In response to the global COVID-19 pandemic, on March 30, 2020, the Secretary of the Department of Health and Human Services (HHS) issued nationwide blanket waivers of sanctions under the federal physician self-referral law (Stark Law) for “COVID-19 Purposes” (Blanket Waivers). These Blanket Waivers provide flexibility for physicians and providers in the fight against COVID-19. With a retrospective effective date of March 1, 2020, and continuing through the end of the Public Health Emergency related to the COVID-19 pandemic, the 18 Blanket Waivers apply to certain arrangements that might otherwise violate the Stark Law, and, importantly, they effectuate a waiver of the sanctions that might result from those Stark Law violations. The Blanket Waivers do not apply to all physician financial relationships and referrals, but rather they apply to only those “that are related to the national emergency that is the COVID-19 outbreak in the United States.”

The Stark Law is a strict liability statute that prohibits a physician from making referrals for certain designated health services (DHS) payable by Medicare or Medicaid to any entity with which the physician (or a member of the physician’s immediate family) has a financial relationship, unless one of the law’s exceptions applies. A financial relationship is an ownership or investment interest in the DHS entity or a compensation arrangement with the DHS entity. The Stark Law also prohibits the DHS entity from billing Medicare or Medicaid for those referred services.

The Blanket Waivers temporarily suspend these general prohibitions and allow payments and referrals between physicians and DHS entities if the relationship falls into one of the stated categories outlined by the Centers for Medicare and Medicaid (CMS) throughout the duration of the COVID-19 pandemic. This is true even if the arrangement would not meet a Stark Law exception.

When do the Blanket Waivers apply?

The Blanket Waivers only apply to referrals and remuneration that are related to the COVID-19 pandemic and “must be solely related to COVID-19 Purposes.” CMS broadly defined “COVID-19 Purposes” to include each of the following:

• Diagnosis or medically necessary treatment of COVID-19 for any patient or individual, whether or not the patient or individual is diagnosed with a confirmed case of COVID-19;
• Securing the services of physicians and other health care practitioners and 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 in the United States;
• Ensuring the ability of health care providers to address patient and community needs due to the COVID-19 outbreak in the United States;
• Expanding the capacity of health care providers to address patient and community needs due to the COVID-19 outbreak in the United States;
• Shifting the diagnosis and care of patients to appropriate alternative settings due to the COVID-19 outbreak in the United States; or
• Addressing medical practice or business interruption due to the COVID-19 outbreak in the United States in order to maintain the availability of medical care and related services for patients and the community.

What are the Blanket Waivers?

The Secretary identified 18 specific relationships, covering both remuneration and referral relationships, to which the Blanket Waivers apply:

