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. The bottom line is that in the context of fair market value and the Stark Law, normal business negotiations allowing for leverage between parties is not necessarily the same in the healthcare context (because the parties cannot take into account that they generate business for one another). Some of those include organizations that have been charged even with compensation levels that are not above the 90th percentile. 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. PDF HD0070020 CMS Stark Law Regulations - Dorsey That is a topic for another day. 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. 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. You can contact me at 800-270-9629. 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. This is not to say that organizations and individuals cant achieve high levels of income but it is to say that the aims in healthcare are much different than you might see in investment banking, entertainment industries, or in sporting industries. As an industry, the Life Sciences has nearly uniformly adopted . Federal physician self-referral prohibition (42 USC 1395nn. 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. The following requirements must be [] While this exception may be utilized in some instances, it is likely organizations will utilize the employment exception or personal services exception. The Anti-Kickback Statute is a criminal law that prohibits healthcare organizations from knowingly and willfully paying any remuneration to induce patient referrals or to generate business involving any service payable by the federal healthcare programs. The Anti-Kickback Statute (AKS), 42 U.S.C. 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. With regard to fair market value (FMV), industry best practice suggests that you _____ in order to better withstand government scrutiny. The Stark Law safe harbor provision has seven components. On November 20, the Centers for Medicare & Medicaid (CMS) and the Department of Health and Human Services Office of Inspector General (OIG) issued a 627-page final rule which will serve to modernize and clarify Stark Law regulations. The commenters are incorrect that this is CMS policy. Clearly, from CMS perspective, both referenced policies are misguided. CMS Waives Stark Law Limits to Hospital-Physician Arrangements During Data were collected on several properties A "Stark" Difference in Fair Market Value and Commercial Reasonableness 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. ; and (3) Does it mean the compensation is not commercially reasonable? The Stark Truth About the Stark Law: Part I | AAFP 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 . These statutes currently reside under the purview of Centers for Medicare & Medicaid Services (CMS) fraud and abuse laws. Additionally, until now, there has been no codified definition for commercial reasonableness, only limited CMS discussion such as that in the proposed 1998 rule. Stark Law - an overview | ScienceDirect Topics Unfortunately though, although certain information is useful for business planning purposes, it is irrelevant for the purpose of establishing fair market value and compensation paid to a physician. Thus, "compensation substantially above $450,000 per year may be fair market value," according to . \end{matrix} Suite 201 Stark requires that a lease with a referring physician be in writing, signed by both parties, for a term of at least one year, at a fair market value rental rate. 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. First, financial incentives from a policy standpoint should not impact the plan of care developed for patients. Please join us on September 13 th! In addition, CMS removed the "volume or value" and the "other business generated" standards . 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. Others have been slightly more conservative and mandated in their physician contracts that they will not provide total compensation (base compensation plus all bonuses) above the 75th percentile (a true ceiling). Strictly Speaking: CMS Stark Law Guidance to Labs on Speculums - Foster 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. Thanks for reaching out. There are four basic methods of determining fair market value. Proceduralists such as dermatologists, orthopedic surgeons, ophthalmologists, otolaryngologists, plastic surgeons, urologists, etc. On March 30, 2020, the Centers for Medicare & Medicaid Services (CMS) issued blanket waivers to the Stark Law that permit certain arrangements between physicians and health care providers implemented in response to COVID-19 that would otherwise violate the Stark Law. On November 20, the Centers for Medicare & Medicaid (CMS) and the Department of Health and Human Services Office of Inspector General (OIG) issued a 627-page final rule which will serve to modernize and clarify Stark Law regulations. Referring to survey data regarding practice losses per physician and per provider can be enlightening. 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. 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 . This revenue generation includes downstream revenue. Allows the electronic health records (EHR) exception to be unending and allows limited donations of cybersecurity that are necessary for EHR, flexible physician payment schedules, and donations of replacement EHR items. As to its civil penalties, the Anti-Kickback Statute includes monetary penalties up to $50,000 per violation, civil . Carnahan Group. Guidance on reconciliation of payment variances. CMS Limits Isolated Transactions Exception | Jones Day The Stark Law prohibits physicians from referring patients for services to entities in which the physician or _____________________________ has a financial interest. The following requirements must be bet under this exception: While this exception may be utilized in various situations, it is likely another exception, depending on the arrangement, would be more appropriate. Grabbing a 2021 survey and finding a percentile might be enough, then again, it might not. 