Guide to the COVID-19 Crisis Stark Waivers

I. The Secretary of HHS has Established “Blanket Waivers” to Stark Law and OIG Will Not Impose Administrative Sanctions Under the Anti-Kickback Statute for Remuneration Covered by Certain of the “Blanket Waivers” to Ease the Development of Essential Financial Referral Relationships

On March 30, 2020 the Secretary of Health and Human Services (“Secretary”) recognizing the emergency status of the Nation’s current battle against the COVID-19 virus utilized his authority under the Social Security Act to establish broad and helpful waivers to certain Stark Law restrictions which would have otherwise hindered the flexibility of hospitals and physicians to establish new and effective relationships in order to enhance accessibility and quality of care to all patients.  The Stark Law itself has historically established a prohibition against the creation of certain financial relationships between designated health service entities, including hospitals and physicians and the referral of Medicare patients unless a Stark exception applied.  These exceptions are numerous and complex.  In establishing the new blanket waivers the Secretary has permitted DHS entities and physicians to undertake those financial relationships and referral relationships that are necessary to treat patients at this time.  While these waivers can be utilized without providing notice to CMS, parties utilizing the blanket waivers must make records relating their use available upon request.

The waivers, as described below, are retroactively effective as of March 1, 2020, and will remain effective until the Secretary provides notice of their termination or narrowing, which notice would be prospective.  We expect that these waivers will generally be in place for the duration of the public health emergency. The Secretary also reserves the authority to establish additional waivers from time to time. 

It is important to note that if a financial or referral relationship is currently protected by a Stark Law exception that protection will remain effective, and no change needs to occur with regard to those excepted relationships.  Further, if the below blanket waivers are insufficient for your needs, individual waivers may be granted upon request.

On April 3, 2020, in follow-up to the Stark Law blanket waivers, OIG issued a policy statement that it will exercise its enforcement discretion not to impose administrative sanctions under the Federal anti-kickback statute for remuneration covered by the first eleven blanket waivers. See Section II.B.1-11 of the Stark Law blanket waivers.  To the extent there are questions about the application of OIG’s administrative sanctions to remuneration associated with the other Stark Law blanket waivers as relevant to the AKS, OIG invites parties to submit questions to OIGComplianceSuggestions@oig.hhs.gov.  Also notably, the policy statement is only effective as of April 3, 2020 and will terminate with the blanket waivers, unless OIG modifies its policy statement at a later time.

II. Conditions That Must Apply in Order to Utilize the Blanket Waivers

In order for any blanket waiver described below to be applied, certain conditions must be met.  Specifically the remuneration and referral relationships described in the blanket waivers must be “solely related to COVID-19 Purposes.”  Purposes are defined as follows: 

• 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.

As indicated above, the COVID-19 Purposes are therefore much broader than care of  COVID-19 patients themselves, but include being able to address the present shortage of health care workers and the ability to provide necessary healthcare services to COVID-19 and non-COVID-19 patients alike.. 

III. The Blanket Waivers

Following is a chart that will be helpful depending on your status as a designated health service entity, hospital, physician, or physician group in identifying the blanket waivers available to you and understanding by way of example how those waivers may be applied.  (See attached chart.)

IV. Potential Questions of Interpretation

1. The waiver language states that any relationship that would otherwise have been illegal under the Stark Law is now protected if it qualifies for a waiver.  We take that literally, however, there may be question as to whether Stark Law exceptions that prohibit “volume or value of referrals” compensation are affected by these waivers.  We would be happy to discuss that issue and assess on a case-by-case basis. 
2. The waiver authority of the Secretary applies to Medicare, Medicaid, and CHIP reimbursement programs, and in fact those programs are referenced in the waiver announcement.  The Stark Law, however, applies only to the Medicare program.  It is unclear as to whether the waivers may apply to programs other than Medicare, given the strictures of the Stark Law to Medicare only. 
3. Waiver number 9 relaxes the non-monetary compensation limit under 42 C.F.R. 411.357 to remove the compensation limit.  Therefore, entities can furnish items or services that are related to a COVID-19 Purpose well beyond the current limit of $423.  CMS has not put any restrictions around what items or services could be furnished under this exception, and there is no further definition of what “non-monetary compensation” would qualify for this waiver.  It is unclear whether CMS intended to give such broad authority to providers.
4. Parties may not rely on the blanket waivers once either (a) the Secretary terminates or narrows the waivers, or (b) the Secretary’s authority to grant the waivers expires. It is therefore unclear what sort of timeframe will be provided to allow those who rely on the waivers to come into compliance once the waivers terminate.

V. Recommendations to Our Clients

In order to take advantage of these very helpful Stark Law waivers, we recommend as follows:

1. We recommend that all our clients establish a general policy covering its intention to establish flexible financial and referral relationships with physicians in order to combat the COVID-19 virus, provide quality of care, and assure accessibility to all patients, not only COVID-19 patients during this time of crisis. This is similar to what Accountable Care Organizations (“ACOs”) do when invoking fraud and abuse waivers under the Medicare Shared Savings Program.  Providers must demonstrate how your actions are related to a COVID-19 purpose. Similarly to CMS and OIG interpretation of the ACO fraud and abuse waivers, it appears that CMS will interpret COVID-19 purposes broadly, but not without limit.
2. We recommend that whatever relationships you choose to undertake under the waiver authority be in writing, refer specifically to this policy, and to the waiver authority itself.  The policy may also be attached to the written understanding. 
3. Any such relationship should contain language that would permit the termination of the relationship once the waiver itself expires.
4. Importantly, business records should be maintained according to good practices with respect to all such relationships.  The Secretary reserves the right to inspect all such documentation (and possibly determine that the waiver does not apply, or that other potential issues lurk). 
5. Needless to say, all such relationships should be established truthfully and accurately and devoid of any internal fraud or abuse. 

These are unique and difficult times, and these waiver opportunities can be complex.  We would be happy to assist in your interpretation and/or implementation of these waiver opportunities.