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CMS Issues Blanket Stark Law Waivers in Connection with COVID-19 Emergency

On March 30, in connection with the national COVID-19 emergency, the Centers for Medicare and Medicaid Services (“CMS”) issued waivers (the “Waivers”) for certain provisions of the federal physician self-referral law, commonly referred to as the “Stark Law.” To ensure there will be sufficient capacity to handle the unique challenges of the COVID-19 pandemic, CMS is permitting certain financial arrangements that would otherwise be prohibited under the Stark Law for entities and physicians acting in good faith and not engaged in fraud and abuse.

The Waivers apply nationwide and require no notice or approval to be used. The Waivers only apply to financial relationships and referrals that are solely related to “COVID-19 Purposes,” which is broadly defined to include arrangements for securing healthcare professionals to ensure the availability of health care services generally, expanding facility capacity, and addressing medical practice or business interruption due to the COVID-19 outbreak. Parties utilizing the Waivers must make records relating to the use of the Waivers available to the Secretary of the Department of Health and Human Services upon request, although CMS does not specify what documentation would be required.

There are 18 specific Waivers covering numerous types of financial arrangements. While the Waivers do not apply to all arrangements subject to the Stark Law, the Waivers do cover several broad categories. Arrangements permitted under the Waivers include, but are not limited to, the following:

  • Remuneration from an entity to a physician that is above or below fair market value for services personally performed by the physician;

  • Arrangements between an entity and a physician for the lease of office space or equipment, or for the purchase of items and services, that include payments below fair market value;

  • Removal of the compensation limits for Nonmonetary Compensation and Medical Staff Incidental benefits Exceptions set forth under 42 C.F.R. § 411.357(k) and 411.357(m), respectively;

  • Arrangements involving loans between an entity and a physician that include interest rates below fair market value or terms that are unavailable from a lender that is not in a position to generate business for, or receive business generated by, the physician;

  • Temporary capacity expansion for physician-owned hospitals;

  • Referrals within group practices for medically necessary designated health services provided in patient homes and other locations which do not meet the definition of “same building” or “centralized building” for purposes of In-Office Ancillary Services Exception under 42 C.F.R. § 411.355(b)(2); and

  • Compensation arrangements between a physician and entity that do not satisfy the writing and signature requirements generally required by an applicable exception.

As a practical matter, the Waivers will give providers additional flexibility to meet the challenges created by the COVID-19 outbreak. CMS also provides examples of their application.  For example, hospitals may pay physicians above their previously-contracted rate for treating COVID-19 patients in particularly hazardous or challenging environments and may even provide free office space on campus for physicians to treat patients who may not need inpatient care. Entities may also provide telehealth equipment or PPE to physicians for less-than-fair-market-value. The full lists of the CMS waivers and list of examples is available here.

While the Waivers were released on March 30, they are made retroactive to March 1. CMS reserves the right to revise the Waivers or add new Waivers from time to time, and will post any such revisions on the CMS website. Any revisions which narrow a Waiver, or any termination of a Waiver, will be effective on a prospective basis only.

© Copyright 2020 Squire Patton Boggs (US) LLP

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About this Author

Robert Nauman, Health Care, Lawyer, Squire Patton Boggs
Principal

Robert has extensive experience counselling healthcare clients, including hospitals and health systems, physicians, physician groups, ambulatory surgery centers, insurers, health plans and management companies, in a variety of regulatory and transactional matters.

Robert’s areas of expertise include healthcare fraud and abuse laws, Medicare reimbursement issues, provider alignment strategies, provider enrollment, accreditation and licensure, Accountable Care Organizations, provider acquisitions and affiliations, healthcare antitrust matters,...

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