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. All Rights Reserved. Jan 2017 - Oct 20225 years 10 months. b. Its criminal penalties include fines up to $25,000 per violation, and up to 5 years in federal prison. For example, it is very common for recruitment agencies to publicize the perceived revenue generation of certain specialties. CMS Releases Several Stark Law Waivers for Use during the COVID - Mintz CMS is clarifying here that while such a situation (e.g. They are: (a) the lease agreement must be in writing; (b) the . In a simple example, we can determine that fair market value for compensation of a medical director for a cardiac catheterization laboratory is $150 per hour. 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. 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. 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 Anti-Kickback Statute (AKS), 42 U.S.C. While this exception may be utilized in some instances, it is likely organizations will utilize the employment exception or personal services exception. Care coordination arrangements to improve quality, health outcomes, and efficiency without requiring the parties to assume any financial risk. The writing specifies the compensation that will be provided under the arrangement. 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. Hospital-Physician Leasing Arrangements Referring to survey data regarding practice losses per physician and per provider can be enlightening. For example, in the past some arrangements where physician compensation exceeded professional collections have received considerable scrutiny for commercial reasonableness. 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. 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. If the AKS is addressing criminal penalties, the consequences include fines up to $25,000 per violation and up to a five-year . (i) Consistent with the fair market value of . Value-based arrangements with substantial downside financial risk (at least 5%). What are your reasons? Anti-Kickback Statute | Everything You Need to Know - Khouri Law It is, however, often the best information that one can find. New Stark Regulations Further Clarify Definitions of Fair Market Value HIPAA Compliance 03: Privacy Rule Introduction, Administrative, Physical and Technical Safegu, Compliance - Documentation, Billing and Reimb, HIPAA Compliance 04: Protected Health Informa, Calculus for Business, Economics, Life Sciences and Social Sciences, Karl E. Byleen, Michael R. Ziegler, Michae Ziegler, Raymond A. Barnett, Fundamentals of Engineering Economic Analysis, David Besanko, Mark Shanley, Scott Schaefer. 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. ; ; New "Fair Market Value" and "General Market Value" Definitions. 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. 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. 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? Use Superior Corporation's trial balance and financial statements from the previous Work Together exercise. Often traditional salary survey sources do not provide datasets based on level of physician involvement or oversight for CRNAs, making it difficult to find an apples-to-apples comparison. 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. Federal physician self-referral prohibition (42 USC 1395nn. The following requirements must be bet under this exception: While this exception may be utilized in various situations, it is likely another exception, depending on the arrangement, would be more appropriate. 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. 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. 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. This has also been true in markets in which the demand and competition for CRNAs has exploded. 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. 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. Cincinnati. Complying with Stark Law and Anti-Kickback Policies | SMS Always engage a competent appraiser who understands the Stark definition of fair market value and be sure the appraisal report addresses that. 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 . 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. What Is the Stark Law, and How Can You Avoid Violating It? In healthcare, the patient would have received the care regardless of the physician and the complexity of healthcare with patients moving to different sites of service and within different specialties creates impossible scenarios for tracking who is responsible for what. "General market value" means the price that an asset would bring as the result of bona fide . Provides new exceptions for value-based compensation arrangements that meet certain financial risk requirements and provides new definitions for value-based activity; value-based arrangement; value-based enterprise (VBE); value-based purpose; VBE participant; and target patient population. Thursday, October 20, 2022. 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 . Considerations for Determining Fair Market Value Physician Compensation These historic reforms became effective January 19, 2021 and are part of HHS's "Regulatory Sprint to . \text{SOURCE} & \text{DF} & \text{SS}\\ 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. Bottom line, 2021 surveys, based on 2020 data, are likely going to be challenging. 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. Part 1: Healthcare Leases: Anti-Kickback Statute and Stark Law - Bradley Sec. Which of the following is a government sanction provided under the Stark regulation? A general journal is given in the Working Papers. 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. The Stark law prohibits a physician with a financial relationship in an entity from making a referral for designated health services covered by Medicare and Medicaid to that entity even if the services are billed to an individual or other third party payer. The Stark law does maintain a definition of fair market value but it does not dictate actual numbers. 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. 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 . A and B - not be conditioned on referrals & allow the physician to establish medical staff membership at other hospitals. The regulations are part of the HHS Regulatory Sprint to Coordinated Care and . 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. 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. Fraud and Abuse Laws. There are four basic methods of determining fair market value. Do our losses mean the compensation we are paying, while fair market value, is not commercially reasonable? Avoiding Illegal Service Referrals: The Stark Statute Explained White Paper: Value-Based Safe Harbors and Exceptions to the Anti ; . stark law fair market value industry best practice 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. The Stark Law prohibits physicians from referring a patient to an entity with which the physician has a financial relationship when the referral is for the furnishing of certain designated health services (e.g., lab, PT, OT, radiology, DME . This exception takes effect when there is an arrangement into writing that specifies the time frame and remuneration, and meets Anti-Kickback Statutes . Grabbing a 2021 survey and finding a percentile might be enough, then again, it might not. Compliance - Stark Law Flashcards | Quizlet Reflecting on Recent Regulatory Changes to the Stark Law: A Real Estate and Equipment Valuation Perspective, Part 2. Key PYA Takeaway: Guidance from prior court decisions, as well as certain previous governmental representatives, have questioned commercial reasonableness if arrangements are not profitable. 