The End of the Stark Law Blanket Waivers: What Do Providers Need to Do Now?

The COVID-19 pandemic was first declared a “Public Health Emergency” (PHE) by the U.S. Department of Health and Human Services (HHS) on January 31, 2020, and was later declared a “National Emergency” on March 31, 2020. Since that time, the federal government implemented a series of important actions to combat the spread of this disease, including the provision of free vaccines, testing and treatments and the provision of numerous regulatory “flexibilities” in order to enhance patients’ access to care. These flexibilities were also intended to encourage physicians, hospitals and other providers to provide that care without fear of sanctions.

Among the government’s actions, HHS and the Centers for Medicare and Medicaid Services (CMS) issued a number of “blanket waivers” of their regulatory requirements on March 30, 2020 (retroactive to March 1, 2020).[1] Significantly, these waivers included relaxing the fairly strict requirements related to physician self-referrals under the Ethics in Patient Referrals Act (commonly known as the “Stark Law”)[2] and its implementing regulations.[3]

Under normal circumstances, the Stark Law prevents a physician from referring a Medicare or Medicaid patient for “designated health services”[4] by a provider or facility in which the physician has a financial relationship, unless that relationship is structured to fall within a specific exception.[5] However, during the pandemic, the blanket waivers permitted physicians, hospitals and other providers to provide and bill for their services without triggering the sanction’s provisions under the Stark Law.[6]

With the progress made in combating the pandemic over the last several years, President Biden announced on January 30, 2023, that both the COVID-19 PHE and the National Emergency will end on May 11, 2023. Shortly after that announcement, HHS issued its “Fact Sheet: COVID-19 Public Health Emergency Transition Roadmap,”[7] dated February 9, 2023, to provide further guidance in the transition. In addition, CMS issued a set of provider-specific fact sheets on February 23, 2023, with guidance targeted to each segment of the health care provider community.[8]

Significantly, CMS stated in guidance issued on February 24, 2023, that “When the COVID-19 PHE ends, the waivers will terminate, and physicians and entities must immediately comply with all provisions of the Stark Law”[9] (emphasis added). Since the Stark Law is a strict liability statute, with significant civil penalties for violations, this immediate compliance requirement should be noted by parties currently relying on a blanket waiver to protect an arrangement.

What Providers Need to Do Now

1. Depending on the size of the organization, providers should appoint one or more knowledgeable members of their staff (e.g., compliance officer, chief medical officer, director of physician practices, medical staff president or designee, chief nursing officer, in-house counsel, etc.) to conduct a thorough review. 
2. The person or team should promptly identify and inventory all arrangements covered under the blanket waivers that could potentially implicate the Stark Law after May 11, 2023, if not addressed beforehand (collectively referred to as the “Non-Compliant Arrangements”). The HHS blanket waiver document issued on March 30, 2020, has a long list of examples of Non-Compliant Arrangements that may be helpful in this review. A few examples are listed below:
   • A hospital provides free use of medical office space on its campus to allow physicians to provide timely and convenient services to patients who come to the hospital, but do not need inpatient care.
   • 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 hospital sends a hospital employee to an independent physician practice to assist with staff training on COVID-19, intake and treatment of patients most appropriately seen in a physician office, and care coordination between the hospital and the practice.
   • A compensation arrangement that commences prior to the required documentation of the arrangement in writing and the signatures of the parties, but that satisfies all other requirements of the applicable exception, for example:
   • A physician provides call coverage services to a hospital before the arrangement is documented and signed by the parties;
   • A physician with in-office surgical capability delivers masks and gloves to the hospital before the purchase arrangement is documented and signed by the parties; and
   • A physician establishes an office in a medical office building owned by the hospital and begins treating patients who present at the hospital for health care services, but do not need hospital-level care before the lease arrangement is documented and signed by the parties.
3. The blanket waivers issued by HHS specifically state that, “Parties utilizing the blanket waivers must make records relating to the use of the blanket waivers available to the Secretary upon request.”^[10] Therefore, to the extent not already maintained, each provider should develop and maintain records of each of their Non-Compliant Arrangements as expeditiously as possible, and maintain those records in a centralized, secure location, for retrieval in the event they are requested by HHS in the future.
4. If Non-Compliant Arrangements are identified that the hospital, physician group or other provider wishes to maintain after May 11, 2023, the parties must negotiate and execute a written agreement that complies with the requirements of the relevant Stark Law exception by that date (e.g., a written physician office lease at a fair market value rental rate).
5. If one party, such as a hospital, does not wish to continue the Non-Compliant Arrangement with the physician or physician group after May 11, 2023, it should provide written notice to the other party terminating the arrangement on or before that date.
6. Each party to a Non-Compliant Arrangement should also provide written notice to its billing department or billing company not to submit any claims for medical services provided to Medicare or Medicaid patients by providers in Non-Compliant Arrangements after May 11, 2023, unless or until notified that a Stark Law-compliant written agreement is in place.
7. The person or team reviewing the Non-Compliant Arrangements should provide a final, written report to the president or governing board of the provider upon conclusion of the review.
8. The provider’s compliance with the Stark Law after May 11, 2023, should be subject to periodic audit or review in accordance with the provider’s compliance policy.

If you have any comments or questions, please contact the author, Thomas M. Tammany, at: 484-802-5309 or tmt@stevenslee.com, or any member of the Stevens & Lee Health Care Group.

 

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[1] See: Blanket Waivers of Section 1877(g) of the Social