1395 nn) and antikickback statutes (42 U.S.C. CMS recently issued the Stark Law Final Rule ("Final Rule"), which makes numerous significant changes and provides important clarifications to the Stark Law. It says, . Health Management Associates $260 Million, Kalispell Regional Healthcare $24 Million. Fraud and Abuse Laws. Y=20.0 + 7.21X\\\\ 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. \text{Constant} & \text{20.000} & \text{3.2213} & \text{6.21}\\ 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. Personal services and management contracts and outcomes-based payments safe harbor creates protection under safe harbor for part-time or intermittent arrangements and arrangements for which total compensation is not known in advanceit eliminates a requirement that part-time arrangements have a schedule of services specifically set out in advance in the agreement. 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. The law makes it a criminal offense to knowingly and willfully offer, pay, solicit, or receive anything of value (not just money) in order to induce or reward referrals or the generation of business paid for by federal healthcare programs. document.getElementById( "ak_js_1" ).setAttribute( "value", ( new Date() ).getTime() ); document.getElementById( "ak_js_2" ).setAttribute( "value", ( new Date() ).getTime() ); 9850 Von Allmen Court 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. 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. This ensures that there is maximum compliance of regulatory statutes and prevents any violation of healthcare laws. 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 Anti-Kickback Statute (AKS), 42 U.S.C. Value-based arrangements with substantial downside financial risk (at least 5%). Its criminal penalties include fines up to $25,000 per violation, and up to 5 years in federal prison. Healthcare Regulatory and Stark Law/Fair Market Value and Commercial Reasonableness attorney. 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. On February 9, 2018, Congress passed and President Trump signed into law H.R. healthcapital.com. If a payment is made that cannot be shown to have been fair . 2) Be in writing and signed by both parties. What are your reasons? 4 See 42 CFR 411.354. 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. 411.357 Exceptions to the referral prohibition related to compensation arrangements. Carry out the indicated operation and give your answer with the specified number of significant digits. The CMS Self-Referral Disclosure Protocol (SRDP). Consult with healthcare counsel to review compensation arrangements to identify any structures that take into account the volume or value of referrals or business 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 The Stark Law (42 U.S.C. The Stark law does maintain a definition of fair market value but it does not dictate actual numbers. A factor that is certain to affect fair market value determination during the coming year is not new or revised legislation. CMS' stated purpose is to establish bright-line, objective regulations that would be more easily applied. CMS is clarifying here that while such a situation (e.g. While this exception may be utilized in some instances, it is likely organizations will utilize the employment exception or personal services exception. 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." This is not to say that organizations and individuals cant achieve high levels of income but it is to say that the aims in healthcare are much different than you might see in investment banking, entertainment industries, or in sporting industries. Which of the following is TRUE about the Stark Law? We also believe there has to be a limit to what is reasonable in terms of losses. On the other hand, an arrangement must be considered fair market value in order to be commercially reasonable. Historically, the concept of a bargained for exchange was primarily handled and managed by financial professionals within the organization. CMS indicated that many of the changes to the Stark Law rules are intended to provide new flexibility and reduce administrative burden on health care organizations and providers in the structuring of arrangements, making it easier and less expensive to comply with the Stark Law. 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. Limits what qualifies as an ownership or investment interest that is subject to the physician self-referral law. 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. With respect to the rental of office space, 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), without adjustment to reflect the additional value the prospective lessee or lessor would attribute to the proximity or convenience to the lessor where the lessor is a potential source of patient referrals to the lessee, and consistent with the general market value of the subject transaction. In the interim, for more information regarding these matters, contact a PYA executive below at (800) 270-9629. Non-profit hospitals face additional requirements under the Internal Revenue Code that they must satisfy to maintain their tax-exempt status. You can contact me at 800-270-9629. For additional questions or comments regarding this article or other valuation issues, please contact John Meindl, Manager, VMG Health, at 972-616-7813, or john . As an industry, the Life Sciences has nearly uniformly adopted . May 10, 2022 at 11:37 AM 6 minute read These new rules, which significantly amend the existing laws, are a direct result of HHS Regulatory Sprint to Coordinated Care. Many of the new and revised regulations apply beyond financial arrangements related to care coordination initiatives, and thus are crucial for all Assessing Fair Market Value. have been significantly impacted by decreased patient volume. 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. 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. Using the example of celebrities above, many contracts with celebrities include a portion of ticket sales to that movie. Which of the following disclosure protocols should be used by providers when disclosing a Stark violation? Fair Market Value ( 411.351) C. Group Practices ( 411.352) 1. Louisville, Kentucky 40241, 2023 HSG Advisors. 1395nn). If the AKS is addressing criminal penalties, the consequences include fines up to $25,000 per violation and up to a five-year . With regard to fair market value (FMV), industry best practice suggests that you _____ in order to . Documentation of all aspects of relationship. The following definition is from the regulations: means the value in arm's-length transactions, consistent with the general market value. 4, 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. 4) Have a payment or salary provision that is reasonable and is at fair market value. Others have been slightly more conservative and mandated in their physician contracts that they will not provide total compensation (base compensation plus all bonuses) above the 75th percentile (a true ceiling). 2 Healthcare transactions must be commercially reasonable and should be comparable to what is paid ordinarily for similar services in the area. The Federal Anti-Kickback Statute, codified at 42 U.S.C. Directions et al. 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. 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. With regard to fair market value (FMV), industry best practice suggests that you _____ in order to better withstand government scrutiny. The Stark Law prohibits physicians from referring patients for services to entities in which the physician or _____________________________ has a financial interest. stark law fair market value industry best 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. Specifically, the aim of healthcare delivery is to provide high-quality care, high levels of access, and at the most cost-effective price. Compensation arrangements that are required to be representative of . 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. Do our losses mean the compensation we are paying, while fair market value, is not commercially reasonable? 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. Referring to survey data regarding practice losses per physician and per provider can be enlightening. Third, fair market value as a concept is also dictated by relevant government enforcement actions as well as lawsuits. For most Stark Law exceptions to apply, a(n) ___________________ is required. 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 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. Modified the rule related to profit sharing and productivity bonuses such that distribution of profits from designated. nbaker@hsgadvisors.com or call (502) 814-1189. Reflecting on Recent Regulatory Changes to the Stark Law: A Real Estate and Equipment Valuation Perspective, Part 2. New "Fair Market Value" and "General Market Value" Definitions. 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. In some cases, the alignment between compensation and production may be distorted. The regulations will become effective January 19, 2021, with one exception. 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 . Jan 2017 - Oct 20225 years 10 months. Under the statute; This is the art and the work involved in determining fair market value. The arrangement does not violate the anti-kickback statute (section 1128B(b) of the Act), or any Federal or State law or regulation governing billing or claims submission.
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