers Other Client Types Bankers and Loan Underwriters Capital Markets and Wall Street Participants Not for Profits and Others

Others & Not-for-Profits Federal Appraisal, LLC is uniquely qualified to serve. While we have attempted to list on our web pages the client types that we serve, we have not listed them all. It is strongly recommended that clients, who do not fall into a clearly defined category, call us to discuss their particular needs for each project or issue, so that we may propose the most appropriate, costeffective service or product. Insurance Companies 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. Federal Appraisal also provides Insurable Value appraisals. Not-for-Profit Organizations Federal Appraisal has substantial experience servicing not-for-profit organizations. Their organizational structures impact their need for appraisal services. They have unique requirements for reporting to their boards and other oversight groups. They are cost sensitive. While real estate activities that they require assistance with often represent one of the most significant financial decisions of the organization, the real estate training, knowledge, and experience are beyond that of the best run not-for-profit organizations. Unfortunately, all too often, not-for-profit organizations wait too long before contacting real estate professionals or they’re not even aware that they can obtain assistance for their particular needs.