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c. Fair Market Value and General Market Value – the definitions remain substantially the same, but were restructured based on the type of a financial arrangement (e.g., rental of equipment, rental of office space, purchase of assets, and compensation for services).
d. Indirect Compensation Arrangement – to provide that, among other things, for such an arrangement to exist, an individual unit of compensation received by a physician (1) is not fair market value for items or services actually provided; (2) includes the physician’s referrals to the entity furnishing DHS as a variable, resulting in an increase or decrease in the physician’s compensation that positively correlates with the number or value of the physician’s referrals to the entity; or (3) includes other business generated by the physician for the entity furnishing DHS as a variable, resulting in an increase or decrease in the physician’s compensation that positively correlates with the physician’s generation of other business for the entity. For purposes of applying the above “correlation” standards, a positive correlation between two variables exists when one variable decreases as the other variable decreases, or one variable increases as the other variable increases.
e. Isolated Financial Transaction – to include, as a specific examples, a one-time sale of property or a practice, single instance of forgiveness of an amount owed in settlement of a bona fide dispute, or similar one-time transaction, and to specifically exclude a single payment for multiple or repeated services (such as payment for services previously provided but not yet compensated).
f. Ownership or Investment Interest – now specifically excludes two concepts:
i. “Titular” ownership or investment interests, that is, an interest that excludes the ability or right to receive the financial benefits of ownership or investment, including, but not limited to, the distribution of profits, dividends, proceeds of sale, or similar returns on investment. Previously, the concept of titular ownership or investment interest exclusion only applied in determining whether a compensation arrangement (as opposed to ownership or investment arrangement) between an entity and a physician organization was deemed to be a compensation arrangement between the entity and the physicians associated with the organization, and a physician whose
ownership or investment interest in the physician organization was merely titular in nature was not required to “stand in the shoes” of the physician organization.
ii. An interest in an entity that arises from an employee stock ownership plan.
iii. The new regulations also specify which exceptions to Stark Act apply to indirect compensation arrangements.
g. Physician – is now defined by reference to Section 1861(r) of the Social Security Act, which essentially lists the same categories of health care providers as the prior definition, but adds that these providers must be legally authorized to practice their professions by the State in which they perform their services.
h. Referral – to clarify that a “referral” is not an item or service for purposes of the Stark Act prohibitions.
i. Set in advance – to provide that compensation or a formula for determining compensation may be modified during the term of the arrangement and will be considered to have been “set in advance” if (1) all requirements of an applicable exception are met on the date of the modified compensation (or the formula for determining the modified compensation), (2) the modified compensation (or formula) is determined before the furnishing the items, services, office space or equipment for which the modified compensation is to be paid, and (3) the formula or the modified compensation is set forth in writing in sufficient detail so that it can be objectively verified.
j. The concept of “taking into account” the volume or value of referrals or other business generated between the parties:
i. Compensation to a physician (with some exceptions):
A. Compensation from a DHS entity to a physician takes into account the volume or value of referrals only if the formula used to calculate the physician’s compensation includes the physician’s referrals to the entity as a variable, resulting in an increase or decrease in the physician’s compensation that positively correlates with the number or value of the physician’s referrals to the entity.
B. Compensation from a DHS entity to a physician takes into account the volume or value of other business generated only if the formula used to calculate the
MARCH/APRIL 2021 | WWW.OCMS-MI.ORG
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