Chapter 25. 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. A regular assessment should be conducted to determine if the healthcare transactions are commercially reasonable. 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. Stark defines fair market value (FMV) as ______________________________ . Sec. It is, however, often the best information that one can find. 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. 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 . Which of the following is TRUE about the Stark Law? 411.354 Financial relationship, compensation, and ownership or investment interest. B and C only - False Claims Act liability & Exclusion from the Medicare and Medicaid programs. \text{X} & \text{7.210} & \text{1.3626} & \text{5.29}\\\\ Which of the following disclosure protocols should be used by providers when disclosing a Stark violation? Eliminating the period of disallowance rules and correcting discrepancies during the arrangement. 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. v. UPMC et al.In particular, the court held that the relators had made out a plausible allegation of an indirect compensation . Note this requires a valuator being able to find enough comparable postings with posted salary offersless than ten is typically not enough. 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. et al. 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. Unlike the civil nature of Stark Law, the Anti-Kickback Statute is under both civil (administrative) and criminal laws. 411.351. 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. Noteworthy 2021 stark law revisions and modifications: specifically areas impacting provider compensation and transactions valuation. What are your goals? 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. Thursday, October 20, 2022. 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. As it relates to the updated definition of fair market value, CMS continues to emphasize that its determination should be based on any appropriate method depending on the kind of transaction, its location, and other factors. b. In addition to fair market value, most applications of the anti-kickback statute and Stark law also require commercial reasonableness. Likewise, a belief that paying a provider above the 75th percentile is not fair market value is also misplaced. 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. document.write(year) Unlike fair market value determination, commercial reasonableness is not as readily determined by standardized methodologies, practices, or sources. 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 . These statutes currently reside under the purview of Centers for Medicare & Medicaid Services (CMS) fraud and abuse laws. There is no fair market value calculator that takes in a couple datapoints and spits out a positive or negative fair market value answer. Rely on Our Experts for Stark Law and Fair Market Value Matters. The exception cannot be utilized for the rental of office space though. \text{Total} & \text{8} & \text{51984.1}\\ 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. 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. 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. First Name (required) Their concern has been financial, yes, but also an increasing concern of compliance risk. 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." 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. According to CMS in the Final Rule, We continue to believe that this determination should be made from the perspective of the particular parties involved in the arrangement. Another key factor to commercial reasonableness is answering the question: Does the arrangement make sense to accomplish the parties goals? Many hospitals and health systems across the country have drawn a line in the sand and set a base compensation threshold at the 75th percentile for physician compensation. thousands of dollars) for apartment buildings. J. William Bookwalter, III, M.D. With the increased rate of mergers and acquisitions, healthcare organizations are vulnerable to federal scrutiny. Many organizations are frequently asking: Do we have greater compliance risk because our practices are losing money according to our internal financial statements and accounting? Thus, "compensation substantially above $450,000 per year may be fair market value," according to . With the increased rate of mergers and acquisitions, healthcare organizations are vulnerable to federal scrutiny. 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. 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. This is especially true given that scrutiny has increased greatly over the past decade, with the government taking aim at fraud and questionable arrangements and more fervently enforcing the Stark Law and Anti-Kickback Statute (AKS). Bob concentrates his . 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. which allows healthcare organizations to analyze physician compensation arrangements for fair market value and commercial reasonableness instantly. bdo.com. \text{Predictor} & \text{Coef} & \text{SE Coef} & \text{T}\\ HHS, through the Regulatory Sprint to Coordinated Care, has a stated goal of reducing regulatory barriers within our nations health care system and accelerating the transformation of the health care system into one that better pays for value and promotes care coordination. As HHS statement indicates, value-based arrangements and transactions are the focus of this episode of Stark Law and AKS revisions, but other areas and central ideas of the Stark Law and AKS are significantly impacted as well. Proceduralists such as dermatologists, orthopedic surgeons, ophthalmologists, otolaryngologists, plastic surgeons, urologists, etc. 98810.3;2988 \div 10.3 ; 298810.3;2 significant digits. 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.". 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"). While this exception may be utilized in some instances, it is likely organizations will utilize the employment exception or personal services exception. This exception takes effect when there is an arrangement into writing that specifies the time frame and remuneration, and meets Anti-Kickback Statutes . Formally establishes a definition of commercial reasonableness, while deleting outdated Stark Law references and updating key definitions such as fair market value, designated health services, physician, referral, remuneration, and transaction. 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. Barnes & Thornburg LLP. 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 party. B. Stark Law Exception - Value-Based Arrangements . 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. CRNAs are only one examplethe same challenges could easily apply to any physician specialty or market. We also believe there has to be a limit to what is reasonable in terms of losses. That determination may be fairly conservative and well within a reasonable range, but if said physician is the second of two medical directors for this service and the duties are already handled by the first medical director so the second is not needed, then the $150 per hour medical directorship, while fair market value is not commercially reasonable. For more information on Stark Law Exceptions, see our dedicated page. 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. Special Rules for Profit Shares and Productivity Bonuses ( 411.352(i)) a. Care coordination arrangements to improve quality, health outcomes, and efficiency without requiring the parties to assume any financial risk. Interested in learning about what is a referral? 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 other words, the rate of compensation set forth in a salary survey may not always be identical to the worth of a particular physicians services. This is something that we have experienced from time to time for uniquely trained or experienced physicians and/or challenging markets, but more recently and frequently for Certified Registered Nurse Anesthetists (CRNAs) who practice autonomouslyusually in rural markets. This site rocks the Pearsonified Skin for Thesis. The reader is also cautioned that this material may not be applicable to, or suitable for, the readers specific circumstances or needs, and may require consideration of nontax and other tax factors if any action is to be contemplated. 411.354). If ever there was a time in which that is true on so many levels, this is it. To determine what is commercially reasonable, we first must start with a basic definition. Local transportation safe harbor was revised to expand mileage limits for rural areas (to 75 miles) and eliminate mileage limits for transporting patients discharged from the hospital to their home. Close the income statement accounts with debit balances. 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. 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. Which of the following is a government sanction provided under the Stark regulation? The reason the simplicity of this is not correct is that many lawsuits and government enforcement actions have established what are the risks associated with fair market value. Fraud and Abuse Laws. This revenue generation includes downstream revenue. 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. This article was originally published by the American Health Law Association in April 2021 as part of their 2021 Health Care Transactions Resource Guide. Attendees may ask questions in advance. 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. 6 Mark O. Dietrich, CPA/ABV Stark II -Statutory Guidance Stark Statute - 42 U.S.C. An analysis to document commercial reasonableness may include, but not be limited to, whether the arrangement helps meet an organizations mission/ vision/ and values, the importance of the arrangement to the service line(-s) affected, how the arrangement affects the cost, quality, and access to care, what other options exist to accomplish the organizations goals, and why the arrangement entered was the best option. 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 Cimasi, R. Z T. Traversing the threshold of commercial reasonableness in the healthcare industry. To accommodate patient surge, a hospital rents office space or equipment from a physician practice at below fair market value or at no charge. Within the Healthcare industry, there are rules and regulations to ensure that . The Stark Law defines FMV as the value in arms length transactions, consistent with general market value. OIG also amended the definition of remuneration in the Beneficiary Inducements CMP statute to integrate a new statutory exception to the prohibition on beneficiary inducements for certain telehealth technologies.. Record the following closing entries on page 19 of the general journal. 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. A qualitative analysis of the nature and scope of services performed, necessity of services, and comparability of services should be performed. 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 . The regulations are part of the HHS Regulatory Sprint to Coordinated Care and . Looking for help navigating the Stark Law Final Rule? A qualitative analysis of the nature and scope of services performed, necessity of services, and comparability of services should be performed. 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. 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. First, it delineated that salary surveys or salary survey percentiles may not be appropriate to use in all circumstances. Always engage a competent appraiser who understands the Stark definition of fair market value and be sure the appraisal report addresses that. A significant part of compliance with Stark and Anti-Kickback is the concept of Fair Market Value. Bottom line, 2021 surveys, based on 2020 data, are likely going to be challenging. 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. Ultimately, valuators likely will have to be creative and look back into past years surveys to evaluate trends and validate current survey data. Organizations who may have carte blanche physician compensation review policies set at certain thresholds should be careful that the totality of the facts and circumstances support each transaction (versus the entirety of all transactions). 4) Have a payment or salary provision that is reasonable and is at fair market value. Fair market value is a pinnacle issue for compliance under the Stark Law and Anti-Kickback Statute. 411.354). You can contact me at 865-673-0844. ; and (3) Does it mean the compensation is not commercially reasonable? 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 . General market value means the price that an asset would bring as the result of bona fide bargaining between well-informed buyers and sellers who are not otherwise in a position to generate business for the other party, or the compensation that would be included in a service agreement as the result of bona fide bargaining between well-informed parties to the agreement who are not otherwise in a position to generate business for the other party, on the date of acquisition of the asset or at the time of the service agreement. In 2004, CMS noted that valuation methods under Stark Law "must exclude valuation where the parties to the transaction are at arms-length but in a position to refer each other." 6 Because FMV under Stark Law does not "necessarily comport with the usage of the term in standard valuation techniques and methodologies," 7 a purely market . \text{SOURCE} & \text{DF} & \text{SS}\\ That is a topic for another day. The definitions of fair market value and commercial reasonableness have been updated and established as follows: Regarding commercial reasonableness, CMS clarified that , As it relates to fair market value compensation, CMS clarifies several important items. The Anti-Kickback Statute. This piece concludes with thoughts regarding the COVID-19 pandemics effect on the immediate future of physician and APP compensation valuation. \text{Regression} & \text{1} & \text{41587.3}\\ Referring to survey data regarding practice losses per physician and per provider can be enlightening. Commercial Reasonableness Analysis for an Increasingly Regulated Healthcare Environment | BDO Healthcare Industry Blog . recently sold and the following computer output was obtained. For most Stark Law exceptions to apply, a(n) ___________________ is required. 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. The AKS Final Rule further codifies statutory revisions by adding the statutory exception to remuneration related to Accountable Care Organization Beneficiary Incentive Programs for the Medicare Shared Savings Program. The Stark law does maintain a definition of fair market value but it does not dictate actual numbers. At the advent of the Stark regulations, the federal law placed the referral of prosthetics (as defined by state Medicaid laws . 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. An arrangement may be commercially reasonable even if it does not result in profit for one or more of the parties.. It is inaccurate for a hospital or health system to believe that just because base compensation is below the 75th percentile there is no risk and that the compensation they are providing is automatically fair market value. Finalized protection for arrangements that will apply regardless of whether the parties operate in a fee-for-service or value-based payment system, such as donations of cybersecurity technology.
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