By K. Kelly White Bryant and Ozair M. Shariff

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.”

Stark Law

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 the patient or individual is diagnosed with a confirmed case of COVID-19.
• Securing the services of physicians and other healthcare 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 healthcare providers to address patient and community needs due to the COVID-19 outbreak in the United States.
• Expanding the capacity of healthcare 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.
• 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 
2. Office Space Rented from a Physician 
3. Office Space Rented to a Physician 
4. Equipment Rented from a Physician 
5. Equipment Rented to a Physician 
6. Purchase of Items or Services from a Physician 
7. Purchase of Items or Services by a Physician 
8. Medical Staff Incidental Benefits 
9. Non-Monetary Compensation 
10. Loans to a Physician 
11. Loans from a Physician 
12. Expansion of Physician-Owned Hospitals 
13. Physician Ownership in Hospitals that Converted from an Ambulatory Surgery Center 
14. Ownership in Home Health Agency 
15. In-Office Ancillary Services (Practice Location) 
16. In-Office Ancillary Services in Home 
17. Rural Area 
18. Writing Requirements 

Referral Relationships

The Secretary also provided several 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 healthcare providers and supplies, which was updated as recently as April 9, 2020.

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 healthcare 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 healthcare 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.

– K. Kelly White Bryant and Ozair M. Shariff are with Stites & Harbison in Louisville, Ky.