Recently Issued Blanket Waivers Relax Stark Law and Anti-Kickback Statute Requirements for Real Estate Lease Arrangements with Referral Sources
This Bulletin is brought to you by the Real Estate Affinity Group of AHLA’s Hospitals and Health Systems Practice Group.
- May 21, 2020
- Goran Musinovic , Realty Trust Group LLC
- Grant T. Williamson , Realty Trust Group LLP
The Centers for Medicare & Medicaid Services (CMS) responded to the regulatory challenges posed by the COVID-19 pandemic by issuing blanket waivers[1] of Section 1877(g) of the Social Security Act (Act). These waivers, retroactively effective March 1, 2020, were issued with two goals in mind: (1) ensuring that the public has adequate access to health care items and services and (2) ensuring that health care providers that are attempting in good faith to furnish these items and services, but are unable to comply with the requirements of Section 1135(b) of the Act, may still receive reimbursement (and avoid sanctions) absent fraud or abuse.[2] Section 1877 of the Act, the “physician self-referral law” or the “Stark Law,” (a) prohibits a physician from making referrals for certain designated health services (DHS) payable by Medicare to an entity when the physician, or immediate family member of the physician, has a financial relationship with that entity (absent an exception being satisfied) and (b) prohibits the entity from filing claims with Medicare or billing another individual, entity, or third-party payer for DHS furnished pursuant to such a prohibited referral.
The Department of Health and Human Services Office of Inspector General (OIG) issued a corresponding statement[3] on and effective as of April 3, 2020, notifying interested parties that OIG will not impose administrative sanctions under the federal Anti-Kickback Statute, Section 1128B(b) of the Act, for certain remuneration related to COVID-19 covered by the blanket waivers issued by CMS. This Bulletin details the basic aspects of the blanket waivers that relax certain compliance requirements under the Stark Law and the Anti-Kickback Statute for real estate lease arrangements with referral sources.
General Guidelines for the Blanket Waivers
Any remuneration provided or referrals made under a blanket waiver must be solely related to COVID-19 purposes, which is broadly defined as ranging from diagnosing or providing “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” to “[a]ddressing 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.”[4] Specific documentation or advance notice of a party’s intent to utilize a blanket waiver is not required; however, it is nevertheless recommended, and parties must make available records relating to the use of the blanket waivers upon request.[5] The government may still enforce sanctions against health care providers under the Stark Law and the Anti-Kickback Statute when a determination of fraud or abuse has been made, and health care providers relying on blanket waivers must still act in good faith. The term “blanket waiver” is not intended to provide complete freedom for health care providers to ignore the requirements of Section 1135(b) of the Act, or other provisions, but rather to lessen the applicability of the requirements where health care providers are attempting in good faith to provide necessary services during the COVID-19 pandemic.[6]
Blanket Waivers and Examples Related to Real Estate Lease Arrangements with Referral Sources
While the blanket waivers extend broadly to health care providers, this Bulletin focuses solely on how they change compliance requirements for real estate arrangements with referral sources. The following instances fall within the scope of the blanket waivers:
- Rental charges paid by an entity to a physician, or vice versa, that are below fair market value (FMV) for the lease of office space or lease of equipment.[7]
- 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 from the entity and remuneration from an entity to a physician that is below FMV for items or services purchased from the physician.[8]
- Remuneration from an entity to a physician resulting from a loan to the physician, or vice versa, where (1) the interest rate is below FMV or (2) on terms that are unavailable from a lender that is not in a position to generate business for the physician.[9]
- Referrals by a physician to an entity with whom the physician has a compensation arrangement that does not satisfy the writing or signature requirement(s) of an applicable exception but satisfies all other requirements, unless the requirement is waived under another blanket waiver.[10]
There are additional waivers related to real estate, such as expansions of facilities beyond the licensed limits and conversions of ambulatory surgical centers to hospitals, but those are beyond the scope of this Bulletin.
Generally, these blanket waivers address the FMV requirements concerning rent rates and documentation requirements under the rental of office space exception of the Stark Law. Additionally, the blanket waivers related to loans could be applicable to rent abatements and rent deferrals offered by the leasing party.
Specific real estate lease related examples demonstrating the scope of the applicable blanket waivers include:
- To accommodate patient surge, a hospital rents office space or equipment from an independent physician practice at below FMV or at no charge.[11]
- A hospital’s employed physicians use the medical office space and supplies of independent physicians to treat patients who are not suspected of exposure to COVID-19 away from their usual medical office space on the campus of the hospital to isolate patients suspected of COVID-19 exposure.[12]
- A hospital provides free use of medical office space on its campus to allow physicians to provide timely and convenient services to patients who come to the hospital but do not need inpatient care.[13]
- A physician establishes an office in a medical office building owned by the hospital and begins treating patients who present at the hospital for health care services but do not need hospital-level care before the lease arrangement is documented and signed by the parties.[14]
These examples, which respectively address rent rates, use of medical office spaces, and real estate lease document requirements, are not intended to limit the applicability of the waivers. Health care providers should carefully examine each situation and arrangement to determine whether it could be covered by the appropriate blanket waiver.
Of particular importance to many health care providers is that CMS also clarified in a statement titled Explanatory Guidance: March 30, 2020 Blanket Waivers of Section 1877(g) of the Social Security Act[15] issued on April 21, 2020 that amendments to the remuneration terms under an existing agreement may be made provided that (a) all non-waived requirements of an applicable exception are met, (b) the amended remuneration is determined before it is implemented by an amendment document, (c) the volume or value of referrals or other business is not taken into account in formulating remuneration, and (d) the agreement remains in place for a minimum of one year after it is amended.[16]
Conclusion
This Bulletin provides a brief overview of the applicability of the blanket waivers in the context of the Stark Law and Anti-Kickback Statute and real estate lease arrangement with referral sources. It is not meant to serve as guidance as to what situations would fall within the blanket waivers. Any general questions should be directed to CMS at [email protected] or to the OIG at [email protected].