By Jeffrey Mittleman and Andrew Namkung

Law360 (April 2, 2020, 5:30 PM EDT )

Jeffrey Mittleman

Andrew Namkung

On March 30, the Centers for Medicare & Medicaid Services issued blanket waivers of sanctions[1] under the physician self-referral law, or Stark Law, retroactive to March 1, in response to the COVID-19 pandemic. The Stark blanket waiver is one of a sweeping set of waivers that CMS issued as part of its COVID-19 emergency declaration.[2]

The Stark Law prohibits (1) physicians from referring certain designated health care services covered by Medicare to entities that have a financial relationship (including direct or indirect compensation and ownership arrangements) with the referring physician (or an immediate family member), and (2) designated health care services entities from billing Medicare for designated health care services rendered as a result of such referrals.

There are a number of Stark Law exceptions. However, because the Stark Law is a strict liability statute, all of the exceptions' requirements — many of which are highly specific and technical — must be squarely met.

As such, the Stark Law may limit the ability of designated health care services entities to enter into certain financial arrangements with physicians, and physicians to freely refer patients for designated health care services, particularly during emergency situations such as the COVID-19 pandemic.

The CMS issued provider-specific guidance on how the waivers, including the Stark blanket waiver, affect physicians and other clinicians.[3]

Note, the Stark blanket waiver would only protect remuneration and referrals that are related to a broad set of so-called COVID-19 purposes, such as securing the services of physicians who "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."

The CMS provided the following illustrative examples of how the Stark blanket waiver will enable flexibility for physicians and designated health care services entities:

• Nonfair market value compensation: Hospitals and other provider may pay physicians above or below fair market value to rent equipment or receive services from physicians (or vice versa).

• Flexible financial support: A physician owner of a hospital may make a personal loan to the hospital without charging interest at fair market value so that the hospital can make payroll or pay vendors.

• Medical staff benefits: Hospitals can provide benefit to medical staff, such as daily meals, laundry service or child care services.

• Nonmonetary compensation: Certain items and services that are related to the COVID-19 purposes may be provided to physicians (e.g. continuing medical education regarding latest care protocols for COVID-19) without exceeding the annual nonmonetary compensation cap.

• Hospital capacity: Physician-owned hospitals may temporarily increase the number of licensed beds, operating rooms and procedure rooms, even if such increases would otherwise be prohibited under the Stark Law.

• Group-practice home care: Any physician in a group practice may order medically necessary designated health care services that are furnished to a patient by a technician or nurse in the patient's home contemporaneously with a physician service that is furnished via telehealth by the physician who ordered the designated health care services.

• Relaxation of in-office requirements: Group practices can furnish medically necessary MRIs, CT scans or clinical laboratory services from locations like mobile vans in parking lots that the group practice rents on a part-time basis.

These examples are merely illustrative and each arrangement should be carefully reviewed to ensure that the financial relationships and/or referrals are consistent with the Stark blanket waiver. Additionally, each arrangement should be reviewed to ensure that it does not run afoul of other applicable state and federal laws, including, specifically, applicable fraud, waste and abuse laws.

Finally, while designated health care services entities and physicians do not need to notify the CMS to utilize the Stark blanket waiver, they must make records relating to the use of the blanket waivers available to the CMS upon request.

Other Waivers

As mentioned, the CMS emergency declaration[4] contains other sweeping waivers on specific Medicare requirements that may provide flexibility for hospitals, long-term care facilities and skilled/nonskilled nursing facilities, home health agencies, hospices, end-stage renal dialysis facilities, suppliers of durable medical equipment, prosthetics, orthotics and supplies, and other health care providers that are impacted by the COVID-19 pandemic.

