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CMS finalizes major updates to the Stark Law

February 17, 2021
From the January/February 2021 issue of HealthCare Business News magazine

The third exception is a catch-all exception for VBAs not meeting the other two exceptions. While applying to a wider array of VBAs, this exception has stricter requirements. For example, the arrangement itself must be set out in writing, be signed by the parties, and include a description of the following: the value-based activities to be undertaken; how the value-based activities will further the VBE’s value-based purposes; the VBE’s target patient population; the type, nature, and methodology used to determine remuneration; and the outcome measures (e.g., performance and quality standards) for which the recipient of any remuneration is assessed. The outcome measures must be objective, and the VBE must monitor progress toward its value-based purposes. The VBE must set its methodology for determining remuneration in advance of engaging in the VBA. Should the VBE wish to revise its outcome measures, they must be set forth in writing and made applicable only prospectively.

Significantly, these exceptions do not include common safeguards included in other exceptions (e.g., FMV limitations and not taking the volume/value of referrals into consideration for compensation). Instead, the VBAs are required to be commercially reasonable. These exceptions are meant to spur the integration of value-driven initiatives throughout the healthcare industry.

Further, CMS expects DHS-furnishing entities (and the physicians with whom they have financial relationships) to explore and participate in these new VBAs. To spur care coordination and management, CMS implemented an exception permitting physicians to share in profits directly attributable to their participation in a VBE. Such profits may be distributed directly to the physician without being considered to directly relate to (or to take into account) the volume or value of the physician’s referrals.

Other Notable Stark Law Updates
Limited remuneration for personally-performed services

CMS added a new exception to protect limited remuneration from an entity to a physician for services personally provided by the physician. The new exception permits remuneration up to $5,000 in the aggregate per calendar year.

Clarification of “commercially reasonable”
CMS has finalized the definition of “commercially reasonable” to mean an arrangement that furthers a legitimate business purpose of the parties and is sensible considering the characteristics of the parties (e.g., size, type, specialty).

Rental of space and equipment exceptions

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