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 previous definition of fair market value stated that physician compensation "must be set in advance, consistent with fair market value, and not determined in any manner that takes into account the volume or value of referrals or other business generated by the referring physician.". 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. 7 Things Hospitals Should Know About Professional Services Agreements As stated above in our discussion of fair market value, CMS continues to make it clear that the commercial reasonableness determination is also accomplished through consideration of an arrangements context and from the perspective of those involved. recently sold and the following computer output was obtained. Rather, each case must be evaluated and considered in the context of the situation. The primary regulations governing physician compensation arrangements are the Stark Law and AKS. On February 9, 2018, Congress passed and President Trump signed into law H.R. These historic reforms became effective January 19, 2021 and are part of HHS's "Regulatory Sprint to . Finally, the incentives in a healthcare environment are inherently different than they are in a business venture in other industries. Using the example of celebrities above, many contracts with celebrities include a portion of ticket sales to that movie. Civil penalties of the AKS include False Claims Act liability, civil monetary penalties (CMP) and program exclusion, up to $50,000 CMP per violation, and civil assessment of up to three times the amount of kickback. What is Fair Market Value? - Stark Law The writing specifies the compensation that will be provided under the arrangement. \text{Regression} & \text{1} & \text{41587.3}\\ 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." 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. Stark Law: Isolated Transactions -- 411.357(f) - Bricker The Stark Law addressed a legitimate problem. Many of the new and revised regulations apply beyond financial arrangements related to care coordination initiatives, and thus are crucial for all The exception permits both monetary and nonmonetary remuneration between the parties. A significant part of compliance with Stark and Anti-Kickback is the concept of Fair Market Value. 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. 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. What are your reasons? Refines when a physician practice is required to sign a recruitment agreement between a hospital and a physician as well as timing issues for arrangements between a physician and non-physician practitioner (NPP) when a hospital is involved in compensating the NPP. What Is the Stark Law, and How Can You Avoid Violating It? Last Name (required) Special Rules for Profit Shares and Productivity Bonuses ( 411.352(i)) a. With the increased rate of mergers and acquisitions, healthcare organizations are vulnerable to federal scrutiny. While this expansive list of Stark Law changes will take some time for the industry to digest, we wanted to promptly share three changes and corresponding takeaways as it relates to fair market value and commercial reasonableness in physician/ hospital relationships. 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. 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. Answer Choices A. obtain the valuation from legal counsel B. obtain a certified valuation from an expert, third party C. conduct an in-house valuation D. B and C The waivers, which are numerous and fairly broad, offer health care entities significant flexibility to combat COVID-19 in ways . If a hospital is losing three times the national average in its employed primary care practice ask:(1) Why? Noteworthy 2021 stark law revisions and modifications: specifically areas impacting provider compensation and transactions valuation. You can contact me at 865-673-0844. Under the statute; 411.357 Exceptions to the referral prohibition related to compensation arrangements. 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. document.getElementById( "ak_js_1" ).setAttribute( "value", ( new Date() ).getTime() ); document.getElementById( "ak_js_2" ).setAttribute( "value", ( new Date() ).getTime() ); 9850 Von Allmen Court Barnes & Thornburg LLP. 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. CMS' stated purpose is to establish bright-line, objective regulations that would be more easily applied. 22-14.HHS OIG was responding to a written request for an advisory opinion regarding a proposed continuing medical education program for local optometrists conducted by an ophthalmology group practice and four potential funding options for the programs. 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. The Stark Law defines FMV as "the value in arm's length transactions, consistent with general market value". Documentation of all aspects of relationship. 5. 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 . Q. Third Circuit Perpetuates Tuomey's Controversial Stark Law "Volume or 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 Y=20.0 + 7.21X\\\\ Building High-Performing Physician Networks. For bona fide employment as long as all other requirements are met. OIGs proposed new safe harbors are: Additionally, OIG is finalizing changes to the following existing safe harbors: CMS modifications and additions to the Stark Law rules were equally significant. Government scrutiny around healthcare transactions has heightened in recent years due to an increase in the volume of violations of healthcare fraud and abuse laws.
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