CMS Issues Blanket Waivers under the Stark Law

By Adrienne Dresevic, Esq. and Arturo Trafny, Esq. of The Health Law Partners, P.C.

On March 30, 2020, the Centers for Medicare and Medicaid Services (CMS) announced that it will issue blanket waivers from sanctions imposed under the Physician Self-Referral (Stark) Law, to healthcare providers responding to the COVID-19 pandemic.

By way of background, the Stark Law generally prohibits physicians from making referrals for certain designated health services (DHS) payable by Medicare to an entity in which the physician, or one of the physician’s immediate family members, has a financial relationship. The Stark Law also prohibits physicians from filing claims with Medicare or billing another individual/entity/third party payor for DHS furnished pursuant to a prohibited referral.

CMS only has authority to issue waivers when: (1) the President has declared an emergency or disaster and (2) the Department of Health and Human Services’ (HHS) Secretary has declared a Public Health Emergency. As of March 13, 2020, both of these requirements were met. CMS is issuing the blanket waivers to ensure that physicians, hospitals and physician organizations are afforded the regulatory flexibility necessary to ensure sufficient healthcare services are provided to Medicare, Medicaid and CHIP program beneficiaries during the COVID-19 pandemic.

It is common for radiology providers and suppliers to have arrangements that implicate the Stark Law but are structured to meet an applicable Stark Law exception. Due to the COVID-19 pandemic, radiology providers and suppliers could be faced with scenarios that fall within the ambit of the Stark Law but are unable to meet an applicable exception. For example, a radiology provider may be approached by a physician group practice to furnish medically necessary MRIs or CT services in a mobile vehicle in the parking lot of the group practice’s office to Medicare beneficiaries who would normally receive such services at a hospital, but should not go to the hospital due to concerns about the spread of COVID-19. Depending upon the structure, this type of arrangement may not meet an applicable exception. However, if the arrangement is necessary to meet the healthcare needs of beneficiaries during the COVID-19 pandemic and one of the blanket waivers apply, the arrangement will be permissible. Radiology providers and suppliers should review the blanket waivers to determine whether a waiver may apply to arrangements that are triggered during the COVID-19 public health emergency.

THE STARK LAW WAIVERS

As mentioned above, the blanket waivers grant physicians, hospitals, physician organizations and other entities regulatory flexibility to adjust their financial arrangements to best respond to the COVID-19 pandemic and the burden it has imposed on the healthcare industry. CMS wants to ensure that healthcare providers providing services in good faith, that are unable to comply with the specified requirements under the Stark Law, may be exempted from sanctions and properly reimbursed for items and services provided during the pandemic.

CMS has issued eighteen (18) blanket waivers, which apply nationwide. The blanket waivers are as follows:

Waiver for services personally performed by a physician:
1. Remuneration from an entity to a physician (or an immediate family member of a physician) that is above or below the fair market value for services personally performed by the physician (or the immediate family member of the physician) to the entity.
Waivers for rental charges:

Rental charges paid by an entity to a physician (or an immediate family member of a physician) that are below fair market value for the entity’s lease of office space from the physician (or the immediate family member of the physician).
Rental charges paid by an entity to a physician (or an immediate family member of a physician) that are below fair market value for the entity’s lease of equipment from the physician (or the immediate family member of the physician).
Rental charges paid by a physician (or an immediate family member of a physician) to an entity that are below fair market value for the physician’s (or immediate family member’s) lease of office space from the entity.
Rental charges paid by a physician (or an immediate family member of a physician) to an entity that are below fair market value for the physician’s (or immediate family member’s) lease of equipment from the entity.

Waivers for the purchase of items and/or services:

Remuneration from an entity to a physician (or an immediate family member of a physician) that is below fair market value for items or services purchased by the entity from the physician (or the immediate family member of the physician).
Remuneration from a physician (or an immediate family member of a physician) to an entity that is below fair market value 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.

