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. Chapter 25. The Court concluded that the payment above fair market value for the services that were actually required to be performed would serve some other purpose, such as compensation for referrals. 1395nn). Too often, they have hindered, rather than . PDF A Compliance Officer's Approach to Fair Market Value - HCCA Official Site The Stark Law prohibits physicians from referring patients for services to entities in which the physician or _____ has a financial interest. Establishing fair market value physician compensation in a - MGMA \text{Residual} & \text{Error} & \text{7}\\ Distribution of Profits Related to Participation in a Value-Based Enterprise; b. Current Definition of General Market Value (42 C.F.R. For example, it is very common for recruitment agencies to publicize the perceived revenue generation of certain specialties. 7. The Department of Health and Human Services has released extensive and significant revised final rules governing the Physician Self-Referral Law 1 (the Stark law) and the Medicare Anti-Kickback Statute 2 (AKS) in furtherance of its efforts to create a more hospitable regulatory climate for innovation in health care. bdo.com. In addition, CMS removed the "volume or value" and the "other business generated" standards . Clinical Fair Market Value: Why it's essential and what - IQVIA So, while it may require effort, and in some cases could be difficult to achieve, finding fair market value is a must. healthlawyers.org. In some cases, the alignment between compensation and production may be distorted. Kickbacks And Other Illegal Arrangements: The Anti-Kickback Statute 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. 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. Stark law, anti-kickback updates may boost value-based payments healthcapital.com. 1395nn, and the regulations and guidance promulgated thereunder. document.getElementById( "ak_js_1" ).setAttribute( "value", ( new Date() ).getTime() ); document.getElementById( "ak_js_2" ).setAttribute( "value", ( new Date() ).getTime() ); 9850 Von Allmen Court New Exceptions for Value-Based Arrangements - Epstein Becker & Green, P.C. 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. Bob concentrates his . Get ready and roll up your sleeves for the work ahead. B. Stark Law Exception - Value-Based Arrangements . Traditional survey sources have proven to be dated and inadequate for the CRNA salaries being offered. Allows agreement participants to reconcile payment variances in compensation arrangements without violation of physician self-referral law. According to CMS, some of the commenters on the Final Rule asserted that, a safe harbor based on a range of values in salary surveys would be consistent with what they stated was established CMS policy that compensation set at or below the 75th percentile in a salary schedule is appropriate and compensation set above the 75th percentile is suspect, if not presumed inappropriate. To these comments CMS responded, For the reasons explained in Phase I, Phase II, and Phase III, we decline to establish the rebuttable presumptions and safe harbors requested by the commenters. To accommodate patient surge, a hospital rents office space or equipment from a physician practice at below fair market value or at no charge. Limits what qualifies as an ownership or investment interest that is subject to the physician self-referral law. have been significantly impacted by decreased patient volume. Home Fair Market Value and Commercial Reasonableness Applied to Healthcare Transactions, An Informational Article Posted on October 27, 2016August 15, 2022. 411.357 Exceptions to the referral prohibition related to compensation arrangements. Some of those include organizations that have been charged even with compensation levels that are not above the 90th percentile. ), commonly referred to as the Stark law, is a set of regulations that pertain to physician self-referral under current United States (US) federal law. Robert Wade - Partner - Nelson Mullins Riley & Scarborough | LinkedIn This safe harbor is designed to facilitate improved cybersecurity in health care through donations of cybersecurity technology and services. Catherine Short converses with Rachel V. Rose, JD, MBA, principal with Rachel V. Rose - Attorney at Law, P.L.L.C. White Paper: CMS Finalizes Updates to the Stark Law to Reduce Provided additional guidance on key requirements of the exceptions to the Stark Law to make it easier for healthcare providers to take steps to ensure compliance, such as: Guidance on identifying compensation formulas that take into account the volume or value of a physicians referrals. Y=20.0 + 7.21X\\\\ For a vast number of health care entities, employment of physicians and APPs is the only option for attracting and maintaining providers in their community. An arrangement may be renewed any number of times if the terms of the arrangement and the compensation for the same items or services do not change. What Is Fair Market Value and How Is It Calculated? - SmartAsset Fair Market Value ( 411.351) C. Group Practices ( 411.352) 1. Assessing Fair Market Value. That is a topic for another day. PDF Fraud Alert: Physician Compensation Arrangements May Result in The three types of transactions are asset acquisition, compensation, and rental of equipment or office space. Barnes & Thornburg LLP. If the AKS is addressing criminal penalties, the consequences include fines up to $25,000 per violation and up to a five-year . 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. Louisville, Kentucky 40241, 2023 HSG Advisors. In doing so, CMS offered helpful commentary for health care entities structuring real estate arrangements. Avoiding Illegal Service Referrals: The Stark Statute Explained 411.354 Financial relationship, compensation, and ownership or investment interest. Factors affecting the specific company risk of a practice can include the physician's age, specialty, location, market position, payer mix, payer contracts, size, and other factors. CMS' stated purpose is to establish bright-line, objective regulations that would be more easily applied. 