A definition of CR was finally codified. Previously, healthcare entities relied upon commentary issued in 1998 stating an arrangement is CR if it “appears to be a sensible, prudent business agreement, from the perspective of the particular parties involved, even in the absence of any potential referrals.” The codified definition of CR is now:
“Commercially reasonable means that the particular arrangement furthers a legitimate business purpose of the parties to the arrangement and is sensible, considering the characteristics of the parties, including their size, type, scope, and specialty. An arrangement may be commercially reasonable even if it does not result in profit for one or more of the parties.”
A key addition to the definition is consideration of the characteristics, “size, type, scope, and specialty,” of the parties. Again, emphasizing the specific facts and circumstances regarding the parties is essential in determining if an arrangement is CR.
Further, CMS has clarified in the definition an arrangement can be CR even if it is not profitable. Though CMS did note profitability is still relevant in evaluating CR.