\text{Analysis} & \text{of} & \text{Variance}\\\\ Jana will be discussing the Stark Law changes, and Angie will be providing related valuation examples during the September 13, 2022 Let's Talk Compliance webinar entitled Stark Law Changes and Impact on Physician Compensation Part 2. The Anti-Kickback Statute (AKS), 42 U.S.C. The Stark law prohibits a physician with a financial relationship in an entity from making a referral for designated health services covered by Medicare and Medicaid to that entity even if the services are billed to an individual or other third party payer. This ensures that there is maximum compliance of regulatory statutes and prevents any violation of healthcare laws. CMS further clarifies that commercial reasonableness is whether an arrangement makes sense as a means to accomplishing the parties goals. Modifying the definition of set in advance used in many Stark exceptions to allow modification of compensation during the term of an arrangement (including in the first year). Carnahan Group assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein. The AKS Final Rule creates new safe harbors for entities participating in a value-based enterprise (VBE) and amends existing safe harbors. Compensation arrangements that are required to be representative of . On the other hand, an arrangement must be considered fair market value in order to be commercially reasonable. \text{SOURCE} & \text{DF} & \text{SS}\\ Instead, it is the impact of the COVID-19 pandemic on the industrys salary and production survey data. Formally establishes a definition of commercial reasonableness, while deleting outdated Stark Law references and updating key definitions such as fair market value, designated health services, physician, referral, remuneration, and transaction. With respect to the rental of equipment, fair market value means the value in an arms-length transaction of rental property for general commercial purposes (not taking into account its intended use), consistent with the general market value of the subject transaction. Allows agreement participants to reconcile payment variances in compensation arrangements without violation of physician self-referral law. First, fair market value is based purely on the personally performed services of a physician and not based upon any downstream revenue for the entity or business generated between the parties. 1320a-7b (b) and the regulations and guidance promulgated thereunder. In addition to fair market value, most applications of the anti-kickback statute and Stark law also require commercial reasonableness. This has required abandoning, or at least augmenting, traditional surveys with anesthesia-related job posting sites to find comparable salary offerings and ranges. In order to qualify for the recruitment exception, the arrangement must _________________________ . In addition, CMS removed the "volume or value" and the "other business generated" standards . Interpretation of the "Volume or Value Standard" for Purposes of the Group Practice Regulations ( 411.352(g)) 2. The reason the simplicity of this is not correct is that many lawsuits and government enforcement actions have established what are the risks associated with fair market value. A factor that is certain to affect fair market value determination during the coming year is not new or revised legislation. Clarifies the period of disallowance for referrals and billing following a self-referral law violation, the satisfaction requirements for set-in-advance compensation, when an entity may direct a physicians referrals to a provider, the requirement for exclusive use of office space/ equipment, and the exception for payment by a physician to an entity. Interested in learning about what is a referral? The following definition is from the regulations: means the value in arms-length transactions, consistent with the general market value. With regard to fair market value (FMV), industry best practice suggests that you ____________________________ in order to better withstand government scrutiny. The following definition is from the regulations: means the value in arm's-length transactions, consistent with the general market value. First Name (required) Data were collected on several properties stark law fair market value industry best practice. The CMS Final Rule implements changes to the Stark Law and offers several clarifying provisions related to key Stark Law terms and concepts. (i) Consistent with the fair market value of . Not only was the definition of general market value amended, but it was also given three unique definitions related to the context of a specific type of transaction. Fair market value, and specifically as it relates to compensation arrangements, is defined as The value in arms-length transaction, consistent with the general market value of the transaction. General market value means 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., Commercially reasonable means that the 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. Which of the following is TRUE about the Stark Law? The compensation must be set in advance, consistent with fair market value, and not determined in a manner that takes into account the volume or value of referrals or other business generated by the referring physician. 411.362 Additional requirements concerning physician ownership and investment in hospitals. Rather, each case must be evaluated and considered in the context of the situation. How can we lose so much money and still consider our arrangement commercially reasonable? The original content piece along with other guide publications can be accessed here. To accommodate patient surge, a hospital rents office space or equipment from a physician practice at below fair market value or at no charge. Healthcare organizations should consider both qualitative and quantitative components for FMV and commercial reasonableness analyses of financial transactions. Unlike fair market value determination, commercial reasonableness is not as readily determined by standardized methodologies, practices, or sources. The Department of Health and Human Services (HHS) defines commercial reasonableness as a sensible, prudent business arrangement, from the perspective of the particular parties involved, even in the absence of any potential referrals. New Arrangement Best Practices Consult with a valuation