A less well-known, but noteworthy, exception to the Stark Law permits hospitals to grant financial subsidies to private practice physicians in support of recruitment and employment of non-physician practitioners (NPPs) in high-need fields within their communities. Available to primary care and mental health service providers, this particular NPP umbrella includes physician assistants (PAs), nurse practitioners (NPs), certified nurse-midwives, clinical social workers, and psychologists. The guidelines allow for conditional hospital contributions at a level of up to 50% of NPP compensation, including salary, signing bonus, and non-cash benefits.
Healthcare entities that take advantage of this option to bolster their local NPP workforce should keep in mind that the regulation applies specifically to recruitment for employed NPPs — not independent contractors — and involves definite time limits, among other detailed requirements. Primarily, these arrangements must be unconnected to referrals; monitored and documented in detail; and formally authorized and signed by the hospital, the physician, and the NPP.
Moreover, NPP total compensation must be fair market value (FMV), which fluctuates by market, discipline, and specialty. CMS does not set parameters for NPP salaries, signing bonuses, or benefits; therefore, when it comes to NPP-related subsidies, determining and documenting fair market value is left to the hospitals and physician groups involved.
For hospitals and physician groups that are considering taking advantage of the NPP subsidy exception and want to determine FMV internally, we recommend the following in regard to FMV:
· Ensure all parties are given a written summary of the fair market value analysis, including the hospital, the physician group, and the NPP. At a minimum, the analysis should identify the analyst, the intended users of the analysis, the effective date of the analysis, the purpose of the analysis, the methodology used to determine fair market value, and the sources of market data.
· Have all parties review the analysis, including the data sources and methodology, and sign off on the findings.
· Use market data sources that are publicly available and are reliably published on at least an annual basis. The grapevine can provide a wealth of salary data for NPPs, but we recommend sticking to salary surveys from reliable sources. The American Academy of PAs (AAPA) and the American Association of Nurse Practitioners (AANP) both produce affordable salary surveys each year.
For hospital and physician groups not wanting to determine and document fair market value on their own, BuckheadFMV can help. BuckheadFMV has consulted nationally toward compliant and commercially reasonable subsidy arrangements and has extensive experience valuing compensation across the full spectrum of healthcare provider recruitment packages and employment agreements. For assistance with fair market value concerns involving NPP recruitment incentives and compensation, contact Darcy Devine.