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). The Stark Law prohibits physician referrals of Medicare patients for certain "designated health services" to entities with which the physician has a financial relationship, unless an exception under the law applies. 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. A factor that is certain to affect fair market value determination during the coming year is not new or revised legislation. 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. Executive Session: Fair market value and the shift to value - MGMA Kickbacks And Other Illegal Arrangements: The Anti-Kickback Statute The Complete Guide to Fair Market Value Under the Stark Regulations Stark defines fair market value (FMV) as ______________________________ . 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. CMS Releases Several Stark Law Waivers for Use during the COVID - Mintz 411.354). If base or guaranteed compensation does not exceed the 75th percentile for the physicians specialty, as published by a survey source like the Medical Group Management Associations Provider Compensation Survey, then they do not seek a fair market value opinion because they consider the compensation to be fair market value. Traditional survey sources have proven to be dated and inadequate for the CRNA salaries being offered. Too often, they have hindered, rather than . 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. Always engage a competent appraiser who understands the Stark definition of fair market value and be sure the appraisal report addresses that. You can contact me at 865-673-0844. White Paper: Value-Based Safe Harbors and Exceptions to the Anti 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. Proposed Stark Law, Anti-Kickback Reforms Aim To Facilitate Value-Based PDF Fraud Alert: Physician Compensation Arrangements May Result in Contact our expert, Neal D. Barkeratnbaker@hsgadvisors.com or call (502) 814-1189. CMS further clarifies that commercial reasonableness is whether an arrangement makes sense as a means to accomplishing the parties goals. ), 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. 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 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. 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. Not that CMS made it easy by providing a bright line or even a floor that would allow us to say, if we go above this level, then we must get a formal thirty-party fair market value opinion. According to CMS, We wish to be perfectly clear that nothing in our commentary was intended to imply that an independent valuation is required for allcompensation arrangements.. 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. The US Court of Appeals for the Third Circuit endorsed two controversial interpretations of the Stark Law's "volume or value" standard, known as the correlation theory and the practice "loss" theory in U.S. ex rel. What Is the Stark Law, and How Can You Avoid Violating It? Cybersecurity technology and services safe harbor for remuneration in the form of cybersecurity technology and services. Instead, it is the impact of the COVID-19 pandemic on the industrys salary and production survey data. 1320a-7b (b) and the regulations and guidance promulgated thereunder. General market value means the price that an asset would bring as the result of bona fide bargaining between well-informed buyers and sellers who are not otherwise in a position to generate business for the other party, or the compensation that would be included in a service agreement as the result of bona fide bargaining between well-informed parties to the agreement who are not otherwise in a position to generate business for the other party, on the date of acquisition of the asset or at the time of the service agreement. v. UPMC et al.In particular, the court held that the relators had made out a plausible allegation of an indirect compensation . Clinical Fair Market Value: Why it's essential and what - IQVIA For example, if a physician is paid at the 75th percentile under a specific survey then fair market value must be met. 411.354 Financial relationship, compensation, and ownership or investment interest. Providing additional flexibility related to signature and writing requirements. Isolated financial transactions, such as a one-time sale of property or a practice, or a single instance of forgiveness of an amount owed in settlement of a bona fide dispute, if all of the following conditions are met: (1) The amount of remuneration under the isolated financial transaction is. Stark Law provides this definition: The term "fair market value" means the value in arm's length transactions, consistent with the general market value(42 USC 1395nn) 42 CFR 411.351 -"general market value" means the price that an asset would bring or that would be included in a 1320a-7b. This has required abandoning, or at least augmenting, traditional surveys with anesthesia-related job posting sites to find comparable salary offerings and ranges. 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." We also think this is an appropriate reflection and representation of what CMS recognized and articulated when it said: It is not CMS policy that salary surveys necessarily provide an accurate determination of fair market value in all cases.. However, since the law was enacted in 1989, the regulations implementing it have become woefully outdated. This field is for validation purposes and should be left unchanged. 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. Carnahan Group. This revenue generation includes downstream revenue. 1320a-7b(b), covers a broader range of activity than the Stark Law, and extends to all medical providers in a position to arrange or recommend medical services."Referrals" under the Anti-Kickback Statute include "any item or service for which payment may be made in whole or in part under a Federal health care program." 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. 