HVG has come across some existing lease arrangements where the lease rate was calculated based on the fair or desired rate of return to the lessor/landlord or owner of the equipment.  In most cases, this does not comply with the current Stark Law definitions.

Under the new Stark Law definitions, CMS reaffirmed its two-part definition related to the rental of office space.  Fair market value means with respect to the rental of office space, the value in an arms-length transaction of rental property for general commercial purposes (not taking into account its intended use), without adjustment to reflect the additional value the prospective lessee or lessor would attribute to the proximity or convenience to the lessor where the lessor is a potential source of patient referrals to the lessee, and consistent with the general market value of the subject transaction.

General market value means with respect to the rental of equipment or the rental of office space, the price that rental property would bring at the time the parties enter into the rental arrangement as the result of bona fide bargaining between a well-informed lessor and lessee that are not otherwise in a position to generate business for each other.