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Complying with Stark Law and Anti-Kickback Policies | SMS 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. "General market value" is the compensation that would be included in a service agreement as the result of bona fide bargaining between well-informed parties who are not otherwise in a position to generate business for the other . Cybersecurity technology and services safe harbor for remuneration in the form of cybersecurity technology and services. There is no fair market value calculator that takes in a couple datapoints and spits out a positive or negative fair market value answer. 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. Healthcare transactions must be commercially reasonable and should be comparable to what is paid ordinarily for similar services in the area. 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. CMS-sponsored model arrangements and CMS-sponsored model patient incentives. https://www.healthlawyers.org/Events/Programs/Materials/Documents/PHS15/kk_homchick_hutzler_shay.pdf, https://www.bdo.com/blogs/healthcare/april-2015/commercial-reasonableness-analysis?feed=8799bc52-2237-4688-aeac-83e40e623b56, http://www.americanbar.org/content/dam/aba/events/health_law/2015_Meetings/DocLaw/Papers/10_valuation_03.authcheckdam.pdf, http://www.worldservicesgroup.com/publications.asp?action=article&artid=2086, http://www.healthcapital.com/hcc/newsletter/10_12/HCVAL.pdf, New Timeshare Arrangement Exception under Stark Law. Many individual physicians believe that fair market value is met so long as relevant benchmarks exist. 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. Historically, the concept of a bargained for exchange was primarily handled and managed by financial professionals within the organization. Key Takeaways from the Stark Law Final Rule - Hodgson Russ Carnahan Group assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein. First, it delineated that salary surveys or salary survey percentiles may not be appropriate to use in all circumstances. An assessment of transactions should be done to analyze if it is reasonable to pay for the services in the first place, in order to prevent violation of the Anti-Kickback Statute. B and C only - False Claims Act liability & Exclusion from the Medicare and Medicaid programs. 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. For example, if a physician is paid at the 75th percentile under a specific survey then fair market value must be met. 4 See 42 CFR 411.354. 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. 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. If a hospital is losing three times the national average in its employed primary care practice ask:(1) Why? Home Fair Market Value and Commercial Reasonableness Applied to Healthcare Transactions, An Informational Article "General market value" means the price that an asset would bring as the result of bona fide . 3 See 42 U.S.C. The Stark law does maintain a definition of fair market value but it does not dictate actual numbers. worldservicesgroup.com. This field is for validation purposes and should be left unchanged. There are numerous laws across the country that have been created to remove this unethical practice. In June 2022, the United States Department of Health and Human Services Office of Inspector General (HHS OIG) released OIG Advisory Opinion No. Interested in learning about what is a referral? Fair market value is a pinnacle issue for compliance under the Stark Law and Anti-Kickback Statute. 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. 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 HAND Children are the Future. CMS Waives Stark Law Limits to Hospital-Physician Arrangements During 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. As a result, fair market value, commercial reasonableness, and the volume or value standard are separate and distinct requirements, each of which must be satisfied when included in an exception to the physician self-referral law. CMS refers to these three cornerstones of the exceptions to the Stark Law as the Big Three. CMS redefined the Big Three as follows: In addition to the general definition of fair market value above, CMS revisions to the Stark Law also provide definitions of fair market value that are specific to the rental of equipment and the rental of office space. bdo.com. 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. In addition, CMS removed the "volume or value" and the "other business generated" standards . have been significantly impacted by decreased patient volume. 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 Thanks for reaching out. Stark Law Changes: Hospitals Need to Revisit Physician Compensation Although many compensation arrangements are legitimate, a compensation arrangement may violate the anti-kickback statute if even one purpose of the arrangement is to 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 . 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. Catherine Short converses with Rachel V. Rose, JD, MBA, principal with Rachel V. Rose - Attorney at Law, P.L.L.C. If ever there was a time in which that is true on so many levels, this is it. 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.. Fair Market Value ( 411.351) C. Group Practices ( 411.352) 1. 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 . The concept of fair market value under the Stark Law is different than the concept of fair market value in an otherwise normal business arrangement (where parties do realize they can generate business for one another). Stark Law: Isolated Transactions -- 411.357(f) - Bricker 411.351. 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. The arrangement is in writing, signed by the parties, and covers only identifiable items or services, all of which are specified in writing. Regulatory Sprint: Understanding the Impact on the Stark Law, Anti Louisville, Kentucky 40241, 2023 HSG Advisors. Key PYA Takeaway: Guidance from prior court decisions, as well as certain previous governmental representatives, have questioned commercial reasonableness if arrangements are not profitable. 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. 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. CMS has stated that compensation between certain percentiles does not provide a safe harbor. As CMS stated, In our view, each compensation arrangement is different and must be evaluated based on its unique factors. Virtually every provider compensation exception under the Stark Law requires that the compensation paid reflects fair market value. Additionally, until now, there has been no codified definition for commercial reasonableness, only limited CMS discussion such as that in the proposed 1998 rule. Not only was the definition of general market value amended, but it was also given three unique definitions related to the context of a specific type of transaction. The Anti-Kickback Statute. 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. Downstream revenue may include referrals for laboratory services, referrals for imaging services, referrals for hospital services, or even referrals to other specialists. 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 . 411.354). Suite 201