With regard to fair market value (FMV), industry best practice suggests that you _____ in order to better withstand government scrutiny. He will discuss best practices for negotiating and drafting contracts and compensation plans, including common provisions and potential pitfalls to avoid. Included in the changes are definitions and special rules related to: (1) commercial reasonableness, (2) the volume or value standard and other business generated standard, and (3) fair market value and . Key federal laws effecting physician compensation. The Volume or Value Standard: Navigating the Stark Law's Prohibition on 'Taking Into Account' Designated Health Service Referrals Chapter 7. The Anti-Kickback Statute and Stark Law: Avoiding Valuation of Referrals Chapter 6. •Joe has considerable experience with technical Stark and Anti-Kickback analysis, physician compensation and fair market value issues. On March 30, 2020, the Centers for Medicare & Medicaid Services (CMS) issued blanket waivers to the Stark Law that permit certain arrangements between physicians and health care providers implemented in response to COVID-19 that would otherwise violate the Stark Law. The appropriate method will depend on the nature of the transaction, its location, and other factors." (Federal Register, Vol. . The Stark Law prohibits physicians from referring patients for services to entities in which the physician or _____ has a financial interest. Developing effective lines of communication. . The Stark Law defines FMV as "the value in arm's length transactions, consistent with general market value". FMV is a key element of federal laws, statutes, and regulations. The DOJ took just that position in a False Claims Act case against Tenet, where a whistle-blower and the government alleged the hospital paid certain physician-employees substantially more than they had made in private practice. Model works best in states where corporate practice of medicine is an issue . . Key Takeaways from the AKS Final Rule. 72, No. The Final Rule. The hospital allegedly paid physicians for more than fair market value. Best Practices can be most easily understood as . Critical to compliance with the Stark Law is that the payment to the physician be at fair market value (FMV). As health care organizations enter . One practice that has been found to run afoul of these laws occurs when post-acute providers provide staff or services to a hospital to perform functions that the hospital would otherwise perform on its own and at its own cost. He provides consulting services in the areas of forensic accounting, litigation support, health care fraud, and high . The waivers, which are numerous and fairly broad, offer health care entities significant flexibility to combat COVID-19 in ways . With our unique . Conducting effective training and education. Special Rules for Profit Shares and Productivity Bonuses (§ 411.352(i)) a. The law presumes that amounts paid above fair market value may be disguised payments for referrals. Critical Components of Compliant Compensation Models; Processes for Documenting Fair Market Value and Commercial Reasonableness; Best Practices for Auditing Compensation Plan Implementation; Common Compensation Models in the Industry based On Specialty; Potential Changes to the . 42 CFR § 411.357 (l) created a fair-market-value exception for compensation resulting from an arrangement between an entity and a physician, an immediate family member or any group of physicians for the provision of items or services by the physician, family member or group of physicians to the DHS entity. "General market value" means the price that an asset would bring as the result of bona fide . . It is fair to say that virtually every relationship between a physician and a hospital will involve the referral of designated health services. Three main laws impact employment . Critical to compliance with the Stark Law is that the payment to the physician be at fair market value (FMV). Many of these investment relationships have serious legal risks under the AKS and Stark law. Beth Schermer said at a forum sponsored by the American Health Lawyers Association. Key Points: False Claims Act plaintiff cannot use discovery to satisfy Fed. This article is intended to provide only a brief summary of the Stark and AKS regula-tory framework governing specific healthcare marketing activities, including providing entertainment and/or gifts to referral sources. Brief history of the Fair Market Value standard (including IRS Revenue Ruling 59-60 and related guidance) Stark/Anti-kickback Fair Market Value definition, including recent changes to the Big 3 definitions and related regulatory guidance, and recent case law (and major settlements) COVID-19 and its impact on FMV and data used to determine FMV On 2 December 2020, the Centers for Medicare & Medicaid Services (CMS) published a Notice of Final Rulemaking in the Federal Register (Final Rule), 1 modifying the regulations implementing the federal physician self-referral law (the Stark Law). Although lengthy (190 pages/3-column format), the Final Rule is worth the read with multiple clarifications and revisions to the dense . The new BVR/AHLA Guide to Valuing Physician Compensation and Healthcare Service Arrangements, Second Edition challenges and deconstructs the industry's current standard for the fair market value (FMV) of physician clinical compensation based on the exclusive use of survey data and certain percentile-based valuation methods. On November 20, the Centers for Medicare & Medicaid (CMS) and the Department of Health and Human Services Office of Inspector General (OIG) issued a 627-page final rule which will serve to modernize and clarify Stark Law regulations. The Anti-Kickback Statute, 42 U.S.C. While the hypothetical fair market value is $450,000, the general market value may exceed that. "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 . 