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. 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. In the final Stark rule, despite being asked by commenters, CMS specifically refused to establish a rebuttable presumption or safe harbor that guaranteed an arrangement was within fair market value if the arrangements compensation was set at a certain salary survey percentile. First Name (required) CRNAs are only one examplethe same challenges could easily apply to any physician specialty or market. Previous Definition of Fair Market Value (42 U.S.C. Thursday, October 20, 2022. 2 A discussion of Stark's application to Medicaid claims is beyond the scope of this broad overview. 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. B and C only - False Claims Act liability & Exclusion from the Medicare and Medicaid programs. Compliance - Stark Law Flashcards | Quizlet Arrangements for patient engagement and support to improve quality, health outcomes, and efficiency. 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.. Personal services and management contracts and outcomes-based payments safe harbor creates protection under safe harbor for part-time or intermittent arrangements and arrangements for which total compensation is not known in advanceit eliminates a requirement that part-time arrangements have a schedule of services specifically set out in advance in the agreement. 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. Fair Market Value (FMV) Developing your contracts and fair market value Spidey sense for Providing additional flexibility related to signature and writing requirements. 3 See 42 U.S.C. 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. 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. document.getElementById( "ak_js_1" ).setAttribute( "value", ( new Date() ).getTime() ); PYA Repeats Forbes Listing as a Top Tax and Accounting Firm in the Nation, PYA: Healthcare Consulting, Audit & Accounting, Financial Institutions Audit & Accounting, Alternative Payment Model Design & Strategy. The commercial division of a real estate firm is conducting a regression analysis of the relationship The exception permits both monetary and nonmonetary remuneration between the parties. 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. 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. Among the many changes in the Stark Law final rule, the following are some of the most significant: 1. This safe harbor is intended to provide greater predictability for model participants and uniformity across models. Using the example of celebrities above, many contracts with celebrities include a portion of ticket sales to that movie. 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. 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. 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. In doing so, CMS offered helpful commentary for health care entities structuring real estate arrangements. According to CMS in the Final Rule, 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. In the Final Rule, CMS also reiterated that the determination of commercial reasonableness is not one of valuation. An arrangement can be fair market value, but that does not mean that it is commercially reasonable. This piece concludes with thoughts regarding the COVID-19 pandemics effect on the immediate future of physician and APP compensation valuation. The Stark Law addressed a legitimate problem. ; . 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. Although many compensation arrangements are legitimate, a compensation arrangement may violate the anti-kickback statute if even one purpose of the arrangement is to Many of the changes in the Stark Law are aimed at eliminating regulatory restrictions that could deter or even potentially eliminate some novel arrangements as the industry continues its move towards a value-based health care system. Documentation of all aspects of relationship. Stark Law - an overview | ScienceDirect Topics 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. 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. Due to a complex regulatory environment, an in-depth analysis should be performed to ensure that the healthcare transactions are legally permissible at FMV and are commercially reasonable. 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. 6 Mark O. Dietrich, CPA/ABV Stark II -Statutory Guidance Stark Statute - 42 U.S.C. bdo.com. 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. 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. 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.". The fair market value of equipment and office space leases is determined without taking into account intended use or, in the case of office space, proximity to the lessor if the . That is a topic for another day. "General market value" means the price that an asset would bring as the result of bona fide . Assessing Fair Market Value. Grabbing a 2021 survey and finding a percentile might be enough, then again, it might not. 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. Federal physician self-referral prohibition (42 USC 1395nn. Interested in learning about what is a referral? Close the income statement accounts with debit balances. PDF Establishing Fair Market Value under the Anti-kickback and Stark Laws For example, if a physician is paid at the 75th percentile under a specific survey then fair market value must be met. The case underscores that the OIG cares about technical as well as substantive compliance with the Stark law. 5. CMS is clarifying here that while such a situation (e.g. 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 . Guidance on reconciliation of payment variances. Which of the following is a government sanction provided under the Stark regulation? This would be incorrect. Suite 201 Key PYA Takeaway: Guidance from prior court decisions, as well as certain previous governmental representatives, have questioned commercial reasonableness if arrangements are not profitable. A qualitative analysis of the nature and scope of services performed, necessity of services, and comparability of services should be performed. Referring to survey data regarding practice losses per physician and per provider can be enlightening. have been significantly impacted by decreased patient volume. <p> Fair Market Value (FMV) has become an industry standard in accordance with regulations and statutes such as the US Sunshine Act, False Claims Act, and Anti-Kickback Statute, as well as international transparency reporting and anti-corruption legislations. Provides new exceptions for value-based compensation arrangements that meet certain financial risk requirements and provides new definitions for value-based activity; value-based arrangement; value-based enterprise (VBE); value-based purpose; VBE participant; and target patient population. CMS Releases Several Stark Law Waivers for Use during the COVID - Mintz If an appraiser is hired, the appraiser's qualifications and experience must be considered if that appraisal will be relied upon. A "Stark" Difference in Fair Market Value and Commercial Reasonableness Is Coming in 2021. Key Takeaways from the Stark Law Final Rule - Hodgson Russ 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 . The reader should contact his or her Carnahan Group or other tax professional prior to taking any action based upon this information. b. Healthcare employment contracts must: 1) Have a duration of at least a year. 