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. While this exception may be utilized in some instances, it is likely organizations will utilize the employment exception or personal services exception. In order to qualify for the recruitment exception, the arrangement must _________________________ . Attendees may ask questions in advance. ), 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. On the revenue side, many practices had the benefit of the Paycheck Protection Program, but unfortunately, for many that was not enough to outweigh the additional personal protective equipment cost and lost revenue due to decreased patient volume. In some cases, the alignment between compensation and production may be distorted. 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. Again, job posting sites have been invaluable to determining fair market value for high-demand services. Industry stakeholders have informed us that, because the consequences of noncompliance with the Stark Law are so dire, physicians and other healthcare providers may be discouraged from entering into innovative arrangements that would improve . A Stark violation is punishable by civil money penalties; an anti-kickback violation is punishable by exclusion from federal health care programs, criminal penalties of up to $25,000 in fines or . Fair Market Value Under the Stark Law and Anti-Kickback Statute Healthcare Regulatory and Stark Law/Fair Market Value and Commercial Reasonableness attorney. Documenting the organizations goals with the arrangement or transaction must be a priority. According to CMS, we continue to believe that the fair market value of a transactionand particularly, compensation for physician servicesmay not always align with published valuation data compilations, such as salary surveys. Stark Law: Clarification of Key Terms - Dinsmore & Shohl LLP 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. This field is for validation purposes and should be left unchanged. 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. Chapter 25. 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. 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. Fair Market Value Exception - Stark Law 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. 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. stark law fair market value industry best practice 411.356 Exceptions to the referral prohibition related to ownership or investment interests. First, financial incentives from a policy standpoint should not impact the plan of care developed for patients. Further, the concept of fair market value has become much more than a financial analysis. Stark Law Changes: Hospitals Need to Revisit Physician Compensation New Value-Based Exceptions. The writing specifies the compensation that will be provided under the arrangement. 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. Special Rules for Profit Shares and Productivity Bonuses ( 411.352(i)) a. This has also been true in markets in which the demand and competition for CRNAs has exploded. 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"). 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. Their concern has been financial, yes, but also an increasing concern of compliance risk. CMS indicated that many of the changes to the Stark Law rules are intended to provide new flexibility and reduce administrative burden on health care organizations and providers in the structuring of arrangements, making it easier and less expensive to comply with the Stark Law. Get ready and roll up your sleeves for the work ahead. The same survey data that many compensation valuators rely on as a central component to their fair market value analysis and opinion. Fixed asset valuations include fair market value, orderly and forced liquidation valuations of medical equipment, office and computer equipment, software, leasehold improvements and supplies inventory. However, since the law was enacted in 1989, the regulations implementing it have become woefully outdated. With regard to fair market value (FMV), industry best practice suggests that you _____ in order to better withstand government scrutiny. Strictly Speaking: CMS Stark Law Guidance to Labs on Speculums - Foster In addition to fair market value, most applications of the anti-kickback statute and Stark law also require commercial reasonableness. At WilliamsMarston, our team of valuation experts are readily available to assist you with your most important financial transactions, including navigating Stark Law and fair market value (FMV) matters. 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. B and C - obtain a certified valuation from an expert, third party & conduct an in-house valuation . This ensures that there is maximum compliance of regulatory statutes and prevents any violation of healthcare laws. Stark defines fair market value (FMV) as ______________________________ . The Anti-Kickback Statute. 3. As an industry, the Life Sciences has nearly uniformly adopted . document.write(year) Health Management Associates $260 Million, Kalispell Regional Healthcare $24 Million. They go as follows: Cost or selling price: If the item has been recently bought or sold, that can be a good indicator of its fair market value. Louisville, Kentucky 40241, 2023 HSG Advisors. Although many compensation arrangements are legitimate, a compensation arrangement may violate the anti-kickback statute if even one purpose of the arrangement is to Q & A: Self-Referral/Stark Law And Anti-Kickback Regulations On February 9, 2018, Congress passed and President Trump signed into law H.R. Specifically, the aim of healthcare delivery is to provide high-quality care, high levels of access, and at the most cost-effective price. Email (required), Healthcare eNewsletterTax & Assurance eNewsletterWebinars. What are your reasons? The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting, investment or tax advice or opinion provided by Carnahan Group to the reader. 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. americanbar.org. Posted on October 27, 2016August 15, 2022. TheregressionequationisY=20.0+7.21XPredictorCoefSECoefTConstant20.0003.22136.21X7.2101.36265.29AnalysisofVarianceSOURCEDFSSRegression141587.3ResidualError7Total851984.1\begin{matrix} Structuring legally compliant hospital-physician leases and establishing fair market value (FMV) rental rates can be challenging. The Stark Law addressed a legitimate problem. 1395nn, and the regulations and guidance promulgated thereunder. 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 Guidance on reconciliation of payment variances. Directions 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. A qualitative analysis of the nature and scope of services performed, necessity of services, and comparability of services should be performed. 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. Traditional survey sources have proven to be dated and inadequate for the CRNA salaries being offered. These statutes currently reside under the purview of Centers for Medicare & Medicaid Services (CMS) fraud and abuse laws. 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. Thanks for reaching out. Second, downstream financial incentives in healthcare, as in most industries, is extremely hard to quantify. For more information on Stark Law Exceptions, see our dedicated page. While CMS has indicated that the presence of losses does not automatically call into question an arrangements commercial reasonableness, the agency noted that each arrangement or transactions circumstances will ultimately determine its commercial reasonableness. 2 A discussion of Stark's application to Medicaid claims is beyond the scope of this broad overview. Rely on Our Experts for Stark Law and Fair Market Value Matters. The Stark Law safe harbor provision has seven components. 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. 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. 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. 411.353 Prohibition on certain referrals by physicians and limitations on billing. have been significantly impacted by decreased patient volume. Often traditional salary survey sources do not provide datasets based on level of physician involvement or oversight for CRNAs, making it difficult to find an apples-to-apples comparison. 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. Fair Market Value ( 411.351) C. Group Practices ( 411.352) 1. Developing your contracts and fair market value Spidey sense for PDF Fraud Alert: Physician Compensation Arrangements May Result in 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. Hospital-Physician Leasing Arrangements A "Stark" Difference in Fair Market Value and Commercial Reasonableness Is Coming in 2021. 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. The Stark Law defines FMV as the value in arms length transactions, consistent with general market value. For example, in the past some arrangements where physician compensation exceeded professional collections have received considerable scrutiny for commercial reasonableness. Utilizing our extensive experience in fair market value compensation, commercial reasonableness, and physician compensation planning/ strategy, PYA will continue to analyze the final Stark regulations and bring you additional updates and important information. This piece concludes with thoughts regarding the COVID-19 pandemics effect on the immediate future of physician and APP compensation valuation. 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. Historically, the concept of a bargained for exchange was primarily handled and managed by financial professionals within the organization. and Don Barbo, Managing Director with VMG Health, on the topic of "New Stark Law and AKS Final Rules -Valuation Considerations." On January 19, 2021, a new era was ushered in as the CMS Stark Law Final Rule and the HHS-OIG Anti-Kickback Statute Final Rule became effective. 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.