888.739.7039 . The Stark Law applies to physicians and designated health services only, while the Anti-Kickback Statute applies to anyone and any services . For instance, Fair Market Value (FMV) is defined by Revenue Ruling 59-60, as, "the price at which the property would change hands between a willing buyer and a willing seller when the former is not under any compulsion to buy and the latter is not under . It inhibits innovation, contains an eccentric mix of excessively general and overly . These final policies recognize that incentives are different in a healthcare system that pays for the value, rather than the volume, of services provided. The panel will review these and other noteworthy issues: The "Big 3"--fair market value, commercial reasonableness, and volume/value standards; AKS safe harbors and Stark Law exceptions; Impact of the Final Rules on healthcare providers and healthcare M&A; Faculty This podcast's subject matter is a fair market value and commercial reasonableness discussion as well as changes to the Stark Law the Anti-Kickback Statute regulations and the 2021 Medicare . Thus, "compensation substantially above $450,000 per year may be fair market value," according to . 2 In the Final Rule, CMS largely finalizes many of the proposals set forth in the Proposed Rulemaking issued on 17 October 2019 (Proposed Rule), 3 . Fair-market-value compensation exception. A "Stark" Difference in Fair Market Value and Commercial Reasonableness Is Coming in 2021. The purpose of both the federal Anti-Kickback Statute and the Stark Law is to protect against improper financial influences on medical decision-making. The following definition is from the regulations: means the value in arm's-length transactions, consistent with the general market value. Conducting effective training and education. . Medical staff gifts have a limit of $25 per gift, adjusted each year, with no aggregate limit. The waiver is subject to revision and termination, but presumptively will remain in effect for the duration of the COVID-19 public health emergency. Mitigate risk by ensuring physician compensation arrangements are compliant with fair market value and commercial reasonableness standards. (2) Allows for complete access, exchange, and use of all electronically accessible health information for authorized use under applicable State or Federal law. The Stark law prohibits the submission, or causing the submission, of claims in violation of the law's restrictions on referrals. Penalties for physicians who violate the Stark law include fines as well as exclusion from . The other four are the Anti-Kickback Statute, the Civil Monetary Penalties Law, the Exclusion Statute, and the False Claims Act. 6 Mark O. Dietrich, CPA/ABV Stark II -Statutory Guidance • Stark Statute - 42 U.S.C. Other rules under the Stark Law include: (a) amount of the gift cannot be determined in a manner that takes into account the volume or value of referrals; (b) the gift must not . 201 East Fifth Street Suite 1110 Cincinnati, OH 45202-4152 t: 513.870.6700 f: 513.870.6699. info@bricker.com. . 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 . Healthcare valuations require industry-specific knowledge and an understanding of how valuation approaches and methods apply to health care. . -Compensation must meet Stark Law exception • Fair market value a critical component 21 . This conversation dives into the practical considerations that affect the analysis of fair market value and commercial reasonableness under Federal Physician Self-referral law (also known as the "Stark Law") and the Federal Anti-kickback Statute. The Imperative to Meeting the Stark Group Practice Definition Chapter 8. The CMS Final Rule implements changes to the Stark Law and offers several clarifying provisions related to key Stark Law terms and concepts. A physician compensation committee is an essential part of oversight. His experience also encompasses various consulting services such as feasibility studies, going concern valuations, and highest and best use analyses for healthcare investors and operators. The Stark Law is a strict liability . Internal Revenue Ruling 59-60 defines . With regard to fair market value (FMV), industry best practice suggests that you _____ in order to better withstand government scrutiny. Establishing Fair Market Value • "Ultimately, fair market value is determined based on facts and circumstances. Anti-Kickback Statute . Many of the new and revised regulations apply beyond financial arrangements related to care coordination initiatives, and thus are crucial for all On November 20, 2020, the Department of Health and Human Services (HHS) released the final rules 1 to amend the regulations for the federal physician self-referral statute (Stark Law), 2 the federal Anti-Kickback Statute (AKS), 3 and the civil monetary penalty (CMP) statute 4 as part of the "Regulatory . Legal and Regulatory Overview (e.g., Stark, Anti-Kickback, etc.) Chapter 5. R. Civ. Critical Business Issues Transaction Issues -Purchase price • Consider tax consequences to physicians Stark Law forbids physicians from referring patients to receive "designated health services" from entities in which the physician . Healthcare is a highly regulated industry on both a state and federal level. Stark defines fair market value (FMV) as _____ . 2018. (1) Able to securely exchange data with and use data from other health information technology; and. Why you should Attend: Several recent cases and settlements involving employed physicians have helped to illustrate the importance of Stark Law compliance. WASHINGTON -- Physicians should tread carefully when trying to arrive at a fair market value for office space they're renting. The exception applies only to items or services actually provided, and includes . Stark Law ("Stark")1, and the Medicare and Medicaid Anti-kickback Statute (the "AKS")2. In the OIG's Compliance Program Guidance documents¹, there are seven key elements of an effective compliance program including: Implementing written policies, procedures and standards of conduct. Directions Stark Law currently provides some regulatory guidance on the definition of . •Joe has considerable experience with technical Stark and Anti-Kickback analysis, physician compensation and fair market value issues. resource and reputational risk for potential physician compensation violations related to the Stark Law, the Anti-Kickback Statute and IRS not-for-profit regulations. However, given the changing landscape of today's healthcare system, and specifically the transition from fee-for-service to value-based reimbursement, Stark Law is now an obstacle to advancing care coordination. 