While a large number of healthcare providers, developers, and insurers in the US make efforts to obtain benefits from higher reimbursements offered by Medicare and Medicaid rules, it is equally important for them to ensure that they do not violate Stark’s Law. As a matter of fact, Stark Law’s continues to play a vital role in every healthcare real estate transaction for about quarter century after its introduction in the nation. Also, Affordable Care Act (ACA) emphasizes that providers of healthcare services must self-disclose any actual or potential violation of Stark Law. So what’s exactly Stark’s Law about?
Originally, Stark Law banned self-referrals for Designated Health Services (DHS) that were working within Medicare. It was later expanded to prohibit health-care providers or hospitals from submitting Medicare and Medicaid claims for patients that were referred by doctors, with whom health-care providers have a financial relationship. Also, Stark Law applies to real estate property leases between healthcare providers and referring organizations.
How Stark Law impacts healthcare real estate
Stark Law compliance largely affects medical organizations as well as lease transactions. According to Stark Law, if a physician or an immediate family member of the physician has a specified financial relationship with an entity, that includes a space rental relationship, then the physician should not make referrals to the entity for DHS unless the relationship is considered an exception under Stark Law. It states that such leases must comprise a term of at least one year, reasonable and necessary space for legal business reasons, and rent complying with fair market value. In such circumstances, the valuable assistance of professional appraisal services, such a business valuation services in New York, can prove worthy in carrying out accurate valuation of the property in question.
Non-compliance with Stark Law can subject you to hefty penalties as high as $30 million. This stands true especially when it comes to determining and paying rents at a fair and accurate market value. To avoid these hefty penalties, healthcare providers with a new or renewed lease from or to a referral source should perform a market analysis to ensure Stark Law compliance. For this purpose, you need to hire proficient real estate valuation service to obtain an appraisal report based on analysis of subject property data and market data. These professional appraisal services also help in gathering leases, site plans, rent rolls, floor plans; inspecting the real estate; and monitoring the local real estate market at the time of the lease. In this way, real estate valuation plays an important role to help healthcare organizations comply with Stark Law.
In case, healthcare providers are already defending against alleged Stark Law violations then retrospective appraisal reports prepared by efficient property appraiser can help determine whether the lease in question was compliant with the law at the time of the real estate transaction or not. Thus, it’s necessary for every healthcare provider to comply with Stark Law, when carrying out health-care real estate transactions, to avoid hefty penalties and legal issues.