CMS Issues Blanket Waivers of Stark Law Related to COVID-19 Pandemic

UPDATED April 8, 2020

On March 29, CMS issued blanket waivers of the Physician Self-Referral Law (commonly known as the “Stark Law”) to cover financial relationships and referrals related to the COVID-19 pandemic in the United States.  

The blanket waivers have several key features:

• The blanket waivers apply to all treatment related to COVID-19 patients or suspected COVID-19 patients, but apply more broadly to efforts to ensure the ability of the healthcare industry to “address patient and community needs due to the COVID-19 outbreak.”
• CMS included specific statements about shifting other types of care to alternative settings due to the pandemic, including:
  • Addressing medical practice or business interruption due to the COVID-19 outbreak, in order to maintain availability of care and related services, and 
  • Shifting diagnosis and care to appropriate alternative settings to protect non-COVID-19 patients in the face of the outbreak.
• Nine specific waivers related to various types of arrangements that might include compensation that is outside of fair market value, either above or below fair market value, as the circumstances might dictate. 
• Nine other waivers related to various other types of requirements, including: 
  • Timing of documentation,
  • Site of service (if the COVID-19 outbreak causes the need to change the site of service to protect patient health),
  • Expansion of the capacity of physician-owned hospitals, 
  • Use of physician-owned ambulatory surgery centers as hospital facilities on a temporary basis to meet capacity needs, and 
  • Incidental and non-monetary compensation that exceeds the regulatory limits.

• CMS provided 22 separate examples of arrangements where the blanket waivers would apply, including the following notable cases: 
  • Compensation above previously-contracted rates to recognize challenges in providing care in a particularly hazardous or challenging environment, 
  • Rental of additional space to treat COVID-19 patients, or to treat non-COVID-19 patients, 
  • Provision of telehealth equipment to enable remote care where it is determined that patients are better off observing social distancing or quarantine, 
  • Obtaining or providing protective equipment at below fair market value or no charge, 
  • Provision of meals, “comfort items,” onsite child care to medical staff physicians who spend long hours at the hospital during the COVID-19 outbreak, 
  • Loans to physician practices (such as anesthesiologists) to offset lost income resulting from canceled elective procedures, and 
  • Several examples of arrangements that are documented after the services begin due to exigent circumstances associated with the COVID-19 outbreak.

What is also notable is what the waivers do not state explicitly:

• Commercial Reasonableness – the announcement does not appear to waive the commercial reasonableness requirement, but it does appear to be implied that all of the situations where the waivers are applicable involve arrangement that are likely to be considered commercially reasonable, given the exigent circumstances that exist due to the COVID-19 pandemic.
• Physician Recruitment Arrangements – the waivers do not address any of the many requirements of the Physician Recruitment exception to Stark, which could be an important tool to addressing the pandemic. Parties can still seek an individual waiver of a given transaction, but more clarity from CMS may be helpful with regard to recruitment of physicians. 
• Volume or Value standard – the announcement does not base any waivers on situations where compensation is based on or takes into account the volume or value of DHS referrals. The open question then, is whether an arrangement that qualifies for a waiver due to compensation being outside fair market value, still must ensure that compensation is not determined in any way that would take into account the volume or value of referrals.   It seems likely that CMS would regard that if an arrangement has compensation that is outside fair market value due primarily to the exigent circumstances of the COVID-19 outbreak, they would not necessarily regard that the compensation somehow took into account the volume or value of referrals.   It is possible that further clarity from CMS in this area would be helpful.   It is also important to consider that there are no waivers of the Anti-Kickback statute, and therefore, despite the ability to utilize a waiver for a particular arrangement, parties still must ensure that there is no intent to induce or pay for referrals to avoid kickback concerns.

We will continue to monitor changes brought on by COVID-19. Have any questions or looking for guidance? Please contact HORNE Healthcare to learn more.