What to Know

• Recent federal enforcement activity suggests regulators expect healthcare organizations to demonstrate robust compensation governance, not just FMV and commercial reasonableness support.
• As provider compensation models become more complex, organizations need stronger processes for reviewing, approving, and monitoring compensation arrangements.
• Effective compliance depends on governance frameworks that extend beyond valuation analysis to include oversight, documentation, and ongoing monitoring.

The HHS-OIG Spring 2026 Semiannual Report sends a clear message: Healthcare oversight remains a major priority. During the six-month reporting period ending March 31, 2026, the OIG reported $5.56 billion in monetary impact, more than 600 criminal and civil enforcement actions, and over 1,200 program exclusions. The agency also reported generating $12.70 in expected recoveries and receivables for every dollar invested in oversight efforts.

For many healthcare organizations, provider compensation compliance has historically focused on obtaining fair market value (FMV) and commercial reasonableness (CR) support. While those reviews remain essential, recent enforcement activity suggests regulators increasingly expect organizations to demonstrate broader compensation governance, including effective documentation, oversight, monitoring, and internal controls.

As discussed below, with the rising complexity of compensation arrangements and administration, a valuation opinion alone may not be sufficient to identify and mitigate compliance risk.

Provider Compensation Has Become More Complicated

As organizations respond to workforce shortages and competitive recruiting pressures, compensation plans are becoming more customized and, in many cases, more difficult to govern. Today’s provider compensation arrangements often include:

• Quality and value-based incentives.
• Recruitment and retention payments.
• APP supervision compensation.
• Medical directorship stipends.
• Leadership and administrative roles.
• Call coverage arrangements.
• Access and growth incentives.

With these new levels of complexity, the challenge is no longer simply determining whether compensation is FMV but ensuring compensation decisions are reviewed, approved, documented, and monitored consistently across the organization.

FMV Thresholds May Be Outdated and Insufficient for Proper Compliance Monitoring

Health systems often use FMV thresholds as part of their compensation governance framework. These thresholds help indicate when additional review, committee involvement, executive approval, or external valuation support may be needed-typically, when compensation approaches or exceeds predetermined benchmarks.

At many organizations, those governance thresholds were established years ago under very different market conditions. Since then, physician compensation levels have risen, hiring pressures have intensified, and compensation arrangements have become significantly more complex. It is critical, therefore, that organizations periodically reassess their thresholds to determine whether they still:

• Reflect current market realities.
• Support efficient decision-making.
• Accurately identify arrangements that warrant enhanced oversight.
• Promote consistency across the enterprise.

FMV thresholds should not function as compensation caps; rather, they should serve as escalation tools to help organizations determine when additional review and documentation may be appropriate.

Compensation Governance Must Consider More Than FMV

One of the recurring themes throughout the OIG’s report was the importance of effective oversight and controls. The OIG identified billions of dollars in monetary impact, hundreds of enforcement actions, and numerous examples where inadequate oversight contributed to improper payments or compliance concerns. A holistic governance structure that encompasses the business rationale, approval processes, supporting documentation, compensation methodology, and ongoing monitoring procedures should enable organizational leaders to answer the following questions consistently and confidently:

• Why was the compensation decision made, and who approved it?
• How does the arrangement support organizational needs and objectives?
• Were governance policies and approval requirements followed?
• Were any exceptions identified and appropriately documented?
• Is there sufficient documentation supporting the services and compensation?
• Has the arrangement been periodically reassessed to account for changes in duties, workload, or market conditions?

The Bottom Line: There’s No Compliance Without Adequate Governance

Provider compensation will continue to evolve, and as compensation arrangements become more sophisticated, healthcare organizations must ensure their governance frameworks evolve as well. Reviewing FMV thresholds, approval processes, escalation procedures, and documentation standards can help create a more defensible and consistent approach to compensation decision-making. In an environment where regulators continue to emphasize accountability and oversight, the strength of an organization’s governance framework may be just as important to compliance as the compensation value itself.