Category: Compensation Valuation

Telehealth has long been known to have the potential to be a major disruptor to the healthcare industry. Now, during one of the largest disruptions of our lifetime, it has shown its true potential by providing a temporary lifeline for patients and providers alike. In an effort to provide access to healthcare and maintaining continuity of care, the government has issued broad waivers temporarily reducing many of the hurdles that have limited the adoption and expansion of telehealth such as geographic restrictions, coverage and payment rates, state licensure, certain platform and HIPAA requirements, etc.
 
The temporary lifting of restrictions and the protections provided in the Stark Law and Anti-Kickback statutes, coupled with the continuum of care void created by the pandemic has led to a mad dash to provide telehealth services. In turn, this has created an urgent need to enter into various arrangements necessary to support telehealth services. Due to the emerging and evolving nature of the various telehealth services many physicians, hospitals, even large health systems find themselves navigating uncharted territories. And despite the temporary waiver, the long-term viability of these agreements requires regulatory compliance including fair market value compensation. With so much uncertainty, many clients are turning to valuation firms like Root Valuation to help with some of the truly unique challenges of marketing and pricing these services and products.
 
Some of the more daunting and unknown long-term challenges include:
  • Will any of the temporary provisions expanding coverage and access to telehealth services remain in place or become permanent after waivers are lifted?
  • What are the implications if they are not?
  • Will there be a lasting impact on patient demand and preferences?
  • How will care delivery models and practice patterns need to adapt?
  • How does/will the ability to practice across state lines impact FMV?
The safest course of action in light of this uncertainty is to assume Stark and Anti-Kickback regulations and enforcement will be reapplied as currently written. As such, we believe it is important that clients work with a valuator to develop sound logic and document their support for the pricing of temporary arrangements. Clients should also implement specific provisions to revisit these compensation structures and amounts once the waivers expire and the go-forward market and compliance considerations are known with greater certainty.
While it may be impossible to plan for all of the eventualities that may manifest once the pandemic is over, we believe this is a watershed moment for telehealth that will see sustained high demand for these services long after the pandemic subsides. In the near to mid-term telehealth will remain highly fragmented and inconsistent due to the multiple variables and parties involved, however, new technologies and increased capital investment will likely change not only telehealth, but the healthcare industry as a whole.
 
At Root Valuation we are committed to helping clients navigate the market and regulatory uncertainties through a consultative approach to valuation services. If your organization needs help navigating telehealth financial arrangements or help planning how the changes related to telehealth could impact your organization, please give us a call at 720.390.6673 or email us at info@rootvaluation.com.

By Mark Spurlin

Hospitals, health systems and providers of all types are facing unprecedented challenges as they respond to the COVID-19 pandemic, and almost all aspects of healthcare have been affected. In response, we have seen HHS, CMS and other regulators take broad measures to bypass regulatory uncertainties by issuing waivers and providing guidance that allows flexibility for healthcare providers to respond to the crisis based on the unique facts and circumstances they currently face.
Although the priority has been ensuring the resources are available and in place to provide care, and rightfully so, setting the appropriate compensation for physicians and non-physician providers poses its own uncertainties and challenges. Providers on the frontlines are facing a surge in demand, while others are much more idle as elective procedures are canceled or postponed and many patients in general are avoiding seeking healthcare services for non-urgent issues.
 
To facilitate real-time decisions and ensure continuity of care, on March 30, 2020 CMS issued blanket waivers of sanctions under the physician self-referral law, also known as Stark Law. The blanket waivers apply to certain financial relationships and referrals related solely to “COVID-19 Purposes” and are intended to provide additional flexibility for physicians and providers to provide sufficient healthcare items and services in instances that may not normally comply with Stark Law.
 
The waivers address and apply to a wide array of compliance issues that would normally constitute violations under current law. These range from hospitals providing excess benefits to the medical staff such as meals, comfort items, and/or on-site child care, to the temporary ability of physician-owned hospitals to convert observation beds to inpatient beds or otherwise increase their inpatient bed count to accommodate patient surge during the COVID-19 outbreak. Perhaps the most widely applicable wavier applies to the remuneration from an entity to a physician (or an immediate family member of a physician) that is above or below the fair market value (“FMV”) for services personally performed by the physician (or the immediate family member of the physician) to the entity.
 
Furthermore, the guidance can be applied retroactively to March 1 and covers compensation arrangements that commenced prior to the required documentation of the arrangement in writing and the signatures of the parties, but that satisfies all other requirements of the applicable exception. It should be noted that while these waivers provide flexibility for hospitals and healthcare providers to operate under during the pandemic, each financial relationship should be evaluated independently and comply with other federal, state, and local regulations.
 
These regulations and temporary waivers create a new altered framework to answer which financial arrangements CAN be compensated during the Covid-19 pandemic. However, the next question is how, and how much, SHOULD you compensate providers during this temporary crisis and what are the potential long-term implications. The answer to these questions requires careful consideration of the specific facts and circumstances and the application informed judgment. Importantly, steps should also be taken to revisit these arrangements after the crisis has passed to ensure that temporary emergency compensation measures are in fact temporary and do not create compliance risks downstream.
 
Root Valuation is committed to helping the clinicians and healthcare organizations on the front lines in our fight against the coronavirus pandemic. If you or your organization needs valuation support for COVID-19 related compensation arrangements we will donate up to 2 hours of our time for consultation and discount our fees by 50% for any associated FMV opinion required.