PYA White Paper Explores Commercial Reasonableness in Healthcare Transactions

cr-imagePYA has released a white paper outlining commercial reasonableness and regulatory compliance in financial relationships between hospitals and physicians. 

View Updated White Paper

A new white paper from PYA, “Commercial Reasonableness: Defining Practical Concepts and Determining Compliance in Healthcare Transactions for Physician Services,” provides a framework for ensuring compliance with regulatory requirements to avoid sanctions and penalties related to the Stark Law, the Anti-Kickback Statute, the False Claims Act, and Internal Revenue Service 501(c)(3) status for tax-exempt entities.  The paper is an adaptation of a chapter from a book forthcoming this summer, BVR/AHLA Guide to Valuing Physician Compensation and Healthcare Service Arrangements, and is accompanied by an additional resource—“Practice Aid: Commercial Reasonableness Assessment Tool”–which represents some key exercises for evaluating the commercial reasonableness of physician-hospital arrangements.

View Full Study

To avoid costly penalties, financial relationships between hospitals and physicians must be both commercially reasonable and at fair market value (FMV).  While valuators have limited guidance as to how to determine FMV, the concepts and methodology for determining commercial reasonableness (CR) on its own terms continue to evolve.

According to the authors of the paper, “As a whole, the standard of commercial reasonableness remains broad in scope and speaks to an arrangement’s general business characteristics, including matters pertaining to strategy, economic factors, and operations. However, when one wants to evaluate commercial reasonableness in the healthcare setting from a practical perspective, specific terms of the proposed arrangement should be examined and analyzed in relation to the transaction’s: (1) business purpose; (2) provider of service; (3) appropriateness with regard to the provider’s facility and patient population; (4) suitability, considering the human and capital resources of the provider; and (5) aptness related to current and proposed methods for independence and oversight. By following such a process, commercial reasonableness analyses (based on available regulatory guidance) become more concrete and help mitigate any potential ambiguity that may exist between fair market value and commercial reasonableness.”

PYA’s valuation experts provide FMV compensation and CR opinions for a wide range of financial arrangements entered into by physicians, hospitals, and other healthcare entities.  Most often, our reviews are deemed helpful to healthcare providers that are compliance- focused and are desirous of compensation arrangements that comply with the Stark Law and the Anti-Kickback Statute, and any other regulations governing transactions in the healthcare industry.


Carol Carden

Carol Carden

Principal

Lyle Oelrich

Lyle Oelrich

Principal

Martin Brown

Martin Brown

President

Related Posts
An Inside Public Accounting Top 100 Accounting Firm, PYA recently was featured for its successes in the May 2017 edition of Accounting Today.  PYA is among four firms the publication...
Read More
accounting

PYA’s Path Forward Leads to Accounting Today Feature

PYA has released a white paper to assist providers develop population health management skills to succeed under alternative payment models. Providers must develop population health management skills and infrastructure if...
Read More
ffs-pop-health-graphic

New PYA White Paper: Fee-For-Service Population Health Management Services

PYA Principal Martie Ross and Consulting Senior Aaron Elias co-authored an article, “Boosting MIPS Scores Sets the Stage for Increased Revenue,” which recently was published in Physicians Practice. Article Excerpt:...
Read More
MIPS

Boosting MIPS Scores Sets the Stage for Increased Revenue

As a platinum sponsor of the Health:Further Festival, PYA is pleased to share details about a unique 4-day event coordinated by Health:Further and the Tennessee chapter of HIMSS.  PYA President...
Read More
Health:Further

Health:Further, HIMSS Launch 4-Day Future-of-Health Festival in Music City

PYA Principal James M. Keegan, MD, authored a guest editorial, “A Path to Success for LTC Antibiotic Stewardship,” which recently was published in McKnight’s Long-Term Care News. Article Excerpt: LTCs...
Read More
long-term care antibiotic stewardship

A Path to Success for LTC Antibiotic Stewardship

PYA has released an updated white paper that provides a step-by-step guide to participation in the Medicare Shared Savings Program. As of 2017, there are 480 accountable care organizations (ACOs)...
Read More
ACO Road Map Mobile Slider March 2016

PYA Releases Updated Medicare ACO Road Map White Paper

In this podcast, PYA’s Martie Ross and Aaron Elias discuss the 2018 Medicare Shared Savings Program application cycle, highlighting key reasons to participate in the MSSP, the basics of forming...
Read More
MSSP

PYA Podcast: The ABCs of the MSSP

PYA has released a new white paper exploring best practices in medical necessity to help providers avoid denials and recoupments.   A new white paper from PYA, “Medical Necessity—Current Status,...
Read More
mednecessity-image

PYA White Paper Provides Guidance on Medical Necessity

PYA (Pershing Yoakley & Associates), a national management consulting and accounting firm, has released a new infographic and supplementary study that explore market trends related to the supply and demand...
Read More
genpsych-feat

New Infographic: Fair Market Value Compensation Spotlight on General Psychiatry

Share This Insight

If you received value from this article, please share it with your network (e.g., Facebook, Twitter, LinkedIn). Icons below for your convenience.

Stay Current

See more newsletter and alert options.

PYA Population Health Ascend

PYA Healthcare Blog

PYA Thought Leadership Services

The Healthcare Loop