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. You can contact me at 865-673-0844. 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). On Wednesday, October 9, HHS proposed highly anticipated reforms to regulations implementing the Physician Self-Referral Law and the Federal Anti-Kickback Statute, as well as related civil . Get ready and roll up your sleeves for the work ahead. A Primer on Fair Market Value - ByrdAdatto With regard to fair market value (FMV), industry best practice suggests that you _____ in order to better withstand government scrutiny. Many of these reasons are out of the hospital or health systems control. 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. Distribution of Profits Related to Participation in a Value-Based Enterprise; b. 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. A qualitative analysis of the nature and scope of services performed, necessity of services, and comparability of services should be performed. Because of increased enforcement, it is very common for organizations to work with legal professionals who specialize in fair market value and the Stark Law for the purpose of creating compliant and defensible financial arrangements. White Paper: CMS Finalizes Updates to the Stark Law to Reduce The payments that exceed FMV are viewed as potential referrals, which is a violation of Stark Law that can lead to penalties and a healthcare systems exclusion from participation in federal health programs. et al. Removes the timeframe limitations for modifications to the financial terms of a compensation arrangement. Health Management Associates $260 Million, Kalispell Regional Healthcare $24 Million. 411.354). Proposed Stark Law, Anti-Kickback Reforms Aim To Facilitate Value-Based These new rules, which significantly amend the existing laws, are a direct result of HHS Regulatory Sprint to Coordinated Care. HHS Finalizes New Protections Under the Stark Law for Value-Based Fair Market Value and Commercial Reasonableness - Carnahan Group In addition to fair market value, most applications of the anti-kickback statute and Stark law also require commercial reasonableness. CMS further clarifies that commercial reasonableness is whether an arrangement makes sense as a means to accomplishing the parties goals. This safe harbor is designed to facilitate improved cybersecurity in health care through donations of cybersecurity technology and services. Cybersecurity technology and services safe harbor for remuneration in the form of cybersecurity technology and services. How can we lose so much money and still consider our arrangement commercially reasonable? A comprehensive, but not all inclusive, list of the items covered in the final rule follows. stark law fair market value industry best practice 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.". healthcapital.com. If an appraiser is hired, the appraiser's qualifications and experience must be considered if that appraisal will be relied upon. 411.357 Exceptions to the referral prohibition related to compensation arrangements. 1395nn, and the regulations and guidance promulgated thereunder. The waivers, which are numerous and fairly broad, offer health care entities significant flexibility to combat COVID-19 in ways . 411.355 General exceptions to the referral prohibition related to both ownership/investment and compensation. The fair market value exception is a compensation exception that is flexible depending on the arrangement. Stark Law - StatPearls - NCBI Bookshelf Although many compensation arrangements are legitimate, a compensation arrangement may violate the anti-kickback statute if even one purpose of the arrangement is to 411.356 Exceptions to the referral prohibition related to ownership or investment interests. J. William Bookwalter, III, M.D. The Anti-Kickback Statute. 4 See 42 CFR 411.354. 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 . Email (required), Healthcare eNewsletterTax & Assurance eNewsletterWebinars. This has required abandoning, or at least augmenting, traditional surveys with anesthesia-related job posting sites to find comparable salary offerings and ranges. This ensures that there is maximum compliance of regulatory statutes and prevents any violation of healthcare laws. 3. This site rocks the Pearsonified Skin for Thesis. \text{Analysis} & \text{of} & \text{Variance}\\\\ Surviving Fair Market Value & Commercial Reasonableness Thresholds However, there are a few core concepts that are applicable when establishing fair market value. Health Management Associates $260 Million, Kalispell Regional Healthcare $24 Million. Finalized new, permanent exceptions for value-based arrangements that will permit physicians and other health care providers to enter into value-based arrangements without fear that their legitimate activities to better coordinate care, improve quality, and lower costs would violate the Stark Law. 1320a-7b(b), applies to all individuals and companies. 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. 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. Rely on Our Experts for Stark Law and Fair Market Value Matters. Modernizing and Clarifying the Physician Self-Referral - CMS Non-profit hospitals face additional requirements under the Internal Revenue Code that they must satisfy to maintain their tax-exempt status. PDF The New Stark and AKS Final Rules: Implications and Considerations for Strictly Speaking: CMS Stark Law Guidance to Labs on Speculums - Foster The law provides that "fair market value" is the value in arms' length transactions concerning rentals or leases and the value of a rental property for general commercial purposes. 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. Our fixed asset valuation services serve a variety of purposes for our clients, including: Anti-Kickback Statute and Stark Law Compliance The reader should contact his or her Carnahan Group or other tax professional prior to taking any action based upon this information. 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. 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. 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 . stark law fair market value industry best practice. Allows agreement participants to reconcile payment variances in compensation arrangements without violation of physician self-referral law. So, while it may require effort, and in some cases could be difficult to achieve, finding fair market value is a must. 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. 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. 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. Stark Law/Fair Market Value | WilliamsMarston | Accounting Advisory Thanks for reaching out. B. Stark Law Exception - Value-Based Arrangements . 7. Unlike fair market value determination, commercial reasonableness is not as readily determined by standardized methodologies, practices, or sources. 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. While this exception may be utilized in some instances, it is likely organizations will utilize the employment exception or personal services exception. 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. "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 . 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 Note this requires a valuator being able to find enough comparable postings with posted salary offersless than ten is typically not enough. Using the example of celebrities above, many contracts with celebrities include a portion of ticket sales to that movie.