1. A healthcare appraisal firm should determine fair market value. § 411.352(i) that are effective January 1, 2022). as the result of bona fide bargaining between well-informed parties to the . It debunks the current "survey says" paradigm and provides the . Interpretation of the "Volume or Value Standard" for Purposes of the Group Practice Regulations (§ 411.352(g)) 2. . In addition to fair market value, most applications of the anti-kickback statute and Stark law also require commercial reasonableness. The Anti-Kickback Statute. A Need for Fair Market Value and Commercial Reasonableness. . This paper briefly discusses 10 key considerations related to hospital-physician compensation arrangements. A hospital's $50 million settlement over kickback allegations holds lessons for hospitals. The Stark law is a strict liability statute, which means proof of specific intent to violate the law is not required. Fair market value. Interoperable means -. And for those who may be new to the industry, the limitations of the laws in question can be surprising . May 10, 2022 at 11:37 AM 6 minute read Critical Components of Compliant Compensation Models Processes for Documenting Fair Market Value and Commercial Reasonableness Best Practices for Auditing Compensation Plan Implementation Common Compensation Models in the Industry based On Specialty . The law presumes that amounts paid above fair market value may be disguised payments for referrals. 3) Specify an aggregate payment, which is set in advance. . Healthcare employment contracts must: 1) Have a duration of at least a year. FMV under the Stark Law means that the payment is consistent with "general market value," which is defined as "compensation that would be included . In addition, the gift may not be solicited by the physician or your staff. The fair market value requirement of the personal services exception and . 171, CMS, 42 CFR Parts 411 and 424, September 5, 2007). Designating a compliance officer and compliance committee. 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 On November 20, 2020, the Office of Inspector General (OIG) and Centers for Medicare & Medicaid Services (CMS) jointly finalized changes to outdated federal regulations that have burdened health care physicians with added administrative costs and impeded the health care system's move toward value-based reimbursement. Description. . 2 While the definition of FMV has its roots in business valuation,3 FMV in the healthcare industry is a regulatory definition. . David H. Glusman is an advisory partner in Marcum LLP's Philadelphia office. Given the significance of FMV to regulatory compliance, it is important to understand its relationship to physicians and healthcare entities. a hospital may pay you a fair market value salary as an employee or pay you fair market value for specific services you render to the hospital as an independent contractor. The physician self-referral law (known as the Stark Law) There are Stark Law exceptions available to protect payments under a co-management contract. 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. Best practices and recommendations; Benefits. A Best Practice can be defined as a technique or methodology that, through experience and testing, has proven to reliably lead to a desired result. P. 9(b). •Hall Render is the largest health care focused law firm in the country, with 5 practice groups and 21 services lines serving health care clients nationwide. 2) Be in writing and signed by both parties. [1] Industry regulations include the federal Stark law, Anti-Kickback law, and (for federal tax-exempt organizations) IRS regulations. [3] Stark prohibits patient referrals for designated health services payable by Medicare or Medicaid to an entity with which a physician, or their immediate family member, has a financial relationship. Ultimately, the Stark Law's directed referral provisions give health care organizations plenty of leeway to use, monitor, and enforce directed referral requirements in their physician contracts. as the result of bona fide bargaining between well-informed parties to the . Cincinnati. A commitment to using the best practices in any field is a commitment to using all the knowledge and experience at one's disposal to ensure success. FMV under the Stark Law means that the payment is consistent with "general market value," which is defined as "compensation that would be included . The Stark Law, as it has evolved, is one of the worst legislative enactments affecting the healthcare industry. WASHINGTON -- Physicians should tread carefully when trying to arrive at a fair market value for office space they're renting. The Stark Law safe harbor provision has seven components. Therefore, the Stark Law will nearly always come into play and the payment pursuant to the employment agreement must be structured to comply with the Stark Law. Designating a compliance officer and compliance committee. 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 Among the many extraordinary measures taken by the federal government in response to the COVID-19 pandemic is the issuance of blanket waivers of . Law360 (May 8, 2020, 6:30 PM EDT) --. Stark defines fair market value (FMV) as... Answer Choices . Developing effective lines of communication. Stark Law (Stark). Limited Remuneration: Codified at 42 C.F.R. Beth Schermer said at a forum sponsored by the American Health Lawyers Association. The Stark law does maintain a definition of fair market value but it does not dictate actual numbers. § 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." 4) Have a payment or salary provision that is reasonable and is at fair market value. That's because fair market value can become an issue under the Stark antikickback regulations, which say: "Unless an exception applies . affect compliance with the Stark Law, namely fair market value and commercial . 5. [2] Medical Group Management Association Physician . Applicable exceptions generally require that the compensation paid to the management company or physician managers reflects fair market value and is structured in a manner not to vary based on volume or value of referrals. While fair market value (FMV) and commercial reasonableness (CR) have been vital considerations within healthcare transactions for many years, the concept of pay for performance compensation programs in the context of CINs, ACOs, and other similar integrated care models is relatively . While the hypothetical fair market value is $450,000, the general market value may exceed that. Fair Market Value (§ 411.351) C. Group Practices (§ 411.352) 1.