As discussed in detail in a prior post, U.S. Health and Human Services Secretary Alex M. Azar II (the Secretary) issued blanket waivers of sanctions under the federal Physician Self-Referral Law (Section 1877 of the Act), commonly known as the Stark Law, to provide much needed flexibility for hospitals and physicians to structure relationships during the COVID-19 national emergency. On April 21, the Centers for Medicare & Medicaid Services (CMS) published the Explanatory Guidance on the blanket waivers, attempting to address common questions that they had fielded from industry stakeholders in the wake of the blanket waiver document issued on March 30, 2020.
The blanket waiver document enumerated 18 types of compensation and ownership remuneration and referrals that would be exempt from sanctions under the Stark Law if adopted during the national emergency to address a “COVID-19 Purpose” (as defined under the blanket waivers). In addition to the blanket waivers, CMS may also issue waivers under Section 1135 on a case-by-case basis upon request by a provider or supplier. The blanket waivers (as opposed to the case-by-case waivers) are self-implementing, meaning that no additional action is required for health care providers to avail themselves of the waivers. The Office of Inspector General (OIG) issued a Policy Statement on April 3rd indicating that it will not impose administrative sanctions under the Exclusion Statute and the Civil Monetary Penalty Statute that correspond to the first 11 of the Stark blanket waivers. (The remaining 7 Stark blanket waivers that the Explanatory Guidance has not addressed relate to physician-owned hospitals, home health agencies, provision of designated health services outside of the same or centralized building as a group practice, provision of DHS in a patient’s home or assisted living/independent living facility, expanded rural health care exception and failures to meet the writing requirement of an existing Stark exception.)
Also of value to the provider community, CMS has offered to work with the Department of Justice to “address False Claims Act relator suits where parties using the blanket waivers have a good faith belief that their remuneration or referrals are not covered by a blanket waiver.” This is a valuable comment reflecting the interest of the agencies in moving to attempt to dismiss or discourage relators in a scenario where providers might fail to meet the four corners of a blanket waiver.
The Explanatory Guidance provides clarification and discussion on the following points:
It should be noted that, even though the blanket waivers themselves are effective March 1, 2020, a remuneration amendment can be effective only on a prospective basis. This means, for example, if a hospital desires to reduce rent charged to a physician group for space leased in a hospital owned building, the rent reduction can be effective only from after execution of the lease amendment. However, the Explanatory Guidance goes on to flag that as an alternative to “modifying” an existing compensation arrangement the parties could instead enter into a stand-alone compensation arrangement during the term of the emergency period. For example, rather than reducing the rent charged to a physician group, a hospital could provide financial support to the physician group in the form of a loan permitted under blanket waiver #10. This would presumably accomplish the same goal of supporting the physician group’s ability to meet its operating costs and ensure that medical care and related services are available to patients in the community during the emergency period.
In sum, the Explanatory Guidance provides helpful discussion on some key questions related to the blanket waivers, but providers are encouraged to carefully review and document the facts and circumstances relating to any contemplated arrangement that could be protected by a blanket waiver.
Finally, as noted above, CMS has the authority to issue Section 1135 waivers for specific arrangements that may not be covered by the blanket waivers. CMS reviews Section 1135 waiver requests on a case-by-case basis, and requesting such a waiver can be done with relatively minimal administrative/legal effort.
For additional web-based resources available to assist you in monitoring the spread of the coronavirus on a global basis, you may wish to visit the websites of the CDC and the World Health Organization.