October 20, 2020

Volume X, Number 294

October 19, 2020

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CMS Issues Blanket Waivers of Physician Self Referral (Stark) Law Penalties to Support COVID-19 Response Efforts

On March 30th, the Centers for Medicare and Medicaid Services (CMS) issued blanket waivers (Blanket Waivers) of sanctions under the federal physician self-referral law (Stark Law) to relax regulatory requirements related to health care providers’ response to the COVID-19 pandemic. The Blanket Waivers were issued under the Department of Health and Human Services Secretary’s authority in Section 1135 of the Social Security Act to ensure that (i) sufficient health care items and services are available to federal health care program beneficiaries, and (ii)  health care providers are reimbursed for providing such health care items and services while addressing the COVID-19 crisis. The Blanket Waivers apply to remuneration that is between an entity (as defined under the Stark Law) and (1) a physician, (2) the physician organization in whose shoes the physician stands (under 42 C.F.R. 411.354(c)) or (3) the physician’s immediate family member.

COVID-19 Purposes

The Blanket Waivers apply only to remuneration and referrals that are for “COVID-19 Purposes,” defined as one or more of the following:

  • Diagnosis of COVID-19;

  • Medically necessary treatment of COVID-19, even if an individual is not diagnosed with a confirmed case of COVID-19;

  • Obtaining the services of physicians and other health care practitioners and professionals for the purpose of providing medically necessary patient care services in response to the COVID-19 outbreak, including services not related to the diagnosis and treatment of COVID-19;

  • Ensuring that health care providers can meet patient and community needs due to the COVID-19 outbreak;

  • Increasing health care providers’ capacity to meet patient and community needs due to the COVID-19 outbreak;

  • Moving the diagnosis and care of patients to appropriate alternate care settings due to the COVID-19 outbreak; or

  • Addressing medical practice or business interruption that results from the COVID-19 outbreak, for purposes of maintaining available medical care and related services to patients and the community.

Arrangements Covered by the Blanket Waivers

CMS waived Stark Law sanctions to enable referrals and claims to be eligible for reimbursement in connection with eighteen types of arrangements having COVID-19 Purposes that otherwise could violate the Stark Law, including without limitation:

  • Remuneration above or below fair market value (FMV) to a physician (or immediate family member of a physician) for personally performed services;
  • Below-FMV rental payments for office space or equipment (i) leased from a physician (or immediate family member) by an entity (e.g., hospital); or (ii) leased by a physician (or immediate family member) from an entity;
  • Incidental benefits to medical staff members in excess of per-occurrence regulatory limits;
  • Nonmonetary compensation to physicians (or an immediate family member) that exceeds the annual limit normally applicable to such compensation;
  • Below-FMV remuneration from a physician (or immediate family member) to an entity for use of the entity’s space or for the purchase of items from the entity;
  • Remuneration between a physician (or immediate family member) and entity in the form of a loan (i) with a below-FMV interest rate, or (ii) on terms unavailable from a lender not in a position to generate business for the physician or that is not a recipient of referrals from the physician or business generated by the physician (or immediate family member);
  • Physician referrals of beneficiaries for services to a home health agency that is not located in a rural area and in which the physician (or an immediate family member) has an ownership or investment interest;
  • Referrals by a physician in a group practice for medically necessary services furnished by the group practice in a location that is not within the same building or a centralized building;
  • Referrals by a physician in a group practice for medically necessary services furnished by the group practice to a patient in the patient’s private home, an assisted living facility, or independent living facility, even if the referring physician’s principal practice does not consist of treating patients in their homes;
  • Referrals of patients residing in rural locations by physicians to entities with which the physician’s immediate family member has a financial relationship; and
  • Referrals by a physician to an entity with whom the physician (or immediate family member) has a compensation arrangement that satisfies every applicable requirement of a Stark Law exception except the writing or signature requirement(s).

Blanket Waiver Examples

CMS provides helpful examples for health systems and physicians to structure arrangements in accordance with the Stark Law and the Blanket Waivers in order to respond to the COVID-19 pandemic, including:

  • Hospital payments to physicians above their previously contracted rate for treating COVID-19 patients under particularly hazardous or challenging circumstances;

  • Hospital rentals of physician office space at below-FMV or no charge in response to a patient surge;

  • A hospital providing free or below-FMV medical office space on its campus to enable physicians to provide timely outpatient treatment of patients presenting at the hospital;

  • An entity providing free telehealth equipment to physicians to facilitate the delivery of telehealth services to patients who are social distancing or quarantined;

  • A hospital sending an employee to train physician practice offices on COVID-19 detection and response techniques, and to facilitate care coordination for COVID-19 patients;

