Temporary Stark Law and Anti-Kickback Statute Waivers Give Health Care Providers Flexibility

Health care providers struggling to meet patient needs during this unprecedented COVID-19 emergency have been given additional flexibility by the Centers for Medicare and Medicaid Services (CMS) and the Office of Inspector General (OIG) of the Department of Health and Human Services (DHHS). Those entities announced that certain provisions of the Federal Stark Law and Anti-Kickback Statute (AKS) will not be enforced temporarily.

However, this relief is not unlimited and must be carefully evaluated by health care providers when making emergency arrangements. The information below describes the scope and terms of the Stark Law and AKS relief, as well as other key considerations for health care providers. If you would like a more-detailed summary and analysis of the CMS and OIG declarations, please contact Meghan Pound or Jennifer Sullivan in Caplan & Earnest’s Health Law practice.

Stark Law Waivers

CMS issued 18 “blanket waivers” to Stark Law requirements that will apply during the COVID-19 emergency. These blanket waivers are effective as of March 1, 2020, and permit certain payment arrangements and referrals between physicians and DHHS entities. CMS will pay claims for designated health services that satisfy blanket waiver requirements.

The Stark Law waivers have been issued on a nationwide basis. Providers do not need to individually apply for or receive approval from CMS before relying on a waiver. However, each blanket waiver is limited to the circumstances described in the announcement and health care providers must satisfy all conditions of a specified waiver in order to rely on the blanket waiver.

The CMS announcement provides numerous examples of situations that may qualify for a blanket waiver under appropriate circumstances.  Among the examples cited are:

• A hospital pays physicians above their previously contracted rate for furnishing professional services for COVID-19 patients in particularly hazardous or challenging environments.
• To accommodate patient surge, a hospital rents office space or equipment from an independent physician practice at below fair market value or at no charge.
• An entity provides free telehealth equipment to a physician practice to facilitate telehealth visits for patients who are observing social distancing or in isolation or quarantine.
• A physician owner of a hospital lends money to the hospital to assist with operating expenses of the hospital, including staff overtime compensation, related to the COVID-19 outbreak in the United States.
• A physician refers a Medicare beneficiary who resides in a rural area for physical therapy furnished by the medical practice that is owned by the physician’s spouse and located within one mile of the beneficiary’s residence.
• The daughter of a physician begins working as the hospital’s paid COVID-19 outbreak coordinator before the arrangement is documented and signed by the parties.

While these waivers are intended to give health care providers additional flexibility, there remain important limitations. For example:

• The waivers are time limited and will expire at the end of the national and public health emergencies declared by the President and the Secretary. Providers will have to take immediate steps to ensure Stark Law compliance after the emergency declarations are lifted.
• The waivers do not eliminate other regulatory requirements that may be applicable to a transaction – e.g., requirements for setting compensation in advance and requirements for commercial reasonableness.
• A waiver will not be available in any situation in which the government determines there is fraud or abuse.
• The waivers require providers to make records relating to the use of the blanket waivers available to the Secretary upon request.
• The CMS waivers only apply to Stark Law sanctions, and not to sanctions under the federal Anti-Kickback Statute. The OIG has announced more limited relief from AKS sanctions as discussed below.

Anti-Kickback Statute (AKS) Enforcement Discretion

The OIG has announced it will not impose administrative sanctions under the federal Anti-Kickback Statute for certain remuneration arrangements related to COVID-19. The Anti-Kickback Statute makes it a criminal offense to knowingly and willfully offer, pay, solicit, or receive any remuneration to induce or reward referrals of items or services reimbursable by a Federal health care program.

The OIG policy statement reflects an understanding that some financial relationships that implicate the Stark Law also may implicate, and potentially violate, the Federal Anti-Kickback Statute and is intended to give providers the regulatory flexibility necessary to respond to COVID-19 concerns. However, the enforcement discretion is limited in scope and will apply only to remuneration which satisfies one of the eleven Stark Law waivers applicable to remuneration arrangements.

The OIG’s enforcement discretion is available only from April 3, 2020 through the expiration of the COVID-19 national and public health emergency.  When the emergency declarations are lifted, providers will need to take immediate action to unwind or restructure arrangements made in reliance upon the enforcement discretion.

Notably, the Anti-Kickback Statute only proscribes actions that are taken with a certain level of intent (e.g., knowingly and willfully).  As such, the fact that an arrangement does not qualify for the enforcement discretion described in the OIG’s policy statement does not mean that the arrangement violates the Statute.  Arrangements that fully satisfy an AKS safe harbor or do not involve the requisite intent should also be protected from AKS sanctions.

Contact Caplan & Earnest With Questions

If you have questions about the Stark Law waivers or the exercise of the OIG’s enforcement discretion please contact Meghan Pound or Jennifer Sullivan in Caplan & Earnest’s Health Law practice. Our attorneys continue to closely follow these developments, as well as many others related to changing laws, regulations and rules relating to the COVID-19 pandemic.