Provider Alert: Exercise Caution When Operating Under Blanket Waivers of Stark Sanctions

In response to the COVIDI9 crisis, the Secretary of the Department of Health and Human Services invoked his authority to issue blanket waivers of Section 1877(g) of the Social Security Act (also known as the physician self-referral law or “Stark” law). The waivers were issued to ensure, to the maximum extent feasible, in any emergency area and during an emergency period that: (1) sufficient health care items and services are available to meet the needs of individuals in the emergency area enrolled in Medicare, Medicaid, and the Children’s Health Insurance Program programs; and (2) health care providers that furnish such items and services in good faith, but are unable to comply with one or more of the specified requirements of Stark as a result of the COVID-19 pandemic, may be reimbursed for such items and services without sanctions for noncompliance.

Examples of scenarios covered by the blanket waivers include, but are not limited to:

  • Rental charges paid by an entity to a physician (or an immediate family member of a physician) that are below fair market value for the entity’s lease of office space from the physician (or the immediate family member of the physician).
  • 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).
  • An entity provides free telehealth equipment to a physician practice to facilitate telehealth visits for patients who are observing social distancing or are in isolation/quarantine.

Some important things to know about the waivers:

  • Blanket waivers are retroactive to March 1, 2020 (notwithstanding a subsequent issuance date) and continue through the end of the emergency declaration. The waivers apply only to financial relationships and referrals that are related to the COVID-19 outbreak in the United States.
  • Blanket waivers do not constitute carte blanche for all manner of conduct. Arrangements must meet waiver conditions, and even when an arrangement is covered by a waiver, participants may still be subject to government investigations and/or prosecutions of fraud and abuse. Parties that furnish designated health services (“DHS”) must comply with other elements of the applicable Stark Law exception that were not waived, e.g., if the fair market value element of the arrangement is waived, that doesn’t mean the arrangement can take into account the volume or value of referrals.
  • Temporary arrangements must be properly structured and documented. They must satisfy both the “COVID-19 Purpose” element and any other required conditions to qualify for the applicable waiver.
  • Establishing compliance with waiver conditions also minimizes the risk of sanctions under the Anti-Kickback Statute (“AKS”). According to a Policy Statement issued April 3, 2020, the HHS-OIG will not impose administrative sanctions under the AKS for remuneration covered by blanket waivers of Stark sanctions.

How Frier Levitt Can Help

For providers considering an arrangement that implicates Stark but for which there is no blanket waiver of sanctions, if the arrangement merits regulatory flexibility for a COVID-19 Purpose, the provider may wish to consider submitting a request for an individual 1877(g) waiver.

For advice regarding the blanket waivers or assistance requesting individual waivers, call Frier Levitt to speak with an attorney.