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. There is no fair market value calculator that takes in a couple datapoints and spits out a positive or negative fair market value answer. June 14, 2022; salem witch trials podcast lore These statutes currently reside under the purview of Centers for Medicare & Medicaid Services (CMS) fraud and abuse laws. Modernizing and Clarifying the Physician Self-Referral - CMS The same survey data that many compensation valuators rely on as a central component to their fair market value analysis and opinion. ensure that those arrangements reflect fair market value for bona fide services the physicians actually provide. healthcapital.com. Real Estate Leasing in the Healthcare Industry: Understanding the Stark First, financial incentives from a policy standpoint should not impact the plan of care developed for patients. Looking for help navigating the Stark Law Final Rule? 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. On January 19, long-awaited adjustments to the Centers for Medicare and Medicaid Services' ("CMS") Physician Self-Referral Law (commonly referred to as the "Stark Law") and the Department of Health and Human Services Office of Inspector General's ("OIG") Anti-Kickback Statute ("AKS") took effect that make it easier for hospitals and health systems to transition from volume . The Federal Anti-Kickback Statute, codified at 42 U.S.C. Introduction. Our hypothesis is that COVID-19 will appreciably affect the salary, production, and other data reported by physicians and their practicesin some instances, to a significant degree. 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. Contact our expert, Neal D. Barkeratnbaker@hsgadvisors.com or call (502) 814-1189. In reading CMS comments in the Federal Register, there is no doubt that CMS views each case as unique and there is not a set formula or methodology for determining fair market value. Rather, each case must be evaluated and considered in the context of the situation. In our prior article, we provided a basic overview of Fair Market Value (FMV) assessments and how these have become a key aspect in compensation contracts for cardiologists.We also reviewed how practices should focus on demonstrating their value to hospitals and health systems by showcasing leadership efforts within the practice and hospital, attention to strategy, financial performance . The Stark and AKS Final Rules became effective January 19, 2021, with the exception of certain changes to the definition of a group practice that have an effective date of January 1, 2022 to give physician practices time to adjust their compensation methodologies. 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 . A significant part of compliance with Stark and Anti-Kickback is the concept of Fair Market Value. Posted on October 27, 2016August 15, 2022. \text{Total} & \text{8} & \text{51984.1}\\ 5, A regular assessment should be conducted to determine if the healthcare transactions are commercially reasonable. Medical Director Compensation and Compliance - HG.org stark law fair market value industry best practice. In fact, studies done by the government in the 1980s and early 1990s discovered that this was a real issue and it not only represented a significant increase in costs but also created significant patient risk. 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. americanbar.org. Yes, consulting multiple, objective, independently published salary surveys remains a prudent practice for evaluating fair market value, as stated in Stark II, Phase III, but salary surveys are not automaticregardless of the percentile at which the compensation in question falls. Stark Law: Clarification of Key Terms - Dinsmore & Shohl LLP Do our losses mean the compensation we are paying, while fair market value, is not commercially reasonable? 201 East Fifth Street Suite 1110 Cincinnati, OH 45202-4152 t: 513.870.6700 f: 513.870.6699. info@bricker.com. The fair market value exception is a compensation exception that is flexible depending on the arrangement. This exception takes effect when there is an arrangement into writing that specifies the time frame and remuneration, and meets Anti-Kickback Statutes . Q & A: Self-Referral/Stark Law And Anti-Kickback Regulations 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. Directions The key elements of a robust FMV practice continue, however, to evolve. 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. Thanks for reaching out. Healthcare Regulatory and Stark Law/Fair Market Value and Commercial Reasonableness attorney. 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. First, it delineated that salary surveys or salary survey percentiles may not be appropriate to use in all circumstances. An extension has been granted until January 1, 2022 for compliance related to certain changes required in group practice compensation methodologies. Fair Market Value and Commercial Reasonableness Applied to Healthcare Transactions. a non-profitable arrangement) may present a problem, it is not expressing a definitive opinion on the matter as each arrangement is facts and circumstances specific, and it could see certain arrangements with facts and circumstances whereby a non-profitable arrangement is commercially reasonable. In addition to fair market value, most applications of the anti-kickback statute and Stark law also require commercial reasonableness. \text{X} & \text{7.210} & \text{1.3626} & \text{5.29}\\\\ Consult with healthcare counsel to review compensation arrangements to identify any structures that take into account the volume or value of referrals or business 411.356 Exceptions to the referral prohibition related to ownership or investment interests. var year = today.getFullYear() The fair market value exception is a compensation exception that is flexible depending on the arrangement. For example, celebrities and professional athletes negotiate contracts without any specific compensation regulations. 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 Compensation arrangements that are required to be representative of . 7. Stark Law/Fair Market Value | WilliamsMarston | Accounting Advisory