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. Note this requires a valuator being able to find enough comparable postings with posted salary offersless than ten is typically not enough. 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 regulations are part of the HHS Regulatory Sprint to Coordinated Care and . 3) Specify an aggregate payment, which is set in advance. Key PYA Takeaway: Since the Stark II, Phase II regulations, CMS has introduced the use of salary surveys to help in determining fair market value compensation, even going so far in the Stark II, Phase III regulations to comment reference to multiple, objective, independently published salary surveys remains a prudent practice for evaluating fair market value. However, salary surveys by themselves may be limited in establishing fair market value. CRNAs are only one examplethe same challenges could easily apply to any physician specialty or market. Consult with healthcare counsel to review compensation arrangements to identify any structures that take into account the volume or value of referrals or business OIG also amended the definition of remuneration in the Beneficiary Inducements CMP statute to integrate a new statutory exception to the prohibition on beneficiary inducements for certain telehealth technologies.. 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. 5, A regular assessment should be conducted to determine if the healthcare transactions are commercially reasonable. This site rocks the Pearsonified Skin for Thesis. The following requirements must be [] between x, annual gross rents (in thousands of dollars), and y, selling price (in These Stark Law updates may not alter the approach to production of a compensation fair market value and commercial reasonableness opinion (i.e., we are still going to consult industry salary surveys), but it certainly has us doubling down on the lengths to which we go to describe and document the uniqueness of a provider, the market, or the situation. HAND Children are the Future. \text{Residual} & \text{Error} & \text{7}\\ New Exceptions for Value-Based Arrangements - Epstein Becker & Green, P.C. In some cases, the alignment between compensation and production may be distorted. document.getElementById( "ak_js_1" ).setAttribute( "value", ( new Date() ).getTime() ); document.getElementById( "ak_js_2" ).setAttribute( "value", ( new Date() ).getTime() ); 9850 Von Allmen Court 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. 411.351. T. Z, R. C. Healthcare Valuation Series: A look at fair market value and commercial reasonableness. 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.". The Situation: The isolated transactions exception under the Stark Law has been used by some providers and entities to retroactively protect services arrangements that do not qualify for personal services or fair market value compensation exceptions because, for example, the arrangements were not reduced to writing before services were rendered. Another key Stark Law change that will certainly influence fair market value and commercial reasonableness opinion approach and deliverable is the uncoupling or disentanglement of the volume or value standard (and the other business generated standard) from the definitions of fair market value and commercial reasonableness. Further, even if the physician under the arrangement is paid, in part, based upon his or her productivity, any rates under those models must be consistent with benchmark data. This safe harbor is intended to provide greater predictability for model participants and uniformity across models. Third Circuit Perpetuates Tuomey's Controversial Stark Law "Volume or Stark Law: Clarification of Key Terms - Dinsmore & Shohl LLP Compensation arrangements that are required to be representative of . There are numerous regulatory statutes, such as Stark Law and Anti-Kickback Statute that need to be considered while structuring financial transactions for physicians and other staff to ensure that compensation is within fair market value (FMV) and is commercially reasonable. 411.355 General exceptions to the referral prohibition related to both ownership/investment and compensation. Stark Law/Fair Market Value | WilliamsMarston | Accounting Advisory 6 Carnahan Group provides a unique platform FMVMD,which allows healthcare organizations to analyze physician compensation arrangements for fair market value and commercial reasonableness instantly. CMS Completes Sprint to Modernize the Stark Law-Part III var year = today.getFullYear() Helps identify compensation formulas that take into account the volume or value of a physicians referrals as well as those that are allowed to distribute profits from designated health services within a group practice. Please join us on September 13 th! The following definition is from the regulations: means the value in arm's-length transactions, consistent with the general market value. The three types of transactions are asset acquisition, compensation, and rental of equipment or office space. Whether it's an outright acquisition or a lease or service agreement, and whether it is the business or the underlying tangible assets (real estate and equipment), the transaction must be consistent with Fair Market Value. Looking for help navigating the Stark Law Final Rule? HHS OIG Issues Advisory Opinion on Continuing Medical Education, Stark This article was originally published by the American Health Law Association in April 2021 as part of their 2021 Health Care Transactions Resource Guide. On November 20, 2020, the U.S. Department of Health and Human Services (HHS) published Final Rules for the Physician Self-Referral Law (Stark Law), the federal AKS, and the Civil Monetary Penalties (CMP) Law. 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. White Paper: CMS Finalizes Updates to the Stark Law to Reduce Among the many changes in the Stark Law final rule, the following are some of the most significant: 1. HSG is not a law firm; we are a health care consulting and compensation valuation firm, so this article is not an exhaustive legal interpretation, summary, or review of all of CMS and OIGs updates, but rather a review of selected areasparticularly those elements and areas we view as having the most impact in the world of physician and advance practice provider (APP) compensation and transactions valuation. 