Patients Over Paperwork: CMS Issues Blanket Waivers on Stark Law Sanctions in Response to COVID-19

Extraordinary times call for extraordinary measures – this is the approach the Centers for Medicare and Medicaid Services (“CMS”) has taken with respect to the federal Physician Self-Referral Law (the “Stark Law”) by issuing blanket waivers in light of the unprecedented Coronavirus (COVID-19) pandemic.

Background

On March 30, 2020, pursuant to Section 1135 of the Social Security Act (the “Act”), Alex Azar, Secretary of the Department of Health and Human Services (the “Secretary”), issued blanket waivers on sanctions under the Stark Law for certain “COVID-19 purposes” (as defined below).  Section 1135 of the Act permits the Secretary to waive or modify certain Medicare program requirements, so long as two conditions are satisfied: (1) the President must have declared an emergency or disaster under either the Stafford Act or the National Emergencies Act, and (2) the Secretary must have declared a Public Health Emergency under Section 319 of the Public Health Service Act.  These conditions were met as of March 13, 2020.

The purpose of the Section 1135 waiver power is, in part, to ensure that during an emergency period in an emergency area: (1) sufficient health care items and services are available to satisfy the needs of Medicare, Medicaid, and Children’s Health Insurance Program beneficiaries, and (2) health care providers that furnish such items and services (absent fraud and abuse), but who are unable to comport with one or more requirements described in Section 1135(b) of the Act, may be reimbursed for such items and services and exempted from sanctions for noncompliance (e.g., sanctions under Section 1877(g) of the Act).

The Stark Law, a strict liability statute, prohibits a physician from making a referral for designated health services payable by Medicare to an entity with which such physician (or an immediate family member) has a financial relationship, unless an exception applies.  Moreover, the entity may not submit, or cause to be submitted, a claim to Medicare (or bill another individual, entity, or third-party payor) for designated health services furnished pursuant to a prohibited referral.  Financial relationships include both ownership interests and compensation arrangements with the designated health services entity.

In order for the blanket waivers to apply to the Stark Law, the applicable financial arrangement must satisfy all of the conditions of the relevant blanket waiver(s).

Stark Law Blanket Waivers

Conditions that Must be Satisfied for the Blanket Waivers to Apply to the Stark Law Sanctions

The Secretary issued the blanket waivers applicable to the Stark Law on March 30, 2020, however they have a retroactive effective date of March 1, 2020 (with an expiration date upon the termination of the declaration of emergency or disaster; the termination of the declaration of public health emergency; or termination of a period of 60 days from the date the waiver or modification is first published, or, if applicable, the date of extension of the waiver).  The blanket waivers only apply to financial relationships and referrals related to the COVID-19 national emergency in the United States.  The remuneration described in the blanket waivers must also be directly between the designated health services entity and either (1) the physician or the physician’s organization (under the “stand in the shoes” provisions), or (2) the physician’s immediate family member.  As such, it does not appear that the blanket waivers are applicable to indirect compensation arrangements.

To obtain the benefit of the blanket waivers, the remuneration and referrals described in the blanket waivers must be solely related to “COVID-19 purposes.”  These “COVID-19 purposes” include the following:

• Diagnosis or medically necessary treatment of COVID-19 for any patient or individual, whether or not the patient or individual is diagnosed with a confirmed case of COVID-19;
• Securing the services of physicians and other health care practitioners and professionals to furnish medically necessary patient care services, including services not related to the diagnosis and treatment of COVID-19, in response to the COVID-19 outbreak in the United States;
• Ensuring the ability of health care providers to address patient and community needs due to the COVID-19 outbreak in the United States;
• Expanding the capacity of health care providers to address patient and community needs due to the COVID-19 outbreak in the United States;
• Shifting the diagnosis and care of patients to appropriate alternative settings due to the COVID-19 outbreak in the United States; and/or
• Addressing medical practice or business interruption due to the COVID-19 outbreak in the United States in order to maintain the availability of medical care and related services for patients and the community.

Stark Law Blanket Waivers

The Secretary issued eighteen (18) blanket waivers on sanctions for noncompliance with the Stark Law (i.e., prohibited referrals and claims) related to “COVID-19 purposes,” absent the government’s determination of fraud and abuse.  Generally speaking, the blanket waivers fall into the following categories: (1) payments from an entity to a physician, (2) payments from a physician to an entity, and (3) referrals made by a physician.  The following are some examples of the blanket waivers issued by the Secretary:

• Remuneration from an entity to a physician (or an immediate family member of a physician) that is above or below the fair market value for services personally performed by the physician (or the immediate family member of the physician) to the entity.
• Rental charges paid by a physician (or an immediate family member of a physician) to an entity that are below fair market value for the physician’s (or immediate family member’s) lease of office space from the entity.
• Rental charges paid by a physician (or an immediate family member of a physician) to an entity that are below fair market value for the physician’s (or immediate family member’s) lease of equipment from the entity.
• Remuneration from an entity to a physician (or the immediate family member of a physician) in the form of non-monetary compensation that exceeds the limit set forth in 42 C.F.R. § 411.357(k)(1).
• The referral by a physician in a group practice for medically necessary designated health services furnished by the group practice in a location that does not qualify as a “same building” or “centralized building” for purposes of 42 C.F.R. § 411.355(b)(2).
• Referrals by a physician to an entity with whom the physician (or an immediate family member of the physician) has a compensation arrangement that does not satisfy the writing or signature requirement(s) of an applicable exception but satisfies each other requirement of the applicable exception, unless such requirement is waived under one or more of the blanket waivers.

To obtain CMS’s complete list of the Stark Law blanket waivers, as well examples of remuneration, referrals, or conduct (for illustrative purposes) that may fall within the scope of such blanket waivers, please click here.

Conclusion

Although these blanket waivers will shield physicians and entities from sanctions for what would otherwise constitute a Stark Law violation, it is important to recognize that such blanket waivers only apply to the aforementioned “COVID-19 purposes.”  As a result, it is advisable for parties to develop and maintain comprehensive documentation of arrangements to demonstrate compliance.

If you have specific questions or require further information, please contact Jennifer D. Burgar or Gregory M. Gaylis. Please refer to AGG’s Coronavirus (COVID-19) Resource Center for additional legal alerts.