1320a-7b. 1320a-7b (b) and the regulations and guidance promulgated thereunder. A "Stark" Difference in Fair Market Value and Commercial Reasonableness healthcapital.com. Sec. 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. The Situation: The isolated transactions exception under the Stark Law has been used by some providers and entities to retroactively protect services arrangements that do not qualify for personal services or fair market value compensation exceptions because, for example, the arrangements were not reduced to writing before services were rendered. Stark Law - StatPearls - NCBI Bookshelf 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. et al. CMS has stated that compensation between certain percentiles does not provide a safe harbor. An extension has been granted until January 1, 2022 for compliance related to certain changes required in group practice compensation methodologies. HHS Finalizes New Protections Under the Stark Law for Value-Based This ensures that there is maximum compliance of regulatory statutes and prevents any violation of healthcare laws. 98810.3;2988 \div 10.3 ; 298810.3;2 significant digits. Value-based arrangements with substantial downside financial risk (at least 5%). The services to be performed under the arrangement do not involve the counseling or promotion of a business arrangement or other activity that violates a Federal or State law. 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. Removes the timeframe limitations for modifications to the financial terms of a compensation arrangement. The Stark law does maintain a definition of fair market value but it does not dictate actual numbers. 7. 2021 Stark Law and Anti-Kickback Statute: Fair Market Value Impact | HSG In doing so, CMS offered helpful commentary for health care entities structuring real estate arrangements. v. UPMC et al.In particular, the court held that the relators had made out a plausible allegation of an indirect compensation . The arrangement is in writing, signed by the parties, and covers only identifiable items or services, all of which are specified in writing. The U.S. Department of Health and Human Services (HHS) adopted certain regulatory leasing safe harbors for both the Anti-Kickback Statute, commonly referred to as the "space rental safe harbor," and Stark Law, commonly referred to as the "office space rental exception.". Health Management Associates $260 Million, Kalispell Regional Healthcare $24 Million. The same survey data that many compensation valuators rely on as a central component to their fair market value analysis and opinion. Contact our expert, Neal D. Barkeratnbaker@hsgadvisors.com or call (502) 814-1189. The Federal Anti-Kickback Statute, codified at 42 U.S.C. 411.353 Prohibition on certain referrals by physicians and limitations on billing. Financial arrangements are commercially reasonable if they are at FMV, services provided are documented and deemed necessary, and when the services cannot be provided at a lesser value. 411.362 Additional requirements concerning physician ownership and investment in hospitals. 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. Use Superior Corporation's trial balance and financial statements from the previous Work Together exercise. Further, the concept of fair market value has become much more than a financial analysis. Jana will be discussing the Stark Law changes, and Angie will be providing related valuation examples during the September 13, 2022 Let's Talk Compliance webinar entitled Stark Law Changes and Impact on Physician Compensation Part 2. The original content piece along with other guide publications can be accessed here. 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. nbaker@hsgadvisors.com or call (502) 814-1189. 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 . Its criminal penalties include fines up to $25,000 per violation, and up to 5 years in federal prison. Too often, they have hindered, rather than . 1892, the Bipartisan Budget Act of 2018 (the "Budget Act"), which included changes to the federal physician self-referral law (commonly known as the "Stark law").Among these revisions are allowing indefinite holdovers in two notable exceptions to the Stark law: (1) personal services arrangements and (2 . 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. The waivers, which are numerous and fairly broad, offer health care entities significant flexibility to combat COVID-19 in ways . Executive Session: Fair market value and the shift to value - MGMA In turn, CMS is willing to accept any commercially reasonable methodology that demonstrates compensation is comparable to what is ordinarily paid for services in an arms-length transaction. 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. There are numerous laws across the country that have been created to remove this unethical practice. This has also been true in markets in which the demand and competition for CRNAs has exploded. 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. You can contact me at 865-673-0844. Carnahan Group. Healthcare Regulatory and Stark Law/Fair Market Value and Commercial Reasonableness attorney. So, while it may require effort, and in some cases could be difficult to achieve, finding fair market value is a must. 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. Part 1: Healthcare Leases: Anti-Kickback Statute and Stark Law - Bradley 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 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. \end{matrix} While the hypothetical fair market value is $450,000, the general market value may exceed that. 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. 