Summary of the STARK LAW Blanket Waivers AUTHORIZED UNDER COVID-19 NATIONAL EMERGENCY DECLARATION - EFFECTIVE MARCH 1, 2020

Carol Ewald Bowen, Kimberly Short Kirk, Rachel Rice

04.2020

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Authors:
Carol Ewald Bowen, carolbowen@mvalaw.com
Kimberly Short Kirk, kimberlykirk@mvalaw.com
Rachel Rice, rachelrice@mvalaw.com

On March 30, 2020, the Secretary of the Department of Health and Human Services (the “Secretary”) authorized blanket waivers of Section 1877(g) of the Social Security Act (the “Stark Law”). The Stark Law prohibits physicians from making referrals for designated health services[1] to an entity if the physician or an immediate family member has an ownership interest in, or financial arrangement with, the entity, unless an exception applies.

These blanket waivers under the Stark Law (the “blanket waivers”) are effective as of March 1, 2020 and are intended to ensure that sufficient health care items and services in response to COVID-19 are available to meet the needs of individuals enrolled in the Medicare, Medicaid, and Children’s Health Insurance Program (CHIP) programs, and that health care providers who are providing such services in good faith, but are unable to comply with the Stark Law or meet an available exception, may be reimbursed for such services without being subject to sanctions for noncompliance.  The blanket waivers may be utilized without notifying the Centers for Medicare & Medicaid Services (“CMS”), but it is recommended that parties seeking protection under the blanket waivers keep records related to the use of the blanket waivers should the Secretary request such information.

Blanket Waivers

The blanket waivers apply only to referrals and services related to COVID-19 Purposes.  Payments protected under the blanket waivers must be made directly between the entity and (1) the physician or the organization in whose shoes the physician stands (such as a group practice) or (2) the immediate family member of the physician.

“COVID-19 Purposes” means:

• Diagnosis or medically necessary treatment of COVID-19 for any individual;
• Securing the services of health care professionals 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 and expanding the capacity of health care providers to address patient and community needs due to the COVID-19 outbreak;
• Shifting the diagnosis and care of patients to appropriate alternative settings due to the COVID-19 outbreak; or
• 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.

Under the blanket waivers, health care providers may be reimbursed for items and services, and exempted from sanctions (absent fraud or abuse), for:

• Payments from an entity to a physician (or an immediate family member of a physician) that are above or below the fair market value for services performed for the entity.
• Rental charges that are below fair market value for the lease of office space from an entity to a physician (or the immediate family member of the physician), or vice versa.
• Rental charges that are below fair market value for the lease of equipment from an entity to a physician (or the immediate family member of the physician), or vice versa.
• Payments that are below fair market value for items or services purchased by an entity from a physician (or the immediate family member of the physician), or vice versa.
• Medical staff incidental benefits from a hospital to a physician with a value exceeding $36/instance (the limit of the existing Stark exception for such benefits), such as meals, change of clothing, or onsite childcare.
• Nonmonetary compensation from a hospital to a physician (or the immediate family member of a physician) that exceeds $423/year, such as supplies, food, hotel rooms, or transportation.
• A loan from an entity to a physician (or the immediate family member of the physician), (or from a physician or family member to an entity): (1) with an interest rate below fair market value; or (2) on terms that are unavailable from a third-party lender.
• A compensation arrangement that begins before the parties execute the required documentation of the arrangement, but that satisfies all other requirements of the applicable exception.
• Referrals:
  • 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 is licensed.
  • By a physician owner of a hospital that, consistent with the applicable state’s Emergency Preparedness or Pandemic Plan, converts from a physician-owned ambulatory surgical center to a Medicare-participating hospital even if it does not satisfy all of the requirements of the Social Security Act, in order to provide medically necessary care to patients.
  • By a physician of a Medicare beneficiary for the provision of designated health services to a home health agency that does not qualify as a rural provider, in which the physician (or an immediate family member of the physician) has an ownership or investment interest.
  • 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 the in-office ancillary services exception (such as services performed by the group practice in a trailer in the group practice’s parking lot in order to reduce the spread of COVID-19 inside the hospital).
  • 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.
  • 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.

The blanket waiver document provided examples of remuneration, referrals, or conduct that may fall within the scope of the blanket waivers, including: 

• To accommodate patient surge, a hospital rents office space or equipment from an independent physician practice at below fair market value or at no charge.
• A hospital pays physicians above their previously-contracted rate for furnishing professional services for COVID-19 patients in particularly hazardous or challenging environments.
• A hospital’s employed physicians use the medical office space and supplies of independent physicians in order 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 in order to isolate patients suspected of COVID-19 exposure.
• 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 who do not need inpatient care.
• An entity provides free telehealth equipment to a physician practice to facilitate telehealth visits for patients who are observing social distancing or in isolation or quarantine.
• A hospital sends a hospital employee to an independent physician practice to assist with staff training on COVID-19, intake and treatment of patients most appropriately seen in a physician office, and care coordination between the hospital and the practice.
• A hospital provides meals, comfort items (for example, a change of clothing), or onsite childcare with a value greater than $36 per instance to medical staff physicians who spend long hours at the hospital during the COVID-19 outbreak.
• An entity provides nonmonetary compensation to a physician or an immediate family member of a physician in excess of the $423 per year limit (per physician or immediate family member), such as continuing medical education related to the COVID-19 outbreak in the United States, supplies, food, or other grocery items, isolation-related needs (for example, hotel rooms and meals), child care, or transportation.
• A hospital lends money to a physician practice that provides exclusive anesthesia services at the hospital to offset lost income resulting from the cancellation of elective surgeries to ensure capacity for COVID-19 needs or covers a physician’s 15 percent contribution for electronic health records (EHR) items and services in order to continue the physician’s access to patient records and ongoing EHR technology support services.
• Consistent with its State’s Emergency Preparedness or Pandemic Plan, a physician owned ambulatory surgical center enrolls as a Medicare-participating hospital, even if it is unable to satisfy the requirements of section 1877(i)(1) of the Social Security Act, in order to provide medically necessary care to patients during the COVID-19 outbreak.
• A “group practice” as defined in 42 CFR 411.352 furnishes medically necessary magnetic resonance imaging or computed tomography  services in a mobile vehicle, van, or trailer 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 the COVID-19 outbreak.
• A physician in a group practice whose principal medical practice is office-based orders radiology services that are furnished by the group practice to a Medicare beneficiary who is isolated or observing social distancing in the beneficiary’s home, provided that the group practice satisfies all of the requirements of 42 CFR 411.352.

For the complete blanket waiver document, including the full list of examples of potentially permitted arrangements, see https://www.cms.gov/files/document/covid-19-blanket-waivers-section-1877g.pdf.

The foregoing is for your information only, is current as of April 6, 2020 and is not intended to constitute legal advice concerning any fact situation.  Please contact either Carol Ewald Bowen at carolbowen@mvalaw.com or 704-331-2462, Kimberly Short Kirk at kimberlykirk@mvalaw.com or 704-331-3524 or any other member of the MVA Health Care Team with any questions you may have about health care issues presented by the COVID-19 pandemic or for assistance in determining the application of any particular waivers, rules or guidance to your operations.  

[1] The Stark Law defines designated health services as:  clinical laboratory services, physical therapy services. occupational therapy services, outpatient speech-language pathology services, radiology and certain other imaging services, radiation therapy services and supplies, durable medical equipment and supplies, parenteral and enteral nutrients, equipment, and supplies, prosthetics, orthotics, and prosthetic devices and supplies, home health services, outpatient prescription drugs, and inpatient and outpatient hospital services.