These include:

• Waiver of sanctions under Section 1867(a) of the Social Security Act, the Emergency Medical Treatment & Labor Act, with respect to hospitals that screen patients at a location offsite from the hospital's campus pursuant to an appropriate state emergency preparedness plan or for the transfer of an individual who has not been stabilized if the transfer is necessary under the COVID-19 public health emergency;

• Waiver of certain medical record services requirements to allow clinicians to focus on patient care;

• Waiver of particular telemedicine requirements to allow hospitals to furnish telemedicine services through an agreement with off-site hospitals;

• Waiver of nursing care plan requirements and registered nurse presence requirements;

• Waiver of the three-day prior hospitalization requirement for coverage of a skilled nursing facility stay;

• Waiver of the requirement that hospices utilize volunteers at a minimum of 5% of total patient care hours;

• Relaxation of auditing, inspection and patient assessment requirements for end-stage renal dialysis facilities; and

• Waivers of the durable medical equipment, prosthetics, orthotics and supplies replacement requirement, such as the face-to-face, new physician's order, and new medical necessity documentation requirements.

These examples, along with the Stark blanket waiver, are part of more than 60 specific waivers and other changes announced in the CMS emergency declaration[5] that appear to be intended to allow flexibility for health care provider that are impacted by the COVID-19 pandemic.

Medicare requirements are complex and onerous, and impose obligations upon health care providers that may put additional constraints on patient care. It appears that the CMS is recognizing the need to refocus providers' time and effort into patient care.

For example, one of the waivers includes a relaxation of medical record requirements to justify hospital admission and continued hospitalization, by allowing hospitals to more easily utilize standing orders, order sets and protocols for patient orders.

These types of relaxations would allow health care providers to more efficiently treat patients when there is a surge in volume due to the COVID-19 pandemic.

The Stark blanket waiver alone will significantly loosen relationships between designated health care services entities and physicians to address the needs created by the COVID-19 pandemic, including care capacity and the protection of health care providers.

For example, the relaxation of the "same building" or "centralizing building" requirements under the Stark Law in-office ancillary services exception will allow group practices to render designated health care services services referred by a member physician in remote or temporary locations.

Moreover, rental or lease of valuable resources, such as equipment (including personal protective equipment), and office space may be structured in a more flexible way to combat the unique needs created by the pandemic.

It is also worth noting that while the Stark blanket waiver is for COVID-19 purposes, it would protect certain arrangements and referrals that are not directly related to treating COVID-19 patients.

The CMS list of COVID-19 purposes is broad and aimed at the addressing the needs of health care providers and patients that are impacted by the pandemic, beyond the immediate treatment of COVID-19 patients.

For example, one of the COVID-19 purposes includes "expanding the capacity of health care provider to address patient and community needs due to the COVID-19 outbreak in the United States." Any health care provider who might be facing capacity constraints, even indirectly due to the pandemic, should review the waivers to understand whether there are innovative solutions that might not have been previously allowed.

Health care providers, including designated health care services entities and physicians, should continue to monitor the CMS coronavirus waivers website[6] and other resources for any further developments in responding to the COVID-19 pandemic.

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Jeffrey Mittleman is a partner at Holland & Knight LLP and co-leader of the firm's health care and life sciences industry group. 

Andrew Namkung is an associate at Holland & Knight.

The opinions expressed are those of the author(s) and do not necessarily reflect the views of the firm, its clients or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.

[1] https://www.cms.gov/files/document/covid-19-blanket-waivers-section-1877g.pdf.

[2] https://www.cms.gov/files/document/summary-covid-19-emergency-declaration-waivers.pdf.

[3] https://www.cms.gov/files/document/covid-19-physicians-and-practitioners.pdf.

[4] https://www.cms.gov/files/document/summary-covid-19-emergency-declaration-waivers.pdf?fbclid=IwAR2hwI5GzdfXOrnxnN0tZOo6fzDeI2VOuqjljxWoqM90aC--c0QLqUgaduY.

[5] https://www.cms.gov/files/document/summary-covid-19-emergency-declaration-waivers.pdf?fbclid=IwAR2hwI5GzdfXOrnxnN0tZOo6fzDeI2VOuqjljxWoqM90aC--c0QLqUgaduY.

[6] https://www.cms.gov/about-cms/emergency-preparedness-response-operations/current-emergencies/coronavirus-waivers.

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