1. Personally Performed Services by a Physician – Remuneration from an entity to a physician (or an immediate family member of a physician) that is above or below the fair market value (FMV) for services personally performed by the physician to the entity.
2. Office Space Rented from a Physician – Rental charges paid by an entity to a physician that are below FMV for the entity’s lease of office space from the physician.
3. Office Space Rented to a Physician – Rental charges paid by a physician to an entity that are below FMV for the physician’s (or immediate family member’s) lease of office space from the entity.
4. Equipment Rented from a Physician – Rental charges paid by an entity to a physician that are below FMV for the entity’s lease of equipment from the physician.
5. Equipment Rented to a Physician – Rental charges paid by a physician to an entity that are below FMV for the physician’s lease of equipment from the entity.
6. Purchase of Items or Services from a Physician – Remuneration from an entity to a physician that is below FMV for items or services purchased by the entity from the physician.
7. Purchase of Items or Services by a Physician – Remuneration from a physician to an entity that is below FMV for the use of the entity’s premises or for items or services purchased by the physician from the entity.
8. Medical Staff Incidental Benefits – Remuneration from a hospital to a physician in the form of medical staff incidental benefits that exceeds $36.00 per occurrence or item in calendar year 2020, as set forth in 42 C.F.R. § 411.357(m)(5).
9. Non-Monetary Compensation – Remuneration from an entity to a physician in the form of nonmonetary compensation that exceeds $423 in calendar year 2020, as set forth in 42 C.F.R. § 411.357(k)(1).
10. Loans to a Physician – Remuneration from an entity to a physician resulting from a loan to the physician: (1) with an interest rate below FMV 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.
11. Loans from a Physician – Remuneration from a physician to an entity resulting from a loan to the entity: (1) with an interest rate below FMV or; (2) on terms that are unavailable from a lender that is not in a position to generate business for the physician.
12. Expansion of Physician-Owned Hospitals – 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, in the case of a hospital that did not have a provider agreement in effect as of March 23, 2010, but did have a provider agreement in effect on December 31, 2010, the effective date of such provider agreement), without prior application and approval of the expansion of facility capacity as required.
13. Physician Ownership in Hospitals that Converted from an Ambulatory Surgery Center – 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 certain requirements are met, which include, but are not limited to, enrolling in Medicare as a hospital during the period of the public health emergency and meeting the Medicare conditions of participation and other requirements not waived by CMS during the period of the public health emergency.
14. Ownership in Home Health Agency – The referral by a physician of a Medicare beneficiary for the provision of DHS to a home health agency in which the physician has an ownership or investment interest and which does not qualify as a rural provider.
15. In-Office Ancillary Services (Practice Location) – The referral by a physician in a group practice for medically necessary DHS furnished by the group practice in a location that does not qualify as a “same building” or “centralized building.”
16. In-Office Ancillary Services in Home – The referral by a physician in a group practice for medically necessary DHS furnished by the group practice to a patient in his or her private home, an assisted living facility, or an independent living facility where the referring physician’s principal medical practice does not consist of treating patients in their private homes.
17. Rural Area – 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.
18. Writing Requirements – Referrals by a physician to an entity with whom the physician has a compensation arrangement that does not satisfy the writing or signature requirement(s) of an applicable exception but satisfies every other requirement of the applicable exception, unless such requirement is waived under one or more of the Blanket Waivers above.

In addition to the specific waivers outlined above, the Secretary provided a number of illustrative examples of the types of remuneration and referral relationships that might fall within the Blanket Waivers. Lastly, though use of any of the waivers by a provider does not require notice to or pre-approval from CMS, providers should develop and maintain adequate documentation supporting their use of any waiver since such documents must be made available to the Secretary upon request.

Providers should continue to monitor the CMS website for additional resources concerning COVID-19 waivers, including a full and comprehensive list of waivers for various categories of health care providers and supplies, which was updated as recently as April 9, 2020, and can be found here.

What about the Anti-Kickback Statute?

Separate from Stark Law, the Federal anti-kickback statute provides for criminal penalties for whoever knowingly and willfully offers, pays, solicits, or receives remuneration to induce or reward the referral of business reimbursable under any of the Federal health care programs, including Medicare and Medicaid. On April 3, 2020, the Office of Inspector General (OIG) issued a policy statement announcing that it will not impose administrative sanctions relating to the commission of acts described in the Federal anti-kickback statute with respect to remuneration that is covered in the first 11 Stark Law waivers listed above. In the policy statement, the OIG recognizes that, in the current public health emergency, the health care industry must be focused on delivering needed patient care. The OIG seeks to avoid the need for parties to undertake a separate legal review under the Federal anti-kickback statute for certain arrangements protected by the Blanket Waivers.

The OIG did not extend this protection to seven of the waivers – waivers 12 through 18 listed above. These waivers deal with patient referral arrangements involving physician-owned hospitals, home health agencies, and group practices. Instead, the OIG invites parties to communicate with their office about referral relationships described in waivers 12 through 18. Such communications should be submitted to [email protected] and should include sufficient facts to allow for an understanding of the key parties and terms of the arrangement at issue.

Useful sites and contacts:

• Questions concerning Blanket Waivers
• CMS’ COVID-19 waiver website
• List of Blanket Waivers
• Blanket Waivers of Section 1877(g) of the Social Security Act Due to Declaration of COVID-19 Outbreak in the United States as a National Emergency
• OIG COVID-19 Policy Statements and Guidance
• Questions to the OIG regarding the application of its enforcement authorities to certain arrangements during the COVID-19 pandemic