First, it delineated that salary surveys or salary survey percentiles may not be appropriate to use in all circumstances. 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. 2 Healthcare transactions must be commercially reasonable and should be comparable to what is paid ordinarily for similar services in the area. Louisville, Kentucky 40241, 2023 HSG Advisors. 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. 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. This piece concludes with thoughts regarding the COVID-19 pandemics effect on the immediate future of physician and APP compensation valuation. For example, the guaranteed compensation for a physician under an employment arrangement would have to be at levels consistent with what other physicians make within those specialties. Which of the following is a government sanction provided under the Stark regulation? However, since the law was enacted in 1989, the regulations implementing it have become woefully outdated. 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. 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. The exception cannot be utilized for the rental of office space though. Download a PDF Version of the Article as Published in AHLA's 2021 . Likewise, a belief that paying a provider above the 75th percentile is not fair market value is also misplaced. As you can see, the definition of fair market value does not provide details with respect to what is fair market value. The Stark Law addressed a legitimate problem. nbaker@hsgadvisors.com or call (502) 814-1189. This site rocks the Pearsonified Skin for Thesis. If an appraiser is hired, the appraiser's qualifications and experience must be considered if that appraisal will be relied upon. 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 . Too often, they have hindered, rather than . 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. Reflecting on Recent Regulatory Changes to the Stark Law: A Real Estate and Equipment Valuation Perspective, Part 2. The law provides that "fair market value" is the value in arms' length transactions concerning rentals or leases and the value of a rental property for general commercial purposes. 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. 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. This has also been true in markets in which the demand and competition for CRNAs has exploded. The answer to that question has often been more elusive and not as immediately apparent as fair market valueand we know how nebulous and elusive fair market value can be at times. If a hospital is losing three times the national average in its employed primary care practice ask:(1) Why? Which of the following are exceptions under Stark? 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.. Instead, it is the impact of the COVID-19 pandemic on the industrys salary and production survey data. The Stark Law defines FMV as the value in arms length transactions, consistent with general market value. 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 Commercial Reasonableness Applied to Healthcare Transactions. TheregressionequationisY=20.0+7.21XPredictorConstantXAnalysisSOURCERegressionResidualTotalCoef20.0007.210ofDF1Error8SECoef3.22131.3626VarianceSS41587.3751984.1T6.215.29. Distribution of Profits Related to Participation in a Value-Based Enterprise; b. The compensation must be set in advance, consistent with fair market value, and not determined in a manner that takes into account the volume or value of referrals or other business generated by the referring physician. 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. The argument is that but for the celebrity being in the movie the consumer would not purchase the ticket. Previous Definition of Fair Market Value (42 U.S.C. 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. A comprehensive, but not all inclusive, list of the items covered in the final rule follows. Documentation of all aspects of relationship. 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. 411.351. A factor that is certain to affect fair market value determination during the coming year is not new or revised legislation. A and B - not be conditioned on referrals & allow the physician to establish medical staff membership at other hospitals. 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. 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. 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. ; and (3) Does it mean the compensation is not commercially reasonable? The regulations will become effective January 19, 2021, with one exception. Financial arrangements should be based on comparable data and should be set in advance by members who have no conflict of interests. CMS recently issued the Stark Law Final Rule ("Final Rule"), which makes numerous significant changes and provides important clarifications to the Stark Law. TheregressionequationisY=20.0+7.21XPredictorCoefSECoefTConstant20.0003.22136.21X7.2101.36265.29AnalysisofVarianceSOURCEDFSSRegression141587.3ResidualError7Total851984.1\begin{matrix} 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. 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. United States. Finally, the incentives in a healthcare environment are inherently different than they are in a business venture in other industries. 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 . CRNAs are only one examplethe same challenges could easily apply to any physician specialty or market. New "Fair Market Value" and "General Market Value" Definitions. Federal physician self-referral prohibition (42 USC 1395nn. have been significantly impacted by decreased patient volume. Unlike fair market value determination, commercial reasonableness is not as readily determined by standardized methodologies, practices, or sources. Home Fair Market Value and Commercial Reasonableness Applied to Healthcare Transactions, An Informational Article (i) Consistent with the fair market value of . With the increased rate of mergers and acquisitions, healthcare organizations are vulnerable to federal scrutiny. The Stark Law defines FMV as the value in arms length transactions, consistent with general market value. Finalized new, permanent exceptions for value-based arrangements that will permit physicians and other health care providers to enter into value-based arrangements without fear that their legitimate activities to better coordinate care, improve quality, and lower costs would violate the Stark Law. Using the example of celebrities above, many contracts with celebrities include a portion of ticket sales to that movie.