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"). This article was originally published by the American Health Law Association in April 2021 as part of their 2021 Health Care Transactions Resource Guide. \text{Analysis} & \text{of} & \text{Variance}\\\\ A comprehensive, but not all inclusive, list of the items covered in the final rule follows. With the increased rate of mergers and acquisitions, healthcare organizations are vulnerable to federal scrutiny. 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 . Again, job posting sites have been invaluable to determining fair market value for high-demand services. 411.357 Exceptions to the referral prohibition related to compensation arrangements. This safe harbor is intended to provide greater predictability for model participants and uniformity across models. The proposed rule would create new, permanent exceptions to the Stark Law for value-based arrangements. 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. The AKS Final Rule creates new safe harbors for entities participating in a value-based enterprise (VBE) and amends existing safe harbors. Rely on Our Experts for Stark Law and Fair Market Value Matters. Previous Definition of Fair Market Value (42 U.S.C. Non-profit hospitals face additional requirements under the Internal Revenue Code that they must satisfy to maintain their tax-exempt status. 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 . Refines when a physician practice is required to sign a recruitment agreement between a hospital and a physician as well as timing issues for arrangements between a physician and non-physician practitioner (NPP) when a hospital is involved in compensating the NPP. 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. The Stark Law safe harbor provision has seven components. The primary reasons that the Stark Law prevents organizations and individuals from including downstream revenue are numerous. 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. These new rules, which significantly amend the existing laws, are a direct result of HHS Regulatory Sprint to Coordinated Care. A regular assessment should be conducted to determine if the healthcare transactions are commercially reasonable. Modified the rule related to profit sharing and productivity bonuses such that distribution of profits from designated. 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). There are numerous laws across the country that have been created to remove this unethical practice. 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. May 10, 2022 at 11:37 AM 6 minute read Care coordination arrangements to improve quality, health outcomes, and efficiency without requiring the parties to assume any financial risk. Within the Healthcare industry, there are rules and regulations to ensure that . 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. 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. With regard to fair market value (FMV), industry best practice suggests that you ____________________________ in order to better withstand government scrutiny. 7. stark law fair market value industry best practice. This ensures that there is maximum compliance of regulatory statutes and prevents any violation of healthcare laws. Additionally, until now, there has been no codified definition for commercial reasonableness, only limited CMS discussion such as that in the proposed 1998 rule. 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. Email (required), Healthcare eNewsletterTax & Assurance eNewsletterWebinars. Documentation of all aspects of relationship. The Stark Law (42 U.S.C. 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. Documenting the organizations goals with the arrangement or transaction must be a priority. The CMS Final Rule implements changes to the Stark Law and offers several clarifying provisions related to key Stark Law terms and concepts. 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. 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. 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. 411.354 Financial relationship, compensation, and ownership or investment interest. 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. These historic reforms became effective January 19, 2021 and are part of HHS's "Regulatory Sprint to . 1395 nn) and antikickback statutes (42 U.S.C. 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. 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. Download a PDF Version of the Article as Published in AHLA's 2021 . 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. Structuring legally compliant hospital-physician leases and establishing fair market value (FMV) rental rates can be challenging. Health Management Associates $260 Million, Kalispell Regional Healthcare $24 Million. It says, . If a hospital is losing three times the national average in its employed primary care practice ask:(1) Why? The original content piece along with other guide publications can be accessed here. Compliant compensation methodologies: Advanced Stark. 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. 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. 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 . Carnahan Group assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein. Their concern has been financial, yes, but also an increasing concern of compliance risk. Many hospitals and health systems around the country have employed physicians and then struggled, or at least had to come to grips with the fact that, the practices are losing money. See our dedicated page. The Stark Law prohibits physicians from referring patients for services to entities in which the physician or _____________________________ has a financial interest. \text{Predictor} & \text{Coef} & \text{SE Coef} & \text{T}\\ 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. 4 See 42 CFR 411.354. The writing specifies the timeframe for the arrangement, which can be for any period of time and contain a termination clause, provided that the parties enter into only one arrangement for the same items or services during the course of a year. \text{Constant} & \text{20.000} & \text{3.2213} & \text{6.21}\\ 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. It is, however, often the best information that one can find. 2 A discussion of Stark's application to Medicaid claims is beyond the scope of this broad overview. Thanks for reaching out. americanbar.org. Fair market value, and specifically as it relates to compensation arrangements, is defined as The value in arms-length transaction, consistent with the general market value of the transaction. General market value means with respect to compensation for services, the compensation that would be paid at the time the parties enter into the service arrangement as the result of bona fide bargaining between well-informed parties that are not otherwise in a position to generate business for each other., Commercially reasonable means that the particular arrangement furthers a legitimate business purpose of the parties to the arrangement and is sensible, considering the characteristics of the parties, including their size, type, scope, and specialty. Commercial Reasonableness Analysis for an Increasingly Regulated Healthcare Environment | BDO Healthcare Industry Blog . \text{Regression} & \text{1} & \text{41587.3}\\ A and B - not be conditioned on referrals & allow the physician to establish medical staff membership at other hospitals.

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