On March 30th, the Centers for Medicare and Medicaid Services (CMS) issued blanket waivers (Blanket Waivers) of sanctions under the federal physician self-referral law (Stark Law) to relax regulatory requirements related to health care providers’ response to the COVID-19 pandemic. The Blanket Waivers were issued under the Department of Health and Human Services Secretary’s authority in Section 1135 of the Social Security Act to ensure that (i) sufficient health care items and services are available to federal health care program beneficiaries, and (ii)  health care providers are reimbursed for providing such health care items and services while addressing the COVID-19 crisis. The Blanket Waivers apply to remuneration that is between an entity (as defined under the Stark Law) and (1) a physician, (2) the physician organization in whose shoes the physician stands (under 42 C.F.R. 411.354(c)) or (3) the physician’s immediate family member.

COVID-19 Purposes

The Blanket Waivers apply only to remuneration and referrals that are for “COVID-19 Purposes,” defined as one or more of the following:

  • Diagnosis of COVID-19;
  • Medically necessary treatment of COVID-19, even if an individual is not diagnosed with a confirmed case of COVID-19;
  • Obtaining the services of physicians and other health care practitioners and professionals for the purpose of providing medically necessary patient care services in response to the COVID-19 outbreak, including services not related to the diagnosis and treatment of COVID-19;
  • Ensuring that health care providers can meet patient and community needs due to the COVID-19 outbreak;
  • Increasing health care providers’ capacity to meet patient and community needs due to the COVID-19 outbreak;
  • Moving the diagnosis and care of patients to appropriate alternate care settings due to the COVID-19 outbreak; or
  • Addressing medical practice or business interruption that results from the COVID-19 outbreak, for purposes of maintaining available medical care and related services to patients and the community.

Arrangements Covered by the Blanket Waivers

CMS waived Stark Law sanctions to enable referrals and claims to be eligible for reimbursement in connection with eighteen types of arrangements having COVID-19 Purposes that otherwise could violate the Stark Law, including without limitation:

  • Remuneration above or below fair market value (FMV) to a physician (or immediate family member of a physician) for personally performed services;
  • Below-FMV rental payments for office space or equipment (i) leased from a physician (or immediate family member) by an entity (e.g., hospital); or (ii) leased by a physician (or immediate family member) from an entity;
  • Incidental benefits to medical staff members in excess of per-occurrence regulatory limits;
  • Nonmonetary compensation to physicians (or an immediate family member) that exceeds the annual limit normally applicable to such compensation;
  • Below-FMV remuneration from a physician (or immediate family member) to an entity for use of the entity’s space or for the purchase of items from the entity;
  • Remuneration between a physician (or immediate family member) and entity in the form of a loan (i) with a below-FMV interest rate, or (ii) on terms unavailable from a lender not in a position to generate business for the physician or that is not a recipient of referrals from the physician or business generated by the physician (or immediate family member);
  • Physician referrals of beneficiaries for services to a home health agency that is not located in a rural area and in which the physician (or an immediate family member) has an ownership or investment interest;
  • Referrals by a physician in a group practice for medically necessary services furnished by the group practice in a location that is not within the same building or a centralized building;
  • Referrals by a physician in a group practice for medically necessary services furnished by the group practice to a patient in the patient’s private home, an assisted living facility, or independent living facility, even if the referring physician’s principal practice does not consist of treating patients in their homes;
  • Referrals of patients residing in rural locations by physicians to entities with which the physician’s immediate family member has a financial relationship; and
  • Referrals by a physician to an entity with whom the physician (or immediate family member) has a compensation arrangement that satisfies every applicable requirement of a Stark Law exception except the writing or signature requirement(s).

Blanket Waiver Examples

CMS provides helpful examples for health systems and physicians to structure arrangements in accordance with the Stark Law and the Blanket Waivers in order to respond to the COVID-19 pandemic, including:

  • Hospital payments to physicians above their previously contracted rate for treating COVID-19 patients under particularly hazardous or challenging circumstances;
  • Hospital rentals of physician office space at below-FMV or no charge in response to a patient surge;
  • A hospital providing free or below-FMV medical office space on its campus to enable physicians to provide timely outpatient treatment of patients presenting at the hospital;
  • An entity providing free telehealth equipment to physicians to facilitate the delivery of telehealth services to patients who are social distancing or quarantined;
  • A hospital sending an employee to train physician practice offices on COVID-19 detection and response techniques, and to facilitate care coordination for COVID-19 patients;
  • A hospital providing meals, comfort items (e.g., changes of clothing), and/or on-site child care with a value greater than $36 per instance to medical staff physicians responding to the COVID-19 pandemic;
  • A group practice furnishing MRI or CT services in a mobile vehicle, van or trailer in its parking lot to patients so that patients are not obligated to go to a hospital to receive such services;
  • A hospital providing a loan to its exclusive anesthesia provider to offset lost income from the cancellation of elective procedures; or
  • Compensation arrangements that commence prior to the required documentation or signature requirements are met, including call coverage services provided in advance of an agreement being signed, or physician treatment of patients in office space owned by the hospital before the lease arrangement is documented and signed by the parties.

Parties wishing to utilize the Blanket Waivers do not need to provide advance notice or receive approval for their use; however, parties who rely on a Blanket Waiver must retain records relating to their use, and the records must be available for the Secretary’s review upon request.

The Blanket Waivers apply nationwide and are retroactively effective to March 1, 2020. They will remain in effect until the end of the COVID-19 public health emergency or national emergency declarations, unless modified or terminated sooner by the Secretary. CMS indicated that any revisions to the Blanket Waivers would apply prospectively.

The broad scope of the Stark Law waivers issued by CMS appears intended to enable physicians and hospitals to respond to the unprecedented public health challenges posed by the COVID-19 pandemic. Parties would also be well-advised to remember that despite the Blanket Waivers, the Stark Law continues to apply in full to arrangements not related to COVID-19 Purposes, and strict liability for Stark Law violations makes it essential for parties to continue to closely analyze its applicability and that of the Blanket Waivers.