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. 5, A regular assessment should be conducted to determine if the healthcare transactions are commercially reasonable. With the increased rate of mergers and acquisitions, healthcare organizations are vulnerable to federal scrutiny. 411.353 Prohibition on certain referrals by physicians and limitations on billing. PDF The New Stark and AKS Final Rules: Implications and Considerations for Cincinnati. Financial arrangements should be based on comparable data and should be set in advance by members who have no conflict of interests. The writing specifies the timeframe for the arrangement, which can be for any period of time and contain a termination clause, provided that the parties enter into only one arrangement for the same items or services during the course of a year. Proposed Stark Law, Anti-Kickback Reforms Aim To Facilitate Value-Based "General market value" is the compensation that would be included in a service agreement as the result of bona fide bargaining between well-informed parties who are not otherwise in a position to generate business for the other . A "Stark" Difference in Fair Market Value and Commercial Reasonableness Suite 201 B and C - obtain a certified valuation from an expert, third party & conduct an in-house valuation. 2021 Stark Law and Anti-Kickback Statute: Fair Market Value Impact | HSG For the past 30 years, a key consideration for health care organizations entering into transactions and arrangements for the employment and compensation of physicians has been the profitability of the practices in which the physicians, their staff, and other practicerelated resources are housedor more precisely the losses of the practices in which physicians and APPs are housed. The exception permits both monetary and nonmonetary remuneration between the parties. 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. 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. 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. First, financial incentives from a policy standpoint should not impact the plan of care developed for patients. Building High-Performing Physician Networks. Second, from a fair market value standpoint it is often the case that there are true limits on reasonable income and compensation under a financial arrangement with a physician. The exception cannot be utilized for the rental of office space though. A qualitative analysis of the nature and scope of services performed, necessity of services, and comparability of services should be performed. Note this requires a valuator being able to find enough comparable postings with posted salary offersless than ten is typically not enough. Stark defines fair market value (FMV) as ______________________________ . 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. Healthcare transactions must be commercially reasonable and should be comparable to what is paid ordinarily for similar services in the area. 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 . 2018 Changes to the Federal Physician Self-Referral Law (Stark Law) 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. A and B - not be conditioned on referrals & allow the physician to establish medical staff membership at other hospitals. A hospital lends money to a physician practice to offset lost income resulting from the cancellation of elective surgeries to ensure capacity for COVID-19 needs. The fair market value exception is a compensation exception that is flexible depending on the arrangement. The Stark law was initially enacted in 1992 but expanded in . As to its civil penalties, the Anti-Kickback Statute includes monetary penalties up to $50,000 per violation, civil . 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. Additionally, until now, there has been no codified definition for commercial reasonableness, only limited CMS discussion such as that in the proposed 1998 rule. On December 2, 2020, OIG published its Final Rule, Revisions to the Safe Harbors Under the Anti-Kickback Statute and Rules Regarding Beneficiary Inducements, and CMS published its Final Rule, Modernizing and Clarifying the Physician Self-Referral Regulations in the Federal Register. 7 Things Hospitals Should Know About Professional Services Agreements June 14, 2022; salem witch trials podcast lore The Final Rule provided key guidance on the "Big 3" Stark Law requirements of (1) fair market value; (2) commercial reasonableness; and (3) the volume or value of referrals. Sales of comparable assets: When a real estate agent presents a prospective home seller with a list of recent sales prices for similar nearby homes, known as . Interested in learning about what is a referral? The services to be performed under the arrangement do not involve the counseling or promotion of a business arrangement or other activity that violates a Federal or State law. In what situation is a written agreement NOT required under Stark? 4 See 42 CFR 411.354. The primary regulations governing physician compensation arrangements are the Stark Law and AKS. Website managed by SiteCare.com. Many hospitals and health systems around the country have employed physicians and then struggled, or at least had to come to grips with the fact that, the practices are losing money. Real Estate Leasing in the Healthcare Industry: Understanding the Stark Below is a listing of some of the key changes: For those in the physician and APP compensation valuation arena, and for any hospital or health system that compensates a health care provider for administrative and/or professional services (which would be all hospitals and health systems in the country), there are other aspects of the Stark Law revisions that are of particular interest. 411.356 Exceptions to the referral prohibition related to ownership or investment interests. 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. On December 2, 2020, the Department of Health and Human Services ("HHS") Office of Inspector General ("OIG") issued final rules including a host of reforms to the AKS, including three changes to the personal services and management contracts safe harbor ("Safe Harbor").