Arizona provider glossary

What is fair market value (FMV)?

N
Naomi Fayzulayev, FNP-C
Founder, Beso Provider Hub
Updated October 2026
Definition
Compensation that reflects the real value of services provided.
Fair market value (FMV) is compensation consistent with what would be paid in an arm's-length arrangement for the services actually provided, and not set by reference to the volume or value of patient referrals or revenue. In medical director arrangements, it is the reason many advisers recommend flat fees.

Why it matters for directorships

Paying a director a share of revenue or a fee per procedure can tie compensation to volume. Federal anti-kickback rules and state fee-splitting rules are the reasons advisers steer toward a flat fee for a defined scope. Which rules apply to a particular practice depends on its payers and structure, so ask your attorney.

How flat fees are usually set

Document the basis

Record how the fee was derived in the medical director agreement or a supporting file. See also our cost guide, Medical director cost in Arizona.

Note
Ranges are estimates

Published ranges for director fees are market estimates, and actual fees depend on scope. Treat any range as a starting point.

Why it comes up

Fair market value matters wherever one party pays another for services, such as a medical director arrangement. A documented, reasonable basis for the amount helps show the payment reflects real work rather than something else.

Common mistakes

Frequently asked

Is a percentage-of-revenue fee always prohibited?

Not always in every setting, but it can raise fee-splitting and kickback concerns, which is why flat fees are the common recommendation. Check with an Arizona healthcare attorney.

What counts as fair market value?

There is no single number. It is what the services would command in an arm's-length deal, given their scope, time and complexity.

Note
Definitions, not advice

Educational information only, not legal or clinical advice. Rules and Board positions change, so confirm current requirements with the relevant Arizona licensing board and an Arizona healthcare attorney.

Not sure what a director should cost?

We provide flat-fee engagements scoped to your service menu.

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