Waivers for compensation agreements with physicians:

Remuneration from a hospital to a physician in the form of medical staff incidental benefits that exceeds the regulatory limit (currently $36 per occurrence).
Remuneration from an entity to a physician (or the immediate family member of a physician) in the form of nonmonetary compensation that exceeds the regulatory limit (currently $423 for calendar year 2020).
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 fair market value; 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.
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 fair market value; 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).

Waivers for certain types of facilities:

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 the effective date of such provider agreement) without prior application and approval of the expansion of facility capacity as required under the law.
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 satisfies all requirements to qualify for the Rural Provider and Hospital Exception to Ownership or Investment Prohibition under 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.
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; and (2) in which the physician (or an immediate family member of the physician) has an ownership or investment interest.
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.

Waivers to group practices related to in-office ancillary services:

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”.
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.

Waiver for compensation arrangement not meeting the writing requirement:

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.

WAIVER REQUIREMENTS

In order to take advantage of the blanket waivers, the following must be met:

Any remuneration described in a blanket waiver must be directly between the entity and either (1) the physician or the physician organization in whose shoes the physician stands or (2) the immediate family member of the physician;
Remuneration and referrals must be solely related to “COVID-19 purposes”; and
All conditions in a blanket waiver must be met.

For purposes of the blanket waivers, “COVID-19 purposes” means:

Diagnosis or medically necessary treatment of COVID-19 for any patient or individual, whether or not the patient/individual has been diagnosed with a confirmed case of COVID-19;
Securing the services of physicians and other healthcare practitioners 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 pandemic;
Ensuring the ability of healthcare providers to address patient and community needs due to the COVID-19 pandemic;
Expanding the capacity of healthcare providers to address patient and community needs due to the COVID-19 pandemic;
Shifting the diagnosis and care of patients to appropriate alternative settings due to the COVID-19 pandemic; or
Addressing medical practice or business disruption due to the COVID-19 pandemic to maintain the availability of medical care and related services for patients.

TIMEFRAME

These waivers are retroactively effective to March 1, 2020. The waivers will terminate upon the earlier of one of the following: (1) the President’s declaration of an emergency terminates; (2) the HHS Secretary’s declaration of a Public Health Emergency terminates; or (3) the expiration of a 60-day period from the date the waiver is first published. Note that the waivers may be extended for subsequent 60-day periods. If extended, the HHS Secretary will provide notice of the extension to the public.

CONCLUSION

Currently, the COVID-19 pandemic is imposing a large burden on the healthcare industry nationwide. This burden may lead to radiology providers and suppliers facing new relationships that fall within the ambit of the Stark Law but are unable to meet an applicable exception. If the arrangement is necessary to meet the healthcare needs of Medicare, Medicaid, and/or CHIP program beneficiaries, a blanket waiver might potentially be utilized. Radiology providers and suppliers must be aware that the blanket waivers are temporary. To ensure compliance, radiology providers and suppliers should periodically check for updates from CMS or HHS regarding the waiver period.

For any questions regarding waivers from the Stark Law, please contact Adrienne Dresevic, Esq. at (248) 996-8510 or by email at adresevic@thehlp.com.

Adrienne Dresevic, Esq, is a Founding Shareholder of The Health Law Partners, P.C., a nationally recognized healthcare law firm with offices in Michigan and New York. Practicing in all areas of healthcare law, she devotes a substantial portion of her practice to providing clients with counsel and analysis regarding compliance, Stark Law, Anti-Kickback Statute, and compliance related issues. Ms. Dresevic serves on the American Bar Association Health Law Section’s Council, which serves as the voice of the national health law bar within the ABA. Ms. Dresevic is the Budget Officer for the ABA Health Law Section and was the Past Co-Chair for the Physicians Legal Issues Conference for three years. She is licensed to practice law in Michigan and New York, and can be contacted at adresevic@thehlp.com.

Arturo Trafny, Esq, is an associate attorney at the Health Law Partners, P.C. Mr. Trafny graduated from Chicago-Kent College of Law. Practicing healthcare law, Mr. Trafny concentrates on regulatory and transactional matters.

The authors are members of The Health Law Partners, PC and may be reached at (248) 996-8510 or (212) 734-0128, or at www.thehlp.com.