Stark Law Blanket Waivers Among Sweeping Set of CMS Waivers in Response to COVID-19 Pandemic

The Centers for Medicare & Medicaid Services (CMS) on March 30, 2020, issued blanket waivers of sanctions under the physician self-referral law (Stark Law), retroactive to March 1, 2020, in response to the COVID-19 pandemic (Stark Blanket Waiver). The Stark Blanket Waiver is one of a sweeping set of waivers that CMS issued as part of its COVID-19 Emergency Declaration Blanket Waivers for Health Care Providers (Emergency Declaration).

Stark Law prohibits 1) physicians from referring certain designated healthcare services (DHS) covered by Medicare to entities that have a "financial relationship" (including direct/indirect compensation and ownership arrangements) with the referring physician (or an immediate family member), and 2) DHS entities from billing Medicare for DHS rendered as a result of such referrals. There are a number of Stark Law exceptions; however, because Stark Law is a strict liability statute, all of the exceptions' requirements — many of which are highly specific and technical — must be squarely met. As such, Stark Law may limit the ability of DHS entities to enter into certain financial arrangements with physicians, as well as the ability of physicians to freely refer patients for DHS, particularly during emergency situations such as the COVID-19 pandemic.

CMS issued provider-specific guidance on how the waivers, including the Stark Blanket Waiver, will impact physicians and other clinicians. To note, the Stark Blanket Waiver would protect only remuneration and referrals that are related to a broad set of "COVID-19 Purposes," such as securing the services of physicians who "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[.]"

CMS provided the following illustrative examples of how the Stark Blanket Waiver will enable flexibility for physicians and DHS entities:

• Non-Fair Market Value (FMV) Compensation. Hospitals and other providers may pay physicians above or below fair market value to rent equipment or receive services from physicians (or vice versa).
• Flexible Financial Support. A physician owner of a hospital may make a personal loan to the hospital without charging interest at FMV so that the hospital can make payroll or pay vendors.
• Medical Staff Benefits. Hospitals can provide benefits to medical staff, such as daily meals, laundry service or child care services.
• Nonmonetary Compensation. Certain items and services that are related to the COVID-19 Purposes may be provided to physicians (e.g., continuing medical education regarding latest care protocols for COVID-19) without exceeding the annual non-monetary compensation cap.
• Hospital Capacity. Physician-owned hospitals may temporarily increase the number of licensed beds, operating rooms and procedure rooms, even if such increases would otherwise be prohibited under the Stark Law.
• Group Practice-Home Care. Any physician in a group practice may order medically necessary DHS that furnished to a patient by a technician or nurse in the patient's home contemporaneously with a physician service that is furnished via telehealth by the physician who ordered the DHS.
• Relaxation of In-Office Requirement. Group practices can furnish medically necessary MRIs, CT scans or clinical laboratory services from locations such as mobile vans in parking lots that the group practice rents on a part-time basis.

These examples are merely illustrative, and each arrangement should be carefully reviewed to ensure that the financial relationships and/or referrals are consistent with the Stark Blanket Waiver. Additionally, each arrangement should be reviewed to ensure that it does not run afoul of other applicable state and federal laws (including, specifically, applicable fraud, waste and abuse laws). Finally, although DHS entities and physician do not need to notify CMS to utilize the Stark Blanket Waiver, they "must make records relating to the use of the blanket waivers available to" CMS upon request.

Other Waivers

As mentioned, the Emergency Declaration contains other sweeping waivers on specific Medicare requirements that may provide flexibility for hospitals, long-term care facilities and skilled/non-skilled nursing facilities, home health agencies, hospices, end-stage renal dialysis (ESRD) facilities, durable medical equipment, prosthetics, orthotics and supplies (DMEPOS) suppliers, and other healthcare providers that are impacted by the COVID-19 pandemic. They include:

• waiver of sanctions under Section 1867(a) of the Social Security Act (Emergency Medical Treatment & Labor Act – EMTALA) with respect to hospitals that screen patients at a location offsite from the hospital's campus pursuant to an appropriate state emergency preparedness plan or for the transfer of an individual who has not been stabilized if the transfer is necessary under the COVID-19 public health emergency
• waiver of certain medical record services requirements to allow clinicians to focus on patient care
• waiver of particular telemedicine requirements to allow hospitals to furnish telemedicine services through an agreement with off-site hospitals
• waiver of nursing care plan requirements and registered nurse presence requirements
• waiver of the three-day prior hospitalization requirement for coverage of a SNF stay
• waiver of the requirement that hospices utilize volunteers at a minimum of 5 percent of total patient care hours
• relaxation of auditing, inspection and patient assessment requirements for ESRD facilities
• waivers of DMEPOS replacement requirement, such as the face-to-face, new physician's order and new medical necessity documentation requirements

These examples are a part of more than 60 specific waivers and other changes announced in the Emergency Declaration that appear to be intended to allow flexibility for healthcare providers that are impacted by the COVID-19 pandemic. Healthcare providers, including DHS entities and physicians, should continue to monitor the CMS Coronavirus Waivers & Flexibilities website and other resources for any further developments in responding to the COVID-19 pandemic.

DISCLAIMER: Please note that the situation surrounding COVID-19 is evolving and that the subject matter discussed in these publications may change on a daily basis. Please contact your responsible Holland & Knight lawyer or the author of this alert for timely advice.

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem. Moreover, the laws of each jurisdiction are different and are constantly changing. If you have specific questions regarding a particular fact situation, we urge you to consult competent legal counsel.