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PDF The New Stark and AKS Final Rules: Implications and Considerations for The primary reasons that the Stark Law prevents organizations and individuals from including downstream revenue are numerous. 4 See 42 CFR 411.354. Fair market value is a pinnacle issue for compliance under the Stark Law and Anti-Kickback Statute. 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. This ensures that there is maximum compliance of regulatory statutes and prevents any violation of healthcare laws. 4) Have a payment or salary provision that is reasonable and is at fair market value. bdo.com. b. CMS further clarifies that commercial reasonableness is whether an arrangement makes sense as a means to accomplishing the parties goals. How to Define Fair Market Value Rate of Return in Health Care A general journal is given in the Working Papers. 1320a-7b(b), applies to all individuals and companies. 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. This ensures that there is maximum compliance of regulatory statutes and prevents any violation of healthcare laws. 7. Although many compensation arrangements are legitimate, a compensation arrangement may violate the anti-kickback statute if even one purpose of the arrangement is to The regulations are part of the HHS Regulatory Sprint to Coordinated Care and . 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. 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. 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. 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. 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. The three types of transactions are asset acquisition, compensation, and rental of equipment or office space. We also believe there has to be a limit to what is reasonable in terms of losses. the value in an arm's-length transaction that is consistent with general market value. Among the many changes in the Stark Law final rule, the following are some of the most significant: 1. \text{Total} & \text{8} & \text{51984.1}\\ Attendees may ask questions in advance. 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. However, there are a few core concepts that are applicable when establishing fair market value. With regard to fair market value (FMV), industry best practice suggests that you ____________________________ in order to better withstand government scrutiny. Looking for help navigating the Stark Law Final Rule? Compliance Prof Flashcards | Quizlet B and C - obtain a certified valuation from an expert, third party & conduct an in-house valuation. The AKS Final Rule creates new safe harbors for entities participating in a value-based enterprise (VBE) and amends existing safe harbors. et al. Again, job posting sites have been invaluable to determining fair market value for high-demand services. stark law fair market value industry best practice 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. Finalized a new exception to protect compensation not exceeding an aggregate of $5,000 per calendar year to a physician for the provision of items and services, without the need for a signed written agreement and compensation that is set in advance if certain other conditions are met (i.e., fair market value and does not take into account volume and value of referrals). 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. recently sold and the following computer output was obtained. 1395nn, and the regulations and guidance promulgated thereunder. Jan 2017 - Oct 20225 years 10 months. \text{The regression equation is}\\ Stark 101 for Physicians - KJK | Kohrman Jackson Krantz 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, however, often the best information that one can find. 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. New Exceptions for Value-Based Arrangements - Epstein Becker & Green, P.C. What is downstream revenue? The waivers, which are numerous and fairly broad, offer health care entities significant flexibility to combat COVID-19 in ways . The Stark Law defines FMV as the value in arms length transactions, consistent with general market value. 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. In what situation is a written agreement NOT required under Stark? Fair market value is defined to mean the "value in an arm's length transaction, consistent with general market value of the subject transaction" (42 CFR 411.351). Healthcare organizations should consider both qualitative and quantitative components for FMV and commercial reasonableness analyses of financial transactions. Stark law, anti-kickback updates may boost value-based payments 1395 nn) and antikickback statutes (42 U.S.C. In the interim, for more information regarding these matters, contact a PYA executive below at (800) 270-9629. Posted on October 27, 2016August 15, 2022. General market value means the price that an asset would bring as the result of bona fide bargaining between well-informed buyers and sellers who are not otherwise in a position to generate business for the other party, or the compensation that would be included in a service agreement as the result of bona fide bargaining between well-informed parties to the agreement who are not otherwise in a position to generate business for the other party, on the date of acquisition of the asset or at the time of the service agreement. On February 9, 2018, Congress passed and President Trump signed into law H.R. The Anti-Kickback Statute is a criminal law that prohibits healthcare organizations from knowingly and willfully paying any remuneration to induce patient referrals or to generate business involving any service payable by the federal healthcare programs. Expands the 411.357(1) exception to fair market value payments for rental office space, notably when the arrangement is for less than one year. As you can see, the definition of fair market value does not provide details with respect to what is fair market value. They go as follows: Cost or selling price: If the item has been recently bought or sold, that can be a good indicator of its fair market value. Interpretation of the "Volume or Value Standard" for Purposes of the Group Practice Regulations ( 411.352(g)) 2. Barnes & Thornburg LLP. The Anti-Kickback Statute is a criminal law that prohibits healthcare organizations from knowingly and willfully paying any remuneration to induce patient referrals or to generate business involving any service payable by the federal healthcare programs. As to its civil penalties, the Anti-Kickback Statute includes monetary penalties up to $50,000 per violation, civil . For example, if a physician is paid at the 75th percentile under a specific survey then fair market value must be met. Specialties like critical care, hospital medicine, emergency medicine, and pulmonary medicine may have experienced increases in patient volume due to the pandemic. J. William Bookwalter, III, M.D. B and C only - False Claims Act liability & Exclusion from the Medicare and Medicaid programs. Under the Stark Law, one of the critical elements of compliance for many exceptions includes the requirement that the financial arrangement is representative of fair market value. Downstream revenue may include referrals for laboratory services, referrals for imaging services, referrals for hospital services, or even referrals to other specialists. Too often, they have hindered, rather than . 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. A Primer on Fair Market Value - ByrdAdatto In our prior article, we provided a basic overview of Fair Market Value (FMV) assessments and how these have become a key aspect in compensation contracts for cardiologists.We also reviewed how practices should focus on demonstrating their value to hospitals and health systems by showcasing leadership efforts within the practice and hospital, attention to strategy, financial performance . B. Stark Law Exception - Value-Based Arrangements . Fair Market Value Exception - Stark Law Fair Market Value and Commercial Reasonableness - Carnahan Group These new rules, which significantly amend the existing laws, are a direct result of HHS Regulatory Sprint to Coordinated Care. 2 Healthcare transactions must be commercially reasonable and should be comparable to what is paid ordinarily for similar services in the area. In some cases, the alignment between compensation and production may be distorted. For example, in the past some arrangements where physician compensation exceeded professional collections have received considerable scrutiny for commercial reasonableness. The Stark Law defines FMV as "the value in arm's length transactions, consistent with general market value". Sec. Its criminal penalties include fines up to $25,000 per violation, and up to 5 years in federal prison. 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. According to CMS, some of the commenters on the Final Rule asserted that, a safe harbor based on a range of values in salary surveys would be consistent with what they stated was established CMS policy that compensation set at or below the 75th percentile in a salary schedule is appropriate and compensation set above the 75th percentile is suspect, if not presumed inappropriate. To these comments CMS responded, For the reasons explained in Phase I, Phase II, and Phase III, we decline to establish the rebuttable presumptions and safe harbors requested by the commenters.