COVID-19 Insights and Information

Articles

Industries

HHS Issues Blanket Waivers of Stark Law in Wake of COVID-19 Emergency

Breanne M. Rubin
4/2/20

three medical professionals viewing x-ray   On March 30, 2020, following President Trump’s declaration of a national emergency due to the COVID-19 pandemic, the Secretary of Health and Human Services (HHS) issued blanket waivers of enforcement of the Stark Law under his 1135 waiver authority. The waivers only apply to financial relationships and referrals that are related to the national COVID-19 emergency, and the remuneration and referrals must be related solely to “COVID-19 Purposes” (defined below). Although the waivers were issued on March 30, 2020, they are effective as of March 1, 2020, and may be used without notifying CMS. A copy of the HHS Secretary’s waiver announcement can be found here

   For background, Section 1877 of the Social Security Act (commonly referred to as the Stark Law): (1) prohibits a physician from making referrals for certain designated health services payable by Medicare to an entity with which he or she (or an immediate family member) has a financial relationship, unless all of the requirements of an applicable exception are satisfied; and (2) prohibits the entity from filing claims with Medicare (or billing another individual, entity or third party payor) for designated health services furnished pursuant to a prohibited referral. A financial relationship is an ownership or investment interest in the entity or a compensation arrangement with the entity. 

   The Stark Law waivers are intended to ensure that: (1) sufficient health care items and services are available to meet the needs of individuals enrolled in the Medicare, Medicaid and CHIP programs; and (2) health care providers that furnish such items and services in good faith, but are unable to comply with one or more of the regulatory requirements that are subject to the waivers due to the COVID-19 pandemic, may be reimbursed for such items and services and exempted from sanctions for such noncompliance, absent the government’s determination of fraud or abuse. 

   These blanket waivers mean that, absent any determination of fraud or abuse, and if all conditions of a blanket waiver are met, CMS will pay claims for designated health services that would otherwise violate the Stark Law.  Physicians and providers wishing to rely on any of these blanket waivers should ensure that all conditions of a waiver are satisfied and that documentation supports and reflects such reliance. 

Definition of “COVID-19 Purposes” 

   The blanket waivers only apply to financial relationships and referrals that are related to the COVID-19 outbreak in the United States. The remuneration and referrals described in the blanket waivers must be solely related to COVID-19 Purposes. For purposes of the blanket waivers, COVID-19 Purposes means: 

List of Blanket Waivers


   The waivers effectively waive sanctions that would otherwise apply in a number of situations likely to arise during the COVID-19 pandemic, including payment for physician services that is above or below fair market value (FMV), rent paid by physicians below FMV, failure to meet writing requirements and others. The list of blanket waivers includes the following: 

