The same survey data that many compensation valuators rely on as a central component to their fair market value analysis and opinion. CMS Clarifies Key Valuation Terms in the Stark Law | Jones Day 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. 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. 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 stark law fair market value industry best practice First, it delineated that salary surveys or salary survey percentiles may not be appropriate to use in all circumstances. Stark Law provides this definition: The term "fair market value" means the value in arm's length transactions, consistent with the general market value(42 USC 1395nn) 42 CFR 411.351 -"general market value" means the price that an asset would bring or that would be included in a Establishing fair market value physician compensation in a - MGMA CMS is clarifying here that while such a situation (e.g. 411.353 Prohibition on certain referrals by physicians and limitations on billing. 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. There are four basic methods of determining fair market value. Three new safe harbors for remuneration exchanged between or among participants in value-based arrangements: Value-based arrangements with full financial risk. Healthcare Regulatory and Stark Law/Fair Market Value and Commercial Reasonableness attorney. 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. Fair market value is a pinnacle issue for compliance under the Stark Law and Anti-Kickback Statute. Carry out the indicated operation and give your answer with the specified number of significant digits. Previous Definition of Fair Market Value (42 U.S.C. In order to qualify for the recruitment exception, the arrangement must _________________________ . If an appraiser is hired, the appraiser's qualifications and experience must be considered if that appraisal will be relied upon. 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. Specifically, the aim of healthcare delivery is to provide high-quality care, high levels of access, and at the most cost-effective price. HHS OIG Issues Advisory Opinion on Continuing Medical Education, Stark Data were collected on several properties The final rule creates new exceptions to the Stark Law for value-based arrangements that satisfy specified requirements based on the characteristics of the arrangement and the level of financial risk assumed by the . 1320a-7b(b), applies to all individuals and companies. CMS-sponsored model arrangements and CMS-sponsored model patient incentives. PDF Fraud Alert: Physician Compensation Arrangements May Result in \text{SOURCE} & \text{DF} & \text{SS}\\ Healthcare transactions must be commercially reasonable and should be comparable to what is paid ordinarily for similar services in the area. 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. 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. 1320a-7b(b), covers a broader range of activity than the Stark Law, and extends to all medical providers in a position to arrange or recommend medical services."Referrals" under the Anti-Kickback Statute include "any item or service for which payment may be made in whole or in part under a Federal health care program." What are your reasons? Interested in learning about what is a referral? 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). What is downstream revenue? The previous definition of fair market value stated that physician compensation "must be set in advance, consistent with fair market value, and not determined in any manner that takes into account the volume or value of referrals or other business generated by the referring physician.". healthlawyers.org. Key PYA Takeaway: Guidance from prior court decisions, as well as certain previous governmental representatives, have questioned commercial reasonableness if arrangements are not profitable. Fair Market Value (FMV) 4 See 42 CFR 411.354. The commercial division of a real estate firm is conducting a regression analysis of the relationship The argument is that but for the celebrity being in the movie the consumer would not purchase the ticket. The arrangement is commercially reasonable (taking into account the nature and scope of the transaction) and furthers the legitimate business purposes of the parties. 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. Which of the following is TRUE about the Stark Law? 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 . Traditional survey sources have proven to be dated and inadequate for the CRNA salaries being offered. HHS Finalizes New Protections Under the Stark Law for Value-Based Rather, each case must be evaluated and considered in the context of the situation. Sec. 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.". 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. This ensures that there is maximum compliance of regulatory statutes and prevents any violation of healthcare laws. CRNAs are only one examplethe same challenges could easily apply to any physician specialty or market. What are your goals? thousands of dollars) for apartment buildings. et al. 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. The Anti-Kickback Statute, 42 U.S.C. T. Z, R. C. Healthcare Valuation Series: A look at fair market value and commercial reasonableness. Stark 101 for Physicians - KJK | Kohrman Jackson Krantz The general market value definitions are: What does it mean for a compensation arrangement to be commercially reasonable? To determine what is commercially reasonable, we first must start with a basic definition. Documenting the organizations goals with the arrangement or transaction must be a priority. CMS Completes Sprint to Modernize the Stark Law-Part III 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. Providing additional flexibility related to signature and writing requirements. 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. 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. The AKS Final Rule creates new safe harbors for entities participating in a value-based enterprise (VBE) and amends existing safe harbors. 1 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. You can contact me at 865-673-0844. Fair Market Value Under the Stark Law and Anti-Kickback Statute Reflecting on Recent Regulatory Changes to the Stark Law: A Real Estate and Equipment Valuation Perspective, Part 2. Current Definition of General Market Value (42 C.F.R. Limits what qualifies as an ownership or investment interest that is subject to the physician self-referral law. They are: (a) the lease agreement must be in writing; (b) the .