CMS Issues Blanket Waivers of the Stark Law

Published 06 April 2020 by Manatt, Phelps & Phillips, LLP

On March 30, 2020, CMS issued blanket waivers of the Physician Self-Referral Law, also known as the Stark Law (Social Security Act Section 1877), effective as of March 1, 2020, related to referrals and financial arrangements for COVID-19 Purposes. The Stark Law and its implementing regulations prohibit physicians from referring Medicare patients for certain designated health services (DHS) to any entity with which the referring physician (or an immediate family member) has any direct or indirect financial relationship, unless an exception applies. In addition, Stark prohibits entities from billing Medicare for services provided pursuant to a prohibited referral.

“COVID-19 Purposes” is defined broadly to include, among other things, diagnosis or treatment for COVID-19; securing services of physicians and other professionals to provide medical services, including those not related to the diagnosis or treatment of COVID-19, but in response to such outbreak; and addressing medical practice or business interruption due to COVID-19 in order to maintain the availability of medical care for patients in the community. Absent fraud, CMS waives sanctions for violating the Stark Law “for referrals and claims related to the following to ensure that: (1) sufficient healthcare items and services are available to meet the needs of individuals enrolled in the Medicare, Medicaid, and CHIP programs; and (2) healthcare providers . . . that furnish such items and services in good faith, but are unable to comply with one or more of the [Stark Law requirements] . . . as a result of the consequences of the COVID-19 pandemic.”

CMS waives sanctions associated with 18 financial arrangements which would otherwise be prohibited, including, without limitation, remuneration from an entity to a physician that is below market value for services performed; rent paid by a physician that is below fair market value; provision of medical staff incidental benefits that exceed the annual limits; loans to physicians with interest rates below fair market value or on terms that are unavailable for a traditional lender; and referrals of a Medicare beneficiary to a home health agency that is not rural and in which the physician (or an immediate family member) has an ownership or investment interest.

The waiver provides 19 examples of arrangements that would be protected by the blanket waivers, including:

  • A hospital pays physicians above their previously contracted rate for furnishing professional services for COVID-19 patients in particularly hazardous or challenging environments.
  • 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.
  • An entity sells personal protective equipment to a physician, or permits the physician to use space in a tent or other makeshift location, at below fair market value (or provides the items or permits the use of the premises at no charge).
  • A hospital provides meals, comfort items (for example, a change of clothing) or on-site child care with a value greater than $36 per instance to medical staff physicians who spend long hours at the hospital during the COVID-19 outbreak in the United States.
  • 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.

Parties utilizing the blanket waivers must make records relating to the use of the blanket waivers available to the Secretary upon request, but do not have to proactively submit any documentation to CMS.