  1. Remuneration from an entity to a physician (or an immediate family member of a physician) that is above or below the FMV for services personally performed by the physician (or the immediate family member of the physician) to the entity.                                                                                                                                                                                                      
  2. Rental charges paid by an entity to a physician (or an immediate family member of a physician) that are below FMV for the entity’s lease of office space from the physician (or the immediate family member of the physician).                                                                                                   
  3. Rental charges paid by an entity to a physician (or an immediate family member of a physician) that are below FMV for the entity’s lease of equipment from the physician (or the immediate family member of the physician).                                                                                                   
  4. Remuneration from an entity to a physician (or an immediate family member of a physician) that is below FMV for items or services purchased by the entity from the physician (or the immediate family member of the physician).                                                                                                             
  5. Rental charges paid by a physician (or an immediate family member of a physician) to an entity that are below FMV for the physician’s (or immediate family member’s) lease of office space from the entity.                                                                                               
  6. Rental charges paid by a physician (or an immediate family member of a physician) to an entity that are below FMV for the physician’s (or immediate family member’s) lease of equipment from the entity.                                                                     
  7. Remuneration from a physician (or an immediate family member of a physician) to an entity that is below FMV for the use of the entity’s premises or for items or services purchased by the physician (or the immediate family member of the physician) from the entity.                                                                                                                                                                        
  8. Remuneration from a hospital to a physician in the form of medical staff incidental benefits that exceeds the limit set forth in 42 CFR 411.357(m)(5) (currently $423.00 for the year 2020).                                                                                                                                                                          
  9. Remuneration from an entity to a physician (or the immediate family member of a physician) in the form of nonmonetary compensation that exceeds the limit set forth in 42 CFR 411.357(k)(1) (currently $36.00 per occurrence for the year 2020).                                                                                                                                                                                            
  10. Remuneration from an entity to a physician (or the immediate family member of a physician) resulting from a loan to the physician (or the immediate family member of the physician): (1) with an interest rate below FMV; or (2) on terms that are unavailable from a lender that is not a recipient of the physician’s referrals or business generated by the physician.                                                                                                                                                                                                                          
  11. Remuneration from a physician (or the immediate family member of a physician) to an entity resulting from a loan to the entity: (1) with an interest rate below FMV; or (2) on terms that are unavailable from a lender that is not in a position to generate business for the physician (or the immediate family member of the physician).                                                                     
  12. The referral by a physician owner of a hospital that temporarily expands its facility capacity above the number of operating rooms, procedure rooms, and beds for which the hospital was licensed on March 23, 2010, (or, in the case of a hospital that did not have a provider agreement in effect as of March 23, 2010, but did have a provider agreement in effect on December 31, 2010, the effective date of such provider agreement) without prior application and approval of the expansion of facility capacity as required under section 1877(i)(1)(B) and (i)(3) of the Social Security Act and 42 CFR 411.362(b)(2) and (c).                                                                                                                             
  13. Referrals by a physician owner of a hospital that converted from a physician-owned ambulatory surgical center to a hospital on or after March 1, 2020, provided that: (i) the hospital does not satisfy one or more of the requirements of section 1877(i)(1)(A) through (E) of the Social Security Act; (ii) the hospital enrolled in Medicare as a hospital during the period of the public health emergency; (iii) the hospital meets the Medicare conditions of participation and other requirements not waived by CMS during the period of the public health emergency; and (iv) the hospital’s Medicare enrollment is not inconsistent with the Emergency Preparedness or Pandemic Plan of the State in which it is located.                                                                                                                                                                                                                         
  14. The referral by a physician of a Medicare beneficiary for the provision of designated health services to a home health agency: (1) that does not qualify as a rural provider under 42 CFR 411.356(c)(1); and (2) in which the physician (or an immediate family member of the physician) has an ownership or investment interest.                           
  15. 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 CFR 411.355(b)(2).                                                                                                                                                                                                                     
  16. The referral by a physician in a group practice for medically necessary designated health services furnished by the group practice to a patient in his or her private home, an assisted living facility, or independent living facility where the referring physician’s principal medical practice does not consist of treating patients in their private homes.                                                                                                                                                                                                      
  17. The referral by a physician to an entity with which the physician’s immediate family member has a financial relationship if the patient who is referred resides in a rural area.                                                                                                                                                                                                                                                                                               
  18. 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 set forth above.

   Blanket waivers only apply to the specific circumstances described in the individual blanket waiver and health care providers must satisfy all circumstances and conditions of the waiver in order to rely on that waiver. 

Examples of When Blanket Waivers May Apply

   The Secretary provides a non-exhaustive list of examples of remuneration, referrals or conduct that may fall within the scope of the blanket waivers. Unless the blanket waiver expressly applies only to a specific type of entity, examples indicating a hospital also apply to any other type of entity furnishing designated health services.

Documentation 

   Although health care providers are not required to submit any specific documentation or notice to HHS prior to relying on a waiver, providers must maintain records documenting their use of and eligibility for the waivers and that documentation must be made available to HHS upon request. 

   Finally, it is important to note that the waivers are subject to revision from time to time as the Secretary and CMS determine necessary but any revisions that terminate or narrow the scope of the waivers will be prospective only. The Secretary may issue additional blanket waivers in the days and weeks to come, with effective dates to be announced at that time. 

  Should you have any questions concerning the changes to the Stark Law, please contact Ms. Rubin. 

___________________ 

Disclaimers:

At the date of publication the above information was correct.  It is quite possible the information above has changed as COVID-19 is a rapidly evolving situation. 

The article in this publication has been prepared by Eastman & Smith Ltd. for informational purposes only and should not be considered legal advice. This information is not intended to create, and receipt of it does not constitute, an attorney/client relationship.