On March 30, 2020, CMS issued blanket waivers of sanctions under the Federal physician self-referral law (the Stark Law) for purposes of responding to the COVID-19 pandemic (Stark Waivers or Waivers). The Stark Waivers, issued under Section 1135 of the Social Security Act, are effective retroactively to March 1, 2020, apply nationwide, and may be used without notifying CMS. CMS has indicated that it may revise the Stark Waivers as necessary. Revisions that narrow or terminate the Waivers will be effective on a prospective basis only. Providers that wish to use a Stark Waiver to protect an otherwise prohibited financial relationship must satisfy all Waiver conditions to avoid triggering the Stark Law’s sanctions. The Stark Waivers are available here. We have also prepared a table that crosswalks the Stark Waivers to the CMS examples of arrangements that would qualify for those Waivers. The chart here is available here. We set forth below an overview of the Waivers and include at the end some comments on practical implementation.

Application: The Stark Waivers apply only to financial relationships and referrals related to the COVID-19 national emergency and must be solely related to the “COVID-19 Purposes” identified below. Covered remuneration must be directly between an entity that furnishes designated health services (DHS) and: (1) the physician or the physician organization in whose shoes the physician stands; or (2) the physician’s immediate family member.

Recordkeeping Requirement: Parties using the Stark Waivers must keep records relating to the use and make them available to the government upon request. CMS encourages parties to develop and maintain records in a timely manner as a best practice.

Individual Waivers Still Available: Providers seeking to enter unexcepted financial relationships that are outside the Stark Waivers may still seek individual waivers from CMS. Information about requesting an individual waiver is available here.

COVID-19 Purposes: The Stark Waivers are available for the following “COVID-19 Purposes”:

• Diagnosis or medically necessary treatment of COVID-19 for any patient or individual;
• Securing the services of physicians and other 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 (Outbreak);
• Ensuring the ability of providers to address patient and community needs due to the Outbreak;
• Expanding the capacity of providers to address patient and community needs due to the Outbreak;
• Shifting the diagnosis and care of patients to appropriate alternative settings due to the Outbreak; or
• Addressing medical practice or business interruption due to the Outbreak to maintain the availability of medical care and related services for patients and the community.

Stark Waivers: Where a financial relationship or referral is for a COVID-19 Purpose, CMS is waiving the sanctions for noncompliance with the Stark Law requirements summarized below. The waiver notice also includes a non-exhaustive list of practical examples of remuneration, referrals, and other conduct that would qualify for Waivers (subject to meeting other applicable requirements of a Stark exception).

• Writing and Signature Requirements: Noncompliance with the writing or signature requirements by a compensation arrangement between an entity and a physician, so long as the arrangement meets all other non-waived requirements of an applicable exception.
• Fair Market Value Compensation
  • Personally-Performed Services: Remuneration from an entity to a physician that is above or below the fair market value (FMV) for services personally performed by the physician for the entity.
  • Payments to a Physician for Items or Services: Remuneration from an entity to a physician that is below FMV for items or services purchased by the entity from the physician.
  • Payments by a Physician for Items, Services, or Premises: Remuneration from a physician to an entity that is below FMV for the use of the entity’s premises or for items or services purchased by the physician from the entity.
• Rental of Office Space or Equipment: Rental charges paid by an entity to a physician, or vice versa, that are below FMV for the lease of office space or equipment.
• Medical Staff Incidental Benefits: Remuneration from a hospital to a physician in the form of medical staff incidental benefits that exceeds the per occurrence limit under the applicable Stark exception—currently $36.
• Nonmonetary Compensation: Remuneration from an entity to a physician in the form of nonmonetary compensation that exceeds the annual limit under the applicable Stark exception—currently $423.
• Loans to Physicians: A loan from an entity to a physician: (1) with a sub-FMV interest rate; or (2) on terms that are unavailable from a lender that is not a recipient of the physician’s referrals or business generated by the physician.
• Loans to Entities: A loan from a physician to an entity: (1) with a sub-FMV interest rate; or (2) on terms that are unavailable from a lender that is not in a position to generate business for the physician.
• Physician-Owned Hospitals & ASCs: Referrals by a physician owner of a hospital that:
  • temporarily expands its bed capacity above the level specified in the Stark Law’s whole hospital exception, without prior application or approval to CMS; or
  • converts from a physician-owned ASC to a hospital on or after March 1, 2020, provided the hospital meets certain additional requirements.
• Home Health: A physician’s referral of a Medicare patient to a home health agency: (1) that does not qualify as a rural provider; and (2) in which the Physician has an ownership or investment interest.
• Group Practice; In-Office Ancillary Services: The referral by a physician in a group practice for medically necessary DHS furnished by the group practice:
  • in a location that does not qualify as a “same building” or “centralized building” under the Stark Law’s in-office ancillary services exception; or
  • to a patient in his or her private home, an assisted living facility, or independent living facility, even though the referring physician’s principal medical practice does not consist of treating patients in their private homes.
• Intra-Family Rural Referrals: The referral by a physician to an entity with which the physician’s immediate family member has a financial relationship if the referred patient resides in a rural area.

Practical Implementation Comments

• Medical Practice/Business Interruption: Many medical practices are facing serious business interruption due to the Outbreak. Parties may wish to consider rent abatement or other actions to mitigate the impact of the disruptions. However, to qualify for Waiver protection under the medical practice/business interruption COVID-19 Purpose, an action must be taken “to maintain the availability of medical care and related services for patients and the community.” Parties should think carefully about whether this requirement is met and what additional actions could be included in an arrangement to satisfy the requirement, or whether an individual waiver may still be required. There are calls for CMS to expand this COVID-19 Purpose.
• Indirect Compensation Arrangements Analysis: The Waivers applicable to compensation arrangements only apply to so-called “direct compensation arrangements” in which the remuneration in question passes directly between the entity providing Stark designated health services (the DHS Entity) and either an individual physician or the physician organization in whose shoes the physician owners stand. As a practical matter, however, actions like those addressed by the Waivers may need to occur between intervening entities, such as when a health system real estate affiliate that is not a DHS Entity proposes to abate the medical office space rent owed by a physician or physician group. In such cases, it may be that there is no Stark-regulated “indirect compensation arrangement,” if the aggregate compensation to the physicians does not vary with or take into account the volume or value of referrals or other business generated by the physicians for health system DHS Entities affiliated with the real estate company. As is always the case, this will depend on the particular circumstances. Again, there are calls for CMS to expand the Waivers to apply to indirect arrangements that otherwise would qualify for a given Waiver in order to avoid potential vulnerability associated with relying on an indirect compensation arrangement analysis instead of being able to rely on the clear protection of a Waiver.
• Waiver of Writing/Signature Requirements: The Waiver of writing and signature requirements is a critical measure to enable parties to take necessary actions in real time without the practical impediment of needing to formalize a writing and obtain signatures prior to taking action. Parties still should implement prudent measures to document actions under a Waiver in order to meet the recordkeeping requirements of the Blanket Waivers and to be able readily to furnish documentation to CMS upon request.