  • A hospital providing meals, comfort items (e.g., changes of clothing), and/or on-site child care with a value greater than $36 per instance to medical staff physicians responding to the COVID-19 pandemic;

  • A group practice furnishing MRI or CT services in a mobile vehicle, van or trailer in its parking lot to patients so that patients are not obligated to go to a hospital to receive such services;

  • A hospital providing a loan to its exclusive anesthesia provider to offset lost income from the cancellation of elective procedures; or

  • Compensation arrangements that commence prior to the required documentation or signature requirements are met, including call coverage services provided in advance of an agreement being signed, or physician treatment of patients in office space owned by the hospital before the lease arrangement is documented and signed by the parties.

Parties wishing to utilize the Blanket Waivers do not need to provide advance notice or receive approval for their use; however, parties who rely on a Blanket Waiver must retain records relating to their use, and the records must be available for the Secretary’s review upon request.

The Blanket Waivers apply nationwide and are retroactively effective to March 1, 2020. They will remain in effect until the end of the COVID-19 public health emergency or national emergency declarations, unless modified or terminated sooner by the Secretary. CMS indicated that any revisions to the Blanket Waivers would apply prospectively.

The broad scope of the Stark Law waivers issued by CMS appears intended to enable physicians and hospitals to respond to the unprecedented public health challenges posed by the COVID-19 pandemic. Parties would also be well-advised to remember that despite the Blanket Waivers, the Stark Law continues to apply in full to arrangements not related to COVID-19 Purposes, and strict liability for Stark Law violations makes it essential for parties to continue to closely analyze its applicability and that of the Blanket Waivers.

Copyright © 2020 Robinson & Cole LLP. All rights reserved.National Law Review, Volume X, Number 93

TRENDING LEGAL ANALYSIS


About this Author

Nathaniel Arden, Health Care and Intellectual Property Attorney, Robinson Cole Law Firm, Hartford, Connecticut
Counsel

Nathaniel Arden is a member of Robinson+Cole’s Health Law Group. He advises hospitals, health systems, physician groups, community providers, and other health care entities on a variety of health law and business issues. His practice focuses on health care-related regulatory and transactional matters, as well as health care-related information technology issues. Nathaniel has an extensive background in the healthcare industry, and he worked at a large academic medical center prior to joining the firm.

Regulatory

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860-275-8269
Conor Duffy Cybersecurity Attorney
Associate

Conor Duffy is a member of the firm's Health Law Group and its Data Privacy + Cybersecurity Team. He advises hospitals, physician groups, community providers, and other health care entities on general corporate matters and health law issues. He also counsels clients on what measures are needed to safeguard data and patient information.

Regulatory

Conor provides legal counsel to health care clients on various regulatory matters, such as Medicare and Medicaid program compliance, federal fraud and abuse laws, and the Emergency Medical Treatment & Labor Act (EMTALA). He also assists with the full spectrum of state health law matters, including those related to licensure and staffing. Conor represents clients in state and federal administrative appeals and provides counsel related to internal investigations. He is a frequent speaker and writer on recent developments in fraud and abuse enforcement and False Claims Act jurisprudence.

Transactional

Conor advises health care clients on structuring transactions to meet their business objectives in accordance with federal and state law. He assists with transactions involving contracting, affiliations, joint ventures, leasing agreements, clinical service agreements, and the establishment of accountable care and physician-hospital organizations. 

Information Privacy and Security

As a member of the firm’s Data Privacy + Cybersecurity team, Conor assists health care providers with compliance with the Health Insurance Portability and Accountability Act (HIPAA). He helps clients protect against impermissible disclosures of data and provides guidance on data breach response efforts. He also advises clients on security programs, policies, education, and the implementation of administrative, technical, and physical safeguards. Conor is a regular contributor to the firm’s Data Privacy + Security Insider publication. He is also a vice-chair of the American Bar Association Health Law Section’s Web & Tech Committee, a role in which he supports the online activities of the Health Law Section’s interest groups and manages technological matters on behalf of the Health Law Section.

Pro Bono and Community Involvement

Conor regularly undertakes pro bono matters. He is currently representing an Ethiopian political activist in his application for asylum. He has also provided pro bono counsel on reputation management related to unfavorable online search engine results, counseled a public high school on the establishment of a tax-exempt booster club, and reviewed contracts for a prominent veterans’ support organization. While in law school, Conor interned at the University of Connecticut School of Law's Asylum & Human Rights Clinic, where he participated in the representation of a Middle Eastern journalist during her successful application for asylum in the United States.

He contributes to the firm's blog, Health Law Diagnosis.  

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