CMS Issues New Blanket Stark Waivers for COVID-19 Purposes

On March 30, 2020, the Centers for Medicare & Medicaid Services (“CMS”) issued blanket waivers of several Stark Law requirements related to COVID-19 physician arrangements. These waivers are welcome news to hospitals, health systems and other providers that have been tackling challenging physician contracting, compensation and staffing issues over the past month.

Timeframe

The Stark waivers can be relied upon retroactively to March 1, 2020, until the expiration or termination of the declared public health emergency.

Limitation of Blanket Waivers

The Stark waivers can only be relied upon for financial arrangements that relate to a “COVID-19 Purpose.” CMS identified the following COVID-19 Purposes:

Diagnosis or medically necessary treatment of COVID-19 for any patient or individual, whether or not the patient or individual is diagnosed with a confirmed case of COVID-19;
Securing the services of physicians and other health care practitioners and professionals, to furnish medically necessary services in response to the COVID-19 outbreak;
Ensuring the ability of health care providers to address patient and community needs due to the COVID-19 outbreak;
Expanding the capacity of health care providers to address patient and community needs due to the COVID-19 outbreak;
Shifting the diagnosis and care of patients to appropriate alternative settings due to the COVID-19 outbreak; or
Addressing medical practice or business interruption due to the COVID-19 outbreak in order to maintain the availability of medical care and related services for patients and the community.

Scope of the Stark Waivers

The Stark waivers exempt providers from sanctions for noncompliance with the Stark Law related to the following types of arrangements, absent the government’s determination of fraud or abuse:

Physician Services. Payment from an entity to a physician that is above or below FMV for services personally performed by the physician to the entity;
Space/Equipment Rentals. Rental charges for equipment or office space that is below FMV;
Payments to Physicians. Payments from an entity to a physician that are below FMV for items or services purchased by the entity from the physician;
Payments from Physicians. Payments from a physician to an entity that are below FMV for the use of the entity’s premises or for items or services purchased by the physician;
Medical Staff. Remuneration that exceeds the current medical staff incidental benefits amount ($36 per occurrence) or annual nonmonetary compensation ($423) limit;
Loans. Loan payments: (1) with an interest rate below FMV; 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;
Physician-Owned Hospitals. Referrals by a physician owner of a hospital that temporarily expands its facility capacity above its amount allotted under the physician-owned hospital exception. In addition, 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 meets certain requirements;
Group Practices. Referrals by a physician in a group practice for medically necessary designated health services furnished by the group practice: (1) in a location that does not qualify as a “same building” or “centralized building”; or (2) 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 home;
Home Health. Referrals to a non-rural home health agency when the physician has an ownership in the home health agency;
Rural Areas. Referrals 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; and
Other. Referrals by a physician to an entity with whom the physician has a compensation arrangement that satisfies the substance of an applicable exception but is not in writing or signed as required by the exception (unless the arrangement is already covered by another waiver).

Practical Takeaways – Application of the Stark Waivers

Providers should consider the following related to the Stark waivers:

No Fraud or Abuse. Note that CMS states that arrangements must be “absent” of the government’s determination of fraud or abuse to fall under the Stark waivers. Thus it is imperative that any arrangements must be pursued for a proper purpose.
Examples. The Stark waiver document provides over 20 examples of specific arrangements that could fall within the scope of the identified Stark waivers. These examples can assist with determinations as to what is a proper purpose.
Meet an Exception if Possible. CMS also clarified that the Stark waivers are intended to be additional safeguards and that reliance on the waivers may be unnecessary because many financial relationships will already satisfy the requirements of an existing Stark exception. Because the waivers remain novel and are limited in duration, we strongly encourage the structuring of arrangements to fit within current exceptions if at all possible and to rely on the new Stark waivers only when necessary for a bona fide COVID-19 response.
Maintain Documentation. Providers that utilize the blanket waivers must make available to CMS, upon request, records relating to the use of the blanket waivers. Providers should develop a strategy for maintaining separate documentation for their arrangements in a form that justifies the proper purpose and scope of the arrangement.

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