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57 The amended provisions are for the Stark Law exceptions for academic medical centers, bona fide employment relationships, personal service arrangements, certain physician incentive plans, group practice arrangements with a hospital, fair market value compensation, indirect compensation arrangements, and the new exception for limited . This revenue generation includes downstream revenue. At the advent of the Stark regulations, the federal law placed the referral of prosthetics (as defined by state Medicaid laws . This ensures that there is maximum compliance of regulatory statutes and prevents any violation of healthcare laws. However, we agree with the commenter that asserted that a hospital may find it necessary to pay a physician above what is in the salary schedule, especially where there is a compelling need for the physicians services. Despite the request and urging of commenters, CMS declined to establish rebuttable presumptions that compensation is fair market value or safe harbors that would deem compensation to be fair market value if certain conditions are met. Bottom line, CMS affirmed that there is no guarantee to fair market value determinationthere is no universal formula or proverbial rubberstamp as it pertains to provider compensation. The following definition is from the regulations: means the value in arm's-length transactions, consistent with the general market value. document.getElementById( "ak_js_1" ).setAttribute( "value", ( new Date() ).getTime() ); document.getElementById( "ak_js_2" ).setAttribute( "value", ( new Date() ).getTime() ); 9850 Von Allmen Court Office-based primary care has been significantly affected as offices were closed for a period of time and then had to adjust to telehealth and virtual visits. This would be incorrect. Healthcare organizations should consider both qualitative and quantitative components for FMV and commercial reasonableness analyses of financial transactions. In addition, CMS removed the "volume or value" and the "other business generated" standards . Electronic health records (EHR) safe harbor updates and removes provisions regarding interoperability; removes the December 31, 2021 sunset provision and prohibition on donation of equivalent technology; and clarifies protections for cybersecurity technology and services included in an EHR arrangement. Also, a quantitative analysis of revenue cycle should be conducted to determine if the anticipated transaction acquires any referrals during the process and to ensure that healthcare organization complies with the regulatory statutes. 1320a-7b) prohibit payments and receipt of payments given with an intent to influence the purchase of a product or services for which Medicare or Medicaid reimbursement is sought. First, financial incentives from a policy standpoint should not impact the plan of care developed for patients. Sign Up for HSG's Physician Strategy News and Notifications on New Thought Leadership, Advanced Practice Provider (APP) Utilization, Fair Market Value and Commercial Reasonableness Opinions, Advanced Practice Provider (APP) Compensation, Download a PDF Version of the Article as Published in AHLAs 2021 Transactions Resource Guide to Share With Your Team, HSG Advisors Expands Consulting Services and Data Analytics Capabilities in Response to National Outpatient Utilization Trend, Creating a Win/Win System of Advanced Practice Provider Oversight, FPM Practice Pearls: HSG Advisors Shares How to Make APP Reviews Mutually Beneficial, Healthcare Provider Compensation in a Post-COVID, New MPFS Reality, Best Practices in Patient Attraction and Retention Strategies. Financial arrangements are commercially reasonable if they are at FMV, services provided are documented and deemed necessary, and when the services cannot be provided at a lesser value. The law makes it a criminal offense to knowingly and willfully offer, pay, solicit, or receive anything of value (not just money) in order to induce or reward referrals or the generation of business paid for by federal healthcare programs. If Internal Revenue Services (IRS) determines that the net earnings of a tax-exempt organization are used for private interests of employees, or if their payments exceed FMV, it might result in loss of tax-exempt status. Eliminating the period of disallowance rules and correcting discrepancies during the arrangement. A Stark violation is punishable by civil money penalties; an anti-kickback violation is punishable by exclusion from federal health care programs, criminal penalties of up to $25,000 in fines or . While this exception may be utilized in some instances, it is likely organizations will utilize the employment exception or personal services exception. Rely on Our Experts for Stark Law and Fair Market Value Matters. 