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April 03, 2020
Health Law Weekly

CMS Issues Blanket Stark Law Waivers to Address COVID-19 Crisis

  • April 03, 2020
  • Scott R. Grubman , Chilivis Grubman

On March 30, 2020, as part of the federal government’s continuing efforts to lessen the regulatory burden on health care providers during the pendency of the COVID-19 crisis, the Centers for Medicare and Medicaid Services (CMS) issued blanket waivers of certain self-referral prohibitions contained in the federal Stark Law, 42 U.S.C. § 1395nn. The waivers have a retroactive effective date of March 1, 2020.

In general, the Stark Law, also known as the physician self-referral law, prohibits (1) a physician from making referrals for certain designated health services (DHS) payable by Medicare to an entity with which he or she (or an immediate family member) has a financial relationship, and (2) an entity from submitting a claim for payment to Medicare for such DHS furnished pursuant to a prohibited referral. The Social Security Act, which contains the Stark Law, permits the Secretary of the Department of Health and Human Services (Secretary) to waive or modify certain requirements relating to federal health care programs when the President has declared a national emergency and the Secretary has declared a Public Health Emergency, both of which have occurred as a result of the ongoing COVID-19 crisis.  

Pursuant to his authority, the Secretary has waived sanctions under the Stark Law and related regulations for referrals and claims that fall into the following categories: 

  • Remuneration from an entity to a physician that is above or below fair market value (FMV) for services personally performed by the physician; 
  • Rental charges paid by an entity to a physician that are below FMV for the entity’s lease of office space or equipment from the physician, or vice versa;
  • Remuneration from an entity to a physician that is below FMV for items or services purchased by the entity from the physician; 
  • Remuneration from 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 from the entity;
  • Remuneration from a hospital to a physician in the form of medical staff incidental benefits that exceeds the typical limits set forth by federal law;
  • Remuneration from an entity to a physician in the form of nonmonetary compensation that exceeds the typical limits set forth by federal law;
  • Remuneration from an entity to a physician resulting from a loan to the physician with an interest rate below FMV or on terms that are unavailable from a lender that is not a recipient of the physician’s referrals or business generated by the physician, or vice versa; 
  • 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 without the typical prior approval required by federal law;
  • Referrals by a physician owner of a hospital that converted from a physician-owned ambulatory surgical center (ASC) to a hospital on or after March 1, 2020, as long as certain specified requirements are met; 
  • The referral by a physician of a Medicare beneficiary for the provision of DHS to a home health agency that does not qualify as a rural provider under federal law and in which the physician (or immediate family member) has an ownership or investment interest;
  • The referral by a physician in a group practice for medically necessary DHS furnished by the group practice in a location that does not qualify as a “same building” or “centralized building” as typically required by federal law; 
  • The referral by a physician in a group practice for medically necessary DHS 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;
  • 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; and 
  • Referrals by a physician to an entity with whom the physician has a compensation arrangement that does not satisfy the typical writing or signature requirements of an applicable Stark Law exception, as long as the arrangement satisfies each other requirement of the applicable exception, unless such requirement is also waived by this blanket waiver.

Importantly, the waivers apply only to financial relationships and referrals “that are related to the [COVID-19 outbreak].” However, that does not mean that the referral or service at issue has to directly relate to treating COVID-19. Instead, the Secretary has made clear that a service is related to the COVID-19 outbreak for purposes of the Stark Law waivers if it falls into one of the following fairly broad categories:

  • Diagnosis or medially necessary treatment of COVID-19, whether or not the patient is diagnosed with a confirmed case;
  • Securing the services of a physician or other health care practitioner 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;
  • Ensuring the ability of health care providers to address patient and community needs due to the COVID-19 outbreak, and expanding the capacity for health care providers to address such needs;
  • Shifting the diagnosis and care of patients to appropriate alternative settings due to the COVID-19 outbreak; and
  • Addressing medical practice or business interruption due to the COVID-19 outbreak in order to maintain the availability of medical care and related services for patients and the community.   

In issuing these blanket waivers, the Secretary stated that “CMS will pay claims for [DHS] that, but for satisfying the conditions of a blanket waiver, would violate the physician self-referral law.” The Secretary also stated that parties utilizing these blanket waivers “must make records relating to the use of the blanket waivers available to the Secretary upon request” and that parties are encouraged to “develop and maintain records in a timely manner as a best practice.” Finally, the Secretary noted that “[f]or each blanket waiver, the waiver . . . is limited to the circumstances described in the individual blanket waiver, and health care providers must satisfy all conditions of the blanket waiver in order to rely on the blanket waiver.” 

 

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