2021 Stark Law and Anti-Kickback Statute: Fair Market Value Impact | HSG Carnahan Group provides a unique platform. The key elements of a robust FMV practice continue, however, to evolve. To accommodate patient surge, a hospital rents office space or equipment from a physician practice at below fair market value or at no charge. 1395nn). Considerations for Determining Fair Market Value Physician Compensation These are two critical questions that must be answered. \text{Constant} & \text{20.000} & \text{3.2213} & \text{6.21}\\ 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. healthlawyers.org. The Stark Law prohibits physicians from referring patients for services to entities in which the physician or _____ has a financial interest. 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. Q & A: Self-Referral/Stark Law And Anti-Kickback Regulations B and C - obtain a certified valuation from an expert, third party & conduct an in-house valuation . For more information on Stark Law Exceptions, see our dedicated page. Modernizing and Clarifying the Physician Self-Referral - CMS Many individual physicians believe that fair market value is met so long as relevant benchmarks exist. This exception takes effect when there is an arrangement into writing that specifies the time frame and remuneration, and meets Anti-Kickback Statutes . health services directly attributable to a physicians participation in a value-based arrangement are deemed not to take into account the volume or value of the physicians referrals. Second, downstream financial incentives in healthcare, as in most industries, is extremely hard to quantify. Federal physician self-referral prohibition (42 USC 1395nn. Home Fair Market Value and Commercial Reasonableness Applied to Healthcare Transactions, An Informational Article It is, however, often the best information that one can find. The waivers, which are numerous and fairly broad, offer health care entities significant flexibility to combat COVID-19 in ways . 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. A general journal is given in the Working Papers. 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. 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. A comprehensive, but not all inclusive, list of the items covered in the final rule follows. Which of the following are exceptions under Stark? Data were collected on several properties A qualitative analysis of the nature and scope of services performed, necessity of services, and comparability of services should be performed. Finally, the incentives in a healthcare environment are inherently different than they are in a business venture in other industries. Unlike fair market value determination, commercial reasonableness is not as readily determined by standardized methodologies, practices, or sources. Sec. 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. Stark Law Final Rule Summary - Strategic Management Services, LLC The fair market value exception is a compensation exception that is flexible depending on the arrangement. For additional questions or comments regarding this article or other valuation issues, please contact John Meindl, Manager, VMG Health, at 972-616-7813, or john . Key PYA Takeaway: Guidance from prior court decisions, as well as certain previous governmental representatives, have questioned commercial reasonableness if arrangements are not profitable. Bob concentrates his . CMS has stated that compensation between certain percentiles does not provide a safe harbor. Value-based arrangements with substantial downside financial risk (at least 5%). This is especially true given that scrutiny has increased greatly over the past decade, with the government taking aim at fraud and questionable arrangements and more fervently enforcing the Stark Law and Anti-Kickback Statute (AKS). New Value-Based Exceptions. This Stark Law exception applies to physician compensation arrangements that qualify as value-based arrangements, regardless of the level of risk undertaken by the VBE or any of its VBE participants. Louisville, Kentucky 40241, 2023 HSG Advisors. 7 Things Hospitals Should Know About Professional Services Agreements How can we lose so much money and still consider our arrangement commercially reasonable? Stark 101 for Physicians - KJK | Kohrman Jackson Krantz Under the Stark Law, one of the critical elements of compliance for many exceptions includes the requirement that the financial arrangement is representative of fair market value. ensure that those arrangements reflect fair market value for bona fide services the physicians actually provide. document.write(year) 1320a-7b(b), applies to all individuals and companies. Barnes & Thornburg LLP. Thursday, October 20, 2022. 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. 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). 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. 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. Surviving Fair Market Value & Commercial Reasonableness Thresholds Removes the timeframe limitations for modifications to the financial terms of a compensation arrangement. June 14, 2022; salem witch trials podcast lore A regular assessment should be conducted to determine if the healthcare transactions are commercially reasonable. 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. A "Stark" Difference in Fair Market Value and Commercial Reasonableness However, there are a few core concepts that are applicable when establishing fair market value. Using the example of celebrities above, many contracts with celebrities include a portion of ticket sales to that movie. CMS Limits Isolated Transactions Exception | Jones Day CMS recently issued the Stark Law Final Rule ("Final Rule"), which makes numerous significant changes and provides important clarifications to the Stark Law. 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.