With the goal of modernizing Stark Law regulations, the Centers for Medicare & Medicaid Services (CMS) and the Department of Health and Human Services Office of Inspector General (OIG) issued a final rule, Modernizing and Clarifying the Physician Self-Referral Regulations Final Rule (CMS-1720-F).
The final rule is designed to make it easier for hospitals and physicians to maintain compliance with Stark Law and the Anti-Kickback Statute as the industry continues to move toward value-based healthcare. It aims to provide healthcare providers with greater flexibility, reduce regulatory risks and reduce overall costs.
Released on November 20, 2020, the final rule sets out changes that became effective on January 19, 2021. A noted exception is for compliance related to independent physician group practice compensation methodologies, which has a deadline of January 1, 2022.
What changes did the CMS final rule make?
The CMS-1720-F final rule made a number of changes, resulting in a document that is over 600 pages long. Below, we’ve summarized some of the bigger changes.
What should your next steps be?
Although the final rule aims to clarify Stark Law regulations, this has been and still is an exceptionally complex area in healthcare. It will be difficult for hospitals and physicians to get into compliance on their own.
As specialists in the healthcare industry and in the areas of valuation and compensation, Wipfli can help you achieve compliance with the CMS final rule.
- Evaluate current arrangements: Wipfli can perform a valuation to identify whether lease arrangements or compensation agreements meet the fair-market standard and whether they are commercially reasonable given these new definitions.
- Structure/design management agreements, lease arrangements and compensation arrangements: Wipfli can help structure your management agreements and lease arrangements and design your compensation arrangements to be in compliance with the CMS final rule.
- Analyze compensation formulas: When it comes to profit distribution, analyzing and testing compensation formulas is critical to compliance, and Wipfli can help perform that work for independent physician groups.
- Perform compensation modeling: Wipfli can identify areas where you will need to change your compensation and profit distribution models to comply with the CMS final rule. We help you model out the impacts of potential changes so you can minimize the unintended consequences of those changes.
- Provide benchmarks: By providing database information and benchmarks, Wipfli helps you assess your existing compensation arrangements.
- Understand the impact of the 75th percentile: Now that CMS has clarified the 75th percentile is not official policy and there, in fact, is not a threshold percentile that makes an arrangement safe, Wipfli can help you understand the financial and sustainability impacts to your organization.
Start your road to CMS final rule compliance
The penalties for not being in compliance with Stark Law haven’t changed, and you could face monetary penalties on each patient bill after the January 19 deadline. Your organization is likely still dealing with the impacts of the COVID-19 pandemic, as well as compliance with other healthcare industry regulations and changes, so let Wipfli help you get into compliance with the CMS-1720-F final rule. Contact us to get started.