expert on whether financial arrangements satisfy the new Stark Law fair market value and commercial reasonableness standards. Catherine Short converses with Rachel V. Rose, JD, MBA, principal with Rachel V. Rose - Attorney at Law, P.L.L.C. 1320a-7b. In a simple example, we can determine that fair market value for compensation of a medical director for a cardiac catheterization laboratory is $150 per hour. 1395nn, and the regulations and guidance promulgated thereunder. et al. Bottom line, 2021 surveys, based on 2020 data, are likely going to be challenging. ; (2) How can it be fixed? Likewise, a belief that paying a provider above the 75th percentile is not fair market value is also misplaced. The reader is also cautioned that this material may not be applicable to, or suitable for, the readers specific circumstances or needs, and may require consideration of nontax and other tax factors if any action is to be contemplated. The new Stark rule revises this, stating the fair . Traditional survey sources have proven to be dated and inadequate for the CRNA salaries being offered. June 14, 2022; salem witch trials podcast lore The regulations are part of the HHS Regulatory Sprint to Coordinated Care and . The Final Rule of the Stark Law revises the definitions of Fair Market Value and includes a definition of General Market Value to better align with actual practices without unduly restricting innovative relationships between physicians and entities providing designated health services. 98810.3;2988 \div 10.3 ; 298810.3;2 significant digits. Strategy, market growth, and larger referral bases were not among the examples. The argument is that but for the celebrity being in the movie the consumer would not purchase the ticket. Which of the following are exceptions under Stark? 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 . 411.356 Exceptions to the referral prohibition related to ownership or investment interests. As it relates to the updated definition of fair market value, CMS continues to emphasize that its determination should be based on any appropriate method depending on the kind of transaction, its location, and other factors. Always engage a competent appraiser who understands the Stark definition of fair market value and be sure the appraisal report addresses that. 411.354). In the interim, for more information regarding these matters, contact a PYA executive below at (800) 270-9629. For example, if a physician is paid at the 75th percentile under a specific survey then fair market value must be met. There are four basic methods of determining fair market value. have been significantly impacted by decreased patient volume. Thanks for reaching out. Among the many changes in the Stark Law final rule, the following are some of the most significant: 1. Some providers in these four specialties may have seen an increase in compensation to reflect their increased workload, while others, those paid salary and shift rates, may not have seen an increase in compensation. Ultimately, valuators likely will have to be creative and look back into past years surveys to evaluate trends and validate current survey data. Unlike the civil nature of Stark Law, the Anti-Kickback Statute is under both civil (administrative) and criminal laws. CMS has stated that compensation between certain percentiles does not provide a safe harbor. 1395 nn) and antikickback statutes (42 U.S.C. Limits what qualifies as an ownership or investment interest that is subject to the physician self-referral law. Thus, "compensation substantially above $450,000 per year may be fair market value," according to . Consult with healthcare counsel to review compensation arrangements to identify any structures that take into account the volume or value of referrals or business With the increased rate of mergers and acquisitions, healthcare organizations are vulnerable to federal scrutiny. The regulations will become effective January 19, 2021, with one exception. For example, it is very common for recruitment agencies to publicize the perceived revenue generation of certain specialties. The fair market value exception is a compensation exception that is flexible depending on the arrangement. The Anti-Kickback Statute. 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. In the Court's opinion, the excess payments would violate the Stark Law and would make claims made to Medicare for those services false claims. CMS' stated purpose is to establish bright-line, objective regulations that would be more easily applied. A and B - not be conditioned on referrals & allow the physician to establish medical staff membership at other hospitals. Attendees may ask questions in advance. The commercial division of a real estate firm is conducting a regression analysis of the relationship The best practice that a health system can adopt for establishing financial arrangements without getting penalized is consulting with a third-party valuation expert to not only rationalize the compensation rate, but to justify the community need. Therefore, the analysis is recommended to be conducted by an independent valuation expert to establish a value that is consistent with independently published surveys that are comparable for similar services. The U.S. Department of Health and Human Services (HHS) adopted certain regulatory leasing safe harbors for both the Anti-Kickback Statute, commonly referred to as the "space rental safe harbor," and Stark Law, commonly referred to as the "office space rental exception.". https://www.healthlawyers.org/Events/Programs/Materials/Documents/PHS15/kk_homchick_hutzler_shay.pdf, https://www.bdo.com/blogs/healthcare/april-2015/commercial-reasonableness-analysis?feed=8799bc52-2237-4688-aeac-83e40e623b56, http://www.americanbar.org/content/dam/aba/events/health_law/2015_Meetings/DocLaw/Papers/10_valuation_03.authcheckdam.pdf, http://www.worldservicesgroup.com/publications.asp?action=article&artid=2086, http://www.healthcapital.com/hcc/newsletter/10_12/HCVAL.pdf, New Timeshare Arrangement Exception under Stark Law. 4) Have a payment or salary provision that is reasonable and is at fair market value. 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. Too often, they have hindered, rather than . Reflecting on Recent Regulatory Changes to the Stark Law: A Real Estate and Equipment Valuation Perspective, Part 2. Arrangements for patient engagement and support to improve quality, health outcomes, and efficiency. 