1395nn, and the regulations and guidance promulgated thereunder. Care coordination arrangements to improve quality, health outcomes, and efficiency without requiring the parties to assume any financial risk. Catherine Short converses with Rachel V. Rose, JD, MBA, principal with Rachel V. Rose - Attorney at Law, P.L.L.C. In 2004, CMS noted that valuation methods under Stark Law "must exclude valuation where the parties to the transaction are at arms-length but in a position to refer each other." 6 Because FMV under Stark Law does not "necessarily comport with the usage of the term in standard valuation techniques and methodologies," 7 a purely market . The general market value definitions are: What does it mean for a compensation arrangement to be commercially reasonable? Last Name (required) If ever there was a time in which that is true on so many levels, this is it. You can contact me at 865-673-0844. Barnes & Thornburg LLP. B and C - obtain a certified valuation from an expert, third party & conduct an in-house valuation. Fair market value is a pinnacle issue for compliance under the Stark Law and Anti-Kickback Statute. and Don Barbo, Managing Director with VMG Health, on the topic of "New Stark Law and AKS Final Rules -Valuation Considerations." On January 19, 2021, a new era was ushered in as the CMS Stark Law Final Rule and the HHS-OIG Anti-Kickback Statute Final Rule became effective. Introduction. Through the Final Rule, CMS has addressed the topic of losses and profitability, stating the determination that an arrangement is commercially reasonable does not turn on whether the arrangement is profitable; compensation arrangements that do not result in profit for one or more of the parties may nonetheless be commercially reasonable. CMS offers several examples of reasons parties may enter into an arrangement or transaction despite financial losses to one or more parties. According to CMS, those reasons include, community need, timely access to health care services, fulfillment of licensure or regulatory obligations, including those under the Emergency Medical Treatment and Labor Act, the provision of charity care, and the improvement of quality and health outcomes. In our opinion, this means health care organizations must go the extra mile to document their reason(s) for compensating physicians and APPs, if those arrangements and transactions are exhibiting or are expected to yield financial loses. Using the example of celebrities above, many contracts with celebrities include a portion of ticket sales to that movie. Downstream revenue may include referrals for laboratory services, referrals for imaging services, referrals for hospital services, or even referrals to other specialists. Referring to survey data regarding practice losses per physician and per provider can be enlightening. 1877nn(h)(3) Value in arms-length transactions, consistent with general market value Rentals or Leases - value of rental property for general commercial purposes, not taking into account its intended use Space Lease - not taking into account the value the lessee or Healthcare Regulatory and Stark Law/Fair Market Value and Commercial Reasonableness attorney. Healthcare employment contracts must: 1) Have a duration of at least a year. At WilliamsMarston, our team of valuation experts are readily available to assist you with your most important financial transactions, including navigating Stark Law and fair market value (FMV) matters. 4, It is important to maintain documents of services provided by healthcare professionals and have agreements in writing, along with documents supporting the financial transaction at FMV, for actual duties performed to standardize financial transactions and to prevent violation of fraud and abuse laws. 2 A discussion of Stark's application to Medicaid claims is beyond the scope of this broad overview. Many individual physicians believe that fair market value is met so long as relevant benchmarks exist. The CMS Self-Referral Disclosure Protocol (SRDP). 411.353 Prohibition on certain referrals by physicians and limitations on billing. Current, Three-Part Definition of Fair Market Value (42 C.F.R. For example, it is very common for recruitment agencies to publicize the perceived revenue generation of certain specialties. 