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). This would be incorrect. The fair market value exception is a compensation exception that is flexible depending on the arrangement. Healthcare organizations should consider both qualitative and quantitative components for FMV and commercial reasonableness analyses of financial transactions. Provided additional guidance on key requirements of the exceptions to the Stark Law to make it easier for healthcare providers to take steps to ensure compliance, such as: Guidance on identifying compensation formulas that take into account the volume or value of a physicians referrals. Real Estate Leasing in the Healthcare Industry: Understanding the Stark Current Definition of General Market Value (42 C.F.R. 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. Sec. 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. \text{The regression equation is}\\ First, financial incentives from a policy standpoint should not impact the plan of care developed for patients. Home Fair Market Value and Commercial Reasonableness Applied to Healthcare Transactions, An Informational Article which allows healthcare organizations to analyze physician compensation arrangements for fair market value and commercial reasonableness instantly. 5. An arrangement may be commercially reasonable even if it does not result in profit for one or more of the parties.. The Anti-Kickback Statute (AKS), 42 U.S.C. 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. The bottom line is that in the context of fair market value and the Stark Law, normal business negotiations allowing for leverage between parties is not necessarily the same in the healthcare context (because the parties cannot take into account that they generate business for one another). HSG has written articles about practice losses and how to address them. Instead, it is the impact of the COVID-19 pandemic on the industrys salary and production survey data. Changes to AKS Personal Services Safe Harbor | Jones Day 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. 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. Kickbacks And Other Illegal Arrangements: The Anti-Kickback Statute On February 9, 2018, Congress passed and President Trump signed into law H.R. 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 . For the past 30 years, a key consideration for health care organizations entering into transactions and arrangements for the employment and compensation of physicians has been the profitability of the practices in which the physicians, their staff, and other practicerelated resources are housedor more precisely the losses of the practices in which physicians and APPs are housed. Final Rules also provide guidance related to fundamental concepts under the Stark Law, including commercial reasonableness, the volume or value standard, and fair market value. As to its civil penalties, the Anti-Kickback Statute includes monetary penalties up to $50,000 per violation, civil . 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 . 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. With regard to fair market value (FMV), industry best practice suggests that you ____________________________ in order to better withstand government scrutiny. 411.357 Exceptions to the referral prohibition related to compensation arrangements. 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. Many of these reasons are out of the hospital or health systems control. worldservicesgroup.com. 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. Carry out the indicated operation and give your answer with the specified number of significant digits. The fair market value of equipment and office space leases is determined without taking into account intended use or, in the case of office space, proximity to the lessor if the . 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. Isolated financial transactions, such as a one-time sale of property or a practice, or a single instance of forgiveness of an amount owed in settlement of a bona fide dispute, if all of the following conditions are met: (1) The amount of remuneration under the isolated financial transaction is. Healthcare transactions must be commercially reasonable and should be comparable to what is paid ordinarily for similar services in the area. With the increased rate of mergers and acquisitions, healthcare organizations are vulnerable to federal scrutiny. New Stark Law and AKS Final Rules -Valuation Considerations Cybersecurity technology and services safe harbor for remuneration in the form of cybersecurity technology and services. Rely on Our Experts for Stark Law and Fair Market Value Matters. \text{Predictor} & \text{Coef} & \text{SE Coef} & \text{T}\\ Q. 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. 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. 1320a-7b(b), applies to all individuals and companies. However, we agree with the commenter that asserted that a hospital may find it necessary to pay a physician above what is in the salary schedule, especially where there is a compelling need for the physicians services. Despite the request and urging of commenters, CMS declined to establish rebuttable presumptions that compensation is fair market value or safe harbors that would deem compensation to be fair market value if certain conditions are met. Bottom line, CMS affirmed that there is no guarantee to fair market value determinationthere is no universal formula or proverbial rubberstamp as it pertains to provider compensation. <p> Fair Market Value (FMV) has become an industry standard in accordance with regulations and statutes such as the US Sunshine Act, False Claims Act, and Anti-Kickback Statute, as well as international transparency reporting and anti-corruption legislations.