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 would be incorrect. HSG has written articles about practice losses and how to address them. Expands the 411.357(1) exception to fair market value payments for rental office space, notably when the arrangement is for less than one year. Building High-Performing Physician Networks. Bob concentrates his . CMS removed "general market value" from the definition of "fair market value" at 42 C.F.R. Note this requires a valuator being able to find enough comparable postings with posted salary offersless than ten is typically not enough. The primary regulations governing physician compensation arrangements are the Stark Law and AKS. The Federal Anti-Kickback Statute, codified at 42 U.S.C. In healthcare, the patient would have received the care regardless of the physician and the complexity of healthcare with patients moving to different sites of service and within different specialties creates impossible scenarios for tracking who is responsible for what. An extension has been granted until January 1, 2022 for compliance related to certain changes required in group practice compensation methodologies. Structuring legally compliant hospital-physician leases and establishing fair market value (FMV) rental rates can be challenging. Please join us on September 13 th! Which of the following disclosure protocols should be used by providers when disclosing a Stark violation? Via the Final Rule, CMS has also indicated that salary surveys, regardless of percentile, are not automatic determinates of fair market value, stating, Consulting salary schedules or other hypothetical data is an appropriate starting point in the determination of fair market value, and in many cases, it may be all that is required. The exception permits both monetary and nonmonetary remuneration between the parties. Carnahan Group provides a unique platform. As an offshoot to periodic reviews of PSAs, Ms. Walsh says every component of the PSA must be recorded and documented to ensure both parties are . Historically, the concept of a bargained for exchange was primarily handled and managed by financial professionals within the organization. HHS, through the Regulatory Sprint to Coordinated Care, has a stated goal of reducing regulatory barriers within our nations health care system and accelerating the transformation of the health care system into one that better pays for value and promotes care coordination. As HHS statement indicates, value-based arrangements and transactions are the focus of this episode of Stark Law and AKS revisions, but other areas and central ideas of the Stark Law and AKS are significantly impacted as well. Key PYA Takeaway: CMS is clarifying that the Big 3 (fair market value, commercial reasonableness, and the volume or value standard) are separate and distinct concepts. Care coordination arrangements to improve quality, health outcomes, and efficiency without requiring the parties to assume any financial risk. Specialties like critical care, hospital medicine, emergency medicine, and pulmonary medicine may have experienced increases in patient volume due to the pandemic. \text{Constant} & \text{20.000} & \text{3.2213} & \text{6.21}\\ 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. With respect to the rental of office space, fair market value means the value in an arms-length transaction of rental property for general commercial purposes (not taking into account its intended use), without adjustment to reflect 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, and consistent with the general market value of the subject transaction. ; ; 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. If the AKS is addressing criminal penalties, the consequences include fines up to $25,000 per violation and up to a five-year . The arrangement does not violate the anti-kickback statute (section 1128B(b) of the Act), or any Federal or State law or regulation governing billing or claims submission. Many of the new and revised regulations apply beyond financial arrangements related to care coordination initiatives, and thus are crucial for all This ensures that there is maximum compliance of regulatory statutes and prevents any violation of healthcare laws. 1395nn). On Wednesday, October 9, HHS proposed highly anticipated reforms to regulations implementing the Physician Self-Referral Law and the Federal Anti-Kickback Statute, as well as related civil . \text{The regression equation is}\\ The Stark statute defines "fair market value" as the value in arm's-length transactions, consistent with the general market value and, with respect to rentals or leases, the value of rental property for general commercial purposes (not taking into account intended use . 1 The payments that exceed FMV are viewed as potential referrals, which is a violation of Stark Law that can lead to penalties and a healthcare systems exclusion from participation in federal health programs. \text{X} & \text{7.210} & \text{1.3626} & \text{5.29}\\\\ 411.362 Additional requirements concerning physician ownership and investment in hospitals. However, there are a few core concepts that are applicable when establishing fair market value. Makes clear that signatures may be electronic under the same applicable federal/ state laws while allowing parties to an agreement to obtain the writing requirement documentation within 90 days. Healthcare employment contracts must: 1) Have a duration of at least a year. Finalized a new exception to protect compensation not exceeding an aggregate of $5,000 per calendar year to a physician for the provision of items and services, without the need for a signed written agreement and compensation that is set in advance if certain other conditions are met (i.e., fair market value and does not take into account volume and value of referrals). bdo.com. A "Stark" Difference in Fair Market Value and Commercial Reasonableness Is Coming in 2021. In doing so, CMS offered helpful commentary for health care entities structuring real estate arrangements. The Stark "in-office ancillary" exception permits a physician or group practice to order and provide DHS in the office, provided that the DHS is ancillary to the professional medical services provided by the practice.
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