411.357 Exceptions to the referral prohibition related to compensation arrangements. An analysis to document commercial reasonableness may include, but not be limited to, whether the arrangement helps meet an organizations mission/ vision/ and values, the importance of the arrangement to the service line(-s) affected, how the arrangement affects the cost, quality, and access to care, what other options exist to accomplish the organizations goals, and why the arrangement entered was the best option. For most Stark Law exceptions to apply, a(n) ___________________ is required. There are numerous laws across the country that have been created to remove this unethical practice. In December 2020, it was stated in the Stark Law Final Rule that the Centers for Medicare & Medicaid Services (CMS) expressly disavowed having any policy that compensation set at or below the 75th percentile of the physician compensation survey data is always appropriate, and that compensation above the 75th percentile is "suspect, if not . On December 2, 2020, the Centers for Medicare & Medicaid Services ("CMS") finalized long-awaited changes to the rules under the Physician Self-Referral Law, known as the "Stark Law." As discussed in our publication in 2019, CMS proposed the regulatory revisions in part to resolve uncertainty surrounding the terms "commercially reasonable . Final Rules also provide guidance related to fundamental concepts under the Stark Law, including commercial reasonableness, the volume or value standard, and fair market value. The exception permits both monetary and nonmonetary remuneration between the parties. The regulations are part of the HHS Regulatory Sprint to Coordinated Care and . How can we lose so much money and still consider our arrangement commercially reasonable? 3. Non-profit hospitals face additional requirements under the Internal Revenue Code that they must satisfy to maintain their tax-exempt status. Which of the following is TRUE about the Stark Law? Specifically, the Final Rule includes new or modified regulatory definitions for the terms "commercially reasonable," "fair market value," and "general market value" as well as terms particular to the definition of a "Group Practice." The Anti-Kickback Statute (AKS), 42 U.S.C. The arrangement is in writing, signed by the parties, and covers only identifiable items or services, all of which are specified in writing. Health Management Associates $260 Million, Kalispell Regional Healthcare $24 Million. We are uncertain why the commenters believe that it is CMS policy that compensation set at or below the 75th percentile in a salary schedule is always appropriate, and that compensation set above the 75th percentile is suspect, if not presumed inappropriate. Fixed asset valuations include fair market value, orderly and forced liquidation valuations of medical equipment, office and computer equipment, software, leasehold improvements and supplies inventory. americanbar.org. The 2021 Stark Law and Anti-Kickback Statute: Fair Market Value and Commercial Reasonableness (American Health Law Association Publication) Noteworthy 2021 stark law revisions and modifications: specifically areas impacting provider compensation and transactions valuation. As an industry, the Life Sciences has nearly uniformly adopted . 411.351. Fair Market Value and Commercial Reasonableness Applied to Healthcare Transactions. They are: (a) the lease agreement must be in writing; (b) the . 6 Financial arrangements are commercially reasonable if they are at FMV, services provided are documented and deemed necessary, and when the services cannot be provided at a lesser value.10 Financial arrangements should be based on comparable data and should be set in advance by members who have no conflict of interests. This is the art and the work involved in determining fair market value. Among the many changes in the Stark Law final rule, the following are some of the most significant: 1. The definitions are as follows: Central to the definition of fair market value is the definition of general market value. General market value is also restated in the Final Rule. Thursday, October 20, 2022. The AKS Final Rule further codifies statutory revisions by adding the statutory exception to remuneration related to Accountable Care Organization Beneficiary Incentive Programs for the Medicare Shared Savings Program. The Stark Law prohibits physicians from referring patients for services to entities in which the physician or _____________________________ has a financial interest. 411.356 Exceptions to the referral prohibition related to ownership or investment interests. With regard to fair market value (FMV), industry best practice suggests that you _____ in order to better withstand government scrutiny. Warranties safe harbor was modified to revise the definition of warranty and provide protection for bundled warranties for one or more items and related services provided they are paid for under the same payment. Unlike fair market value determination, commercial reasonableness is not as readily determined by standardized methodologies, practices, or sources. Finalized protection for arrangements that will apply regardless of whether the parties operate in a fee-for-service or value-based payment system, such as donations of cybersecurity technology. Included in the changes are definitions and special rules related to: (1) commercial reasonableness, (2) the volume or value standard and other business generated standard, and (3) fair market value and . First Name (required)
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