7. Website managed by SiteCare.com. 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. Thursday, October 20, 2022. This article was originally published by the American Health Law Association in April 2021 as part of their 2021 Health Care Transactions Resource Guide. For more information on Stark Law Exceptions, see our dedicated page. 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. 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. The Stark Law prohibits physicians from referring patients for services to entities in which the physician or _____ has a financial interest. A "Stark" Difference in Fair Market Value and Commercial Reasonableness 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. The commercial division of a real estate firm is conducting a regression analysis of the relationship Within the Healthcare industry, there are rules and regulations to ensure that . 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 . First, it delineated that salary surveys or salary survey percentiles may not be appropriate to use in all circumstances. 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. 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. Current Definition of General Market Value (42 C.F.R. Introduction. document.write(year) Always engage a competent appraiser who understands the Stark definition of fair market value and be sure the appraisal report addresses that. Modifying the definition of set in advance used in many Stark exceptions to allow modification of compensation during the term of an arrangement (including in the first year). 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 example, in the past some arrangements where physician compensation exceeded professional collections have received considerable scrutiny for commercial reasonableness. 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. 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. ; and (3) Does it mean the compensation is not commercially reasonable? Fair Market Value Exception - Stark Law This site rocks the Pearsonified Skin for Thesis. 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. Third, fair market value as a concept is also dictated by relevant government enforcement actions as well as lawsuits. While this exception may be utilized in some instances, it is likely organizations will utilize the employment exception or personal services exception. HSG is not a law firm; we are a health care consulting and compensation valuation firm, so this article is not an exhaustive legal interpretation, summary, or review of all of CMS and OIGs updates, but rather a review of selected areasparticularly those elements and areas we view as having the most impact in the world of physician and advance practice provider (APP) compensation and transactions valuation. These new rules, which significantly amend the existing laws, are a direct result of HHS Regulatory Sprint to Coordinated Care. Medical Director Compensation and Compliance - HG.org With regard to fair market value (FMV), industry best practice suggests that you _____ in order to better withstand government scrutiny. 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. Federal physician self-referral prohibition (42 USC 1395nn. 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. Distribution of Profits Related to Participation in a Value-Based Enterprise; b. The waivers, which are numerous and fairly broad, offer health care entities significant flexibility to combat COVID-19 in ways . Considerations for Determining Fair Market Value Physician Compensation 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. 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. var today = new Date() HHS OIG Issues Advisory Opinion on Continuing Medical Education, Stark Documenting the organizations goals with the arrangement or transaction must be a priority. Valuation Triage: Stark/Anti-Kickback Valuation Issues within the Office-based primary care has been significantly affected as offices were closed for a period of time and then had to adjust to telehealth and virtual visits. Y=20.0 + 7.21X\\\\ Last Name (required) Below is a listing of some of the key changes: For those in the physician and APP compensation valuation arena, and for any hospital or health system that compensates a health care provider for administrative and/or professional services (which would be all hospitals and health systems in the country), there are other aspects of the Stark Law revisions that are of particular interest. The Stark Law prohibits physicians from referring patients for services to entities in which the physician or _____________________________ has a financial interest. Care coordination arrangements to improve quality, health outcomes, and efficiency without requiring the parties to assume any financial risk. Developing your contracts and fair market value Spidey sense for Further, the concept of fair market value has become much more than a financial analysis. To determine what is commercially reasonable, we first must start with a basic definition. For most Stark Law exceptions to apply, a(n) ___________________ is required. CMS further clarifies that commercial reasonableness is whether an arrangement makes sense as a means to accomplishing the parties goals. 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 . Removes the timeframe limitations for modifications to the financial terms of a compensation arrangement. 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. In June 2022, the United States Department of Health and Human Services Office of Inspector General (HHS OIG) released OIG Advisory Opinion No. 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.". To accommodate patient surge, a hospital rents office space or equipment from a physician practice at below fair market value or at no charge. which allows healthcare organizations to analyze physician compensation arrangements for fair market value and commercial reasonableness instantly. Arrangements for patient engagement and support to improve quality, health outcomes, and efficiency. \text{X} & \text{7.210} & \text{1.3626} & \text{5.29}\\\\ 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. Q & A: Self-Referral/Stark Law And Anti-Kickback Regulations 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 Bottom line, 2021 surveys, based on 2020 data, are likely going to be challenging. Many individual physicians believe that fair market value is met so long as relevant benchmarks exist. 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. Proceduralists such as dermatologists, orthopedic surgeons, ophthalmologists, otolaryngologists, plastic surgeons, urologists, etc. 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. The exception cannot be utilized for the rental of office space though. The general market value definitions are: What does it mean for a compensation arrangement to be commercially reasonable? Bob concentrates his . The Stark Law prohibits physician referrals of Medicare patients for certain "designated health services" to entities with which the physician has a financial relationship, unless an exception under the law applies. Clinical Fair Market Value: Why it's essential and what - IQVIA The Anti-Kickback Statute. 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. Cybersecurity technology and services safe harbor for remuneration in the form of cybersecurity technology and services. 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. 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. 1320a-7b(b), applies to all individuals and companies. Three new safe harbors for remuneration exchanged between or among participants in value-based arrangements: Value-based arrangements with full financial risk. Which of the following is TRUE about the Stark Law? 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. Current, Three-Part Definition of Fair Market Value (42 C.F.R. Through the Final Rule, CMS has addressed the topic of losses and profitability, stating the determination that an arrangement is commercially reasonable does not turn on whether the arrangement is profitable; compensation arrangements that do not result in profit for one or more of the parties may nonetheless be commercially reasonable. CMS offers several examples of reasons parties may enter into an arrangement or transaction despite financial losses to one or more parties. According to CMS, those reasons include, community need, timely access to health care services, fulfillment of licensure or regulatory obligations, including those under the Emergency Medical Treatment and Labor Act, the provision of charity care, and the improvement of quality and health outcomes. In our opinion, this means health care organizations must go the extra mile to document their reason(s) for compensating physicians and APPs, if those arrangements and transactions are exhibiting or are expected to yield financial loses.