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Relaxing Stark and Anti-Kickback Requirements for COVID-19

June 9, 2020

CMS and OIG Issue Blanket Waivers Relaxing Stark and Anti-Kickback Requirements for COVID-19 Related ReferralsIn response to health care challenges posed by COVID-19, the Centers for Medicare & Medicaid Services (CMS) and the Department of Health and Human Services Office of Inspector General (OIG) both issued notices waiving certain requirements of the Stark Law and Anti-Kickback Statute, respectively, relating specifically to referrals of items or services in connection with COVID-19 treatment.In its release, CMS stated that its waivers would be retroactive to March 1, 2020 and would serve two principal purposes: (1) to ensure that the public has adequate access to health care items and services; and (2) to ensure that health care providers that are attempting in good faith to furnish these items and services, but are unable to comply with the requirements of the Stark Law may still receive reimbursement and avoid sanctions absent fraud or abuse. The OIG’s release, effective as of April 3, 2020, similarly stated that it would exercise its enforcement discretion not to impose administrative sanctions under the Anti-Kickback Statute.Regulatory Adjustments to Stark and Anti-KickbackThe COVID-19 outbreak triggered a national emergency and sudden and significant need for additional patient care. As a result, hospitals and physicians have had to find ways to make space for the influx of COVID-19 patients, for uninfected patients who need to be kept separate from COVID-19 patients, and for additional health care professionals. To facilitate these changes, CMS and the OIG published blanket waivers to the Stark Law and the Anti-Kickback Statute.Engaging physicians or physician groups or leasing space or equipment are common scenarios that implicate the Stark Law. The Stark Law (often referred to as the self-referral statute) prohibits (1) a physician from making referrals for certain designated health services payable by Medicare to any entity with which he, she or an immediate family member has a financial relationship, or (2) the entity from filing claims with Medicare for services relating to these prohibited referrals. A financial relationship means an ownership or investment interest in the entity or a compensation arrangement with the entity. The only way to avoid strict liability under the Stark Law is to fall within an enumerated exception, which typically requires items or services be furnished at fair market value, among other things.Some of these financial relationships may also implicate the Anti-Kickback Statute, which prohibits any party from soliciting or receiving any remuneration in return for referrals for items or services reimbursable under any federal health care program (such as Medicare, Medicaid or CHIP), unless such an arrangement demonstrates a lack of intent or fits within safe harbors that are very similar to the Stark Law exceptions.Therefore, CMS and the OIG issued blanket waivers where providers are unable to comply with one or more requirements under the Stark Law or the Anti-Kickback Statute due to delivering patient care relating solely to COVID-19 purposes. Blanket WaiversThe CMS notice enumerates 18 different blanket waivers relating to, compensation for services that are above or below fair market value, rental charges for space or equipment that are below fair market value, incidental benefits exceeding regulatory limits,nonmonetary compensation exceeding regulatory limits,interest rates on loans between physicians and entities that are below fair market value or unavailable from a lender that is not in a position to generate business for the other party, andunmet regulatory requirements for expanding space, location of services, rural area relationships, or signed writings.In doing so, CMS emphasized that such arrangements must be related to “COVID-19 Purposes” and done in good faith.COVID-19 PurposesCMS defines “COVID-19 Purposes” as: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; 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. How This Works in PracticeCMS went so far as to provide a non-exhaustive list of over a dozen examples of financial relationships that would fall within the blanket waivers. For example:A hospital pays physicians above their previously-contracted rate for furnishing professional services for COVID-19 patients in particularly hazardous or challenging environments;A hospital’s employed physicians use the medical office space and supplies of independent physicians in order to treat patients who are not suspected of exposure to COVID-19 away from their usual medical office space on the campus of the hospital in order to isolate patients suspected of COVID-19 exposure; A hospital purchases items or supplies from a physician practice at below fair market value or receives such items or supplies at no charge; 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 at below fair market value;A hospital provides meals, comfort items (e.g., change of clothes), or onsite child care with a value greater than $36 per instance to physicians who have to work long hours due to COVID-19 services; andAn entity provides nonmonetary compensation to a physician or immediate family member of a physician in excess of the $423 per year limit, such as CME related to COVID-19, supplies, food, groceries, isolation-related needs (e.g., hotel rooms), child care or transportation.Other Practical Considerations The notices are clear that the blanket waivers are not blank checks. Therefore, a careful study of the notices reveals additional clues to reducing a provider’s risk exposure. For example, where the parties can comply with the statutory and regulatory requirements of the Stark Law and the Anti-Kickback, they should do so. And parties are still required to comply with elements of either law that have not been waived.Recognizing the practical realities of health care during the pandemic, neither agency requires written reports or justification for adjustments made; however, good faith is required. Despite the absence of a reporting requirement, good internal documentation provides evidence of good faith and is simply a good business practice that will reduce risk in the event of an audit. Operations may move quickly and documentation may not be top-of-mind, but parties utilizing the blanket waivers are still required to make their records available to the regulators upon request. ConclusionThe Stark Law and Anti-Kickback Statute may feel like an impenetrable maze in the best of times. While COVID-19 has disrupted the ordinary course of business for a number of providers, these blanket waivers offer both a win and a warning. Regulators recognize many of the practical challenges of putting patient care first while still attempting to remain compliant with laws relating to financial relationships. At the same time, regulators will continue to monitor and take enforcement action against fraud and abuse. Therefore, parties need an understanding not only of these adjustments but also of their limits. They also need to establish good business practices that will ensure that while patient care considerations have heightened, provider risk has not.Article Resource References


Joseph M. Miller

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