CMS issued new Stark waivers on Monday evening, March 30, giving providers unprecedented flexibility to manage arrangements through the COVID-19 pandemic. While regulatory requirements are still in effect and these waivers must be used cautiously, this brand new guidance provides much needed latitude for providers to support one another during this novel crisis.
These waivers come after the Secretary of the Department of Health and Human Services utilized his authority under Section 1135 of the Social Security Act to waive or modify certain federal health care program and Health Insurance Portability and Accountability Act of 1996 (HIPAA) requirements – these are commonly referred to as “1135 waivers”. The most recent waivers of Section 1877(g) of the Social Security Act, also known as the physician self-referral law or Stark law, are blanket waivers – they apply nationwide. The waivers have a retroactive effect to March 1, 2020. Providers who utilize these blanket waivers must make records relating to the use of the blanket waivers available to the Secretary upon request. CMS recommends developing and maintaining records of blanket waiver use in a timely manner. The blanket waivers relate to Stark financial relationships and referrals related to COVID-19 Purposes, which generally mean diagnosing or providing treatment of COVID-19 patients, securing services for the same, ensuring the availability of providers to address patient and community needs due to COVID-19, shifting the diagnosis and care of patients to appropriate alternative settings due to COVID-19 or addressing medical practice or business interruption due to the COVID-19 in order to maintain the availability of medical care and related services for patients and the community.
The Stark law prohibits a physician from making a referral for certain designated health services payable by Medicare to an entity with which (s)he, or an immediate family member, has a financial relationship, unless an applicable exception is satisfied. It also prohibits that entity from submitting a claim for that designated health service furnished pursuant to the prohibited referral.
Applying specifically to remuneration directly between an entity and physician, or physician who stands in the shoes or family member, Secretary Azar has waived sanctions for referrals and claims submitted for items furnished in good faith that were unable to comply with one or more requirements of the Stark law and regulations. Financial relationship and referrals must be related to COVID-19 Purposes, as defined above, to be eligible for the blanket waivers. Below are the waivers (all mentions of a physician also include mention of an immediate family member of the physician):
- Remuneration from an entity to a physician that is above or below the fair market value for services personally performed by the physician to the entity.
- Rental charges paid by an entity to a physician that are below fair market value for the entity’s lease of office space or equipment from the physician.
- Remuneration from an entity to a physician that is below fair market value for items or services purchased by the entity from the physician.
- Rental charges paid by a physician to an entity that are below fair market value for the physician’s lease of office space or equipment from the entity.
- Remuneration from a physician to an entity that is below fair market value for the use of the entity’s premises or for items or services purchased by the physician from the entity.
- Remuneration from a hospital to a physician in the form of medical staff incidental benefits that exceeds the limit set forth in 42 CFR 411.357(m)(5).
- Remuneration from an entity to a physician in the form of nonmonetary compensation that exceeds the limit set forth in 42 CFR 411.357(k)(1).
- Remuneration from an entity to a physician resulting from a loan to the physician:
- with an interest rate below fair market value; or
- on terms that are unavailable from a lender that is not a recipient of the physician’s referrals or business generated by the physician.
- Remuneration from a physician to an entity resulting from a loan to the entity:
- with an interest rate below fair market value; or
- on terms that are unavailable from a lender that is not in a position to generate business for the physician.
- The referral by a physician owner of a hospital that temporarily expands its facility capacity above the number of operating rooms, procedure rooms, and beds for which the hospital was licensed on March 23, 2010 (or, in the case of a hospital that did not have a provider agreement in effect as of March 23, 2010, but did have a provider agreement in effect on December 31, 2010, the effective date of such provider agreement) without prior application and approval of the expansion of facility capacity as required under section 1877(i)(1)(B) and (i)(3) of the Act and 42 CFR 411.362(b)(2) and (c).
- Referrals by a physician owner of a hospital that converted from a physician-owned ambulatory surgical center to a hospital on or after March 1, 2020, provided that:
- the hospital does not satisfy one or more of the requirements of section 1877(i)(1)(A) through (E) of the Act;
- the hospital enrolled in Medicare as a hospital during the period of the public health emergency described in section II.A of the blanket waiver document;
- the hospital meets the Medicare conditions of participation and other requirements not waived by CMS during the period of the public health emergency described in section II.A of the blanket waiver document; and
- the hospital’s Medicare enrollment is not inconsistent with the Emergency Preparedness or Pandemic Plan of the State in which it is located.
- The referral by a physician of a Medicare beneficiary for the provision of designated health services to a home health agency:
- that does not qualify as a rural provider under 42 CFR 411.356(c)(1); and
- in which the physician has an ownership or investment interest.
- The referral by a physician in a group practice for medically necessary designated health services furnished by the group practice in a location that does not qualify as a “same building” or “centralized building” for purposes of 42 CFR 411.355(b)(2).
- The referral by a physician in a group practice for medically necessary designated health services furnished by the group practice to a patient in his or her private home, an assisted living facility, or independent living facility where the referring physician’s principal medical practice does not consist of treating patients in their private homes.
- The referral by a physician to an entity with which the physician’s immediate family member has a financial relationship if the patient who is referred resides in a rural area.
- Referrals by a physician to an entity with whom the physician has a compensation arrangement that does not satisfy the writing or signature requirement(s) of an applicable exception but satisfies each other requirement of the applicable exception, unless such requirement is waived under one or more of the blanket waivers set forth above.
CMS provided an illustrative list of scenarios that might qualify for waiver use during this time. Example situations range from a hospital paying a physician above their previously-contracted rate for furnishing professional services for COVID-19 patients in particularly hazardous or challenging environments, to a loan to a physician group with an exclusive contract to provide anesthesia services at a hospital that is suffering a loss of revenue due to cancellations of non-emergent surgeries. CMS clarified that the list of examples were not exhaustive, and instead meant to provide some guidance regarding application of the waivers. Application to certain common scenarios was absent, such as those physician compensation arrangements based on wRVUs in which physicians are unable to perform normal levels of wRVUs due to the COVID-19 pandemic. Judgment should be exercised going forward as providers seek to use the blanket waivers in arrangements in response to the COVID-19 pandemic.
The CMS waiver document may be found here.
If a specific scenario is not covered by the blanket waivers, providers may email the CMS waiver inbox at firstname.lastname@example.org or also at 1877CallCenter@cms.hhs.gov and request a specific, individual waiver. Responses are normally within a couple days, and no longer than 1 week depending on the complexity of the request. Please note that there are additional waivers beyond the Stark waivers described above – those may generally be found using the CMS Coronavirus Waivers and Flexibilities page.