physician compensation cannot be determined
in a manner that takes into account, directly
or indirectly, the volume or value of any
Medicare designated health services (DHS)
referrals or other business generated by the
physicians to the entity that will employ them
or to other affiliated entities. 8
Financial assistance for physician recruitment must adhere to Stark requirements.
Just as the PNA gives backing to the CR
assessment, so too it proffers backing and justification for proposed recruitment contracts
with regard to FMV.
When determining the FMV of an arrangement, proper documentation and support is
vital — especially when dealing with arrangements that may fall under scrutiny. A PNA
performed by an independent third party can
be used to inform arrangements with highly
compensated physicians or provide support
in a situation where a physician’s employment
results in initial financial loss for the hospital
while the physician builds his/her practice.
A research-intensive process
PNAs, CR analyses, and the determination of
FMV compensation are strongly intertwined.
Much research is required to thoroughly and
accurately conduct a PNA, especially given the
transition from volume-based to value-based
healthcare. Without a PNA or similar validation of provider need in a community,
an assessment of the CR and FMV of an
arrangement may be incomplete. It is critically
important to conduct PNAs with CR and FMV
in mind to fully develop and justify a hospital’s recruitment and/or affiliation strategy.
The author would like to thank PYA Consulting Senior Aaron
Elias for his assistance in the development of this article.
1. 72 Fed. Reg. 51050 (September 5, 2007).
3. Association of American Medical Colleges: The Complexities of
Physician Supply and Demand: Projections from 2013 to 2025, Final
Report. March 2015. Available at http://bit.ly/1OUvrli.
4. The Trustees of Dartmouth College: The Dartmouth Atlas of Health
Care. Available at http://bit.ly/2DHWSCd.
5. National Rural Health Association Policy Brief: “Health Care
Workforce Distribution and Shortage Issues in Rural America”
January 2012. Available at http://bit.ly/2FuKsOT.
7. 80 Fed. Reg. 71376 (November 16, 2015).
8. 69 Fed. Reg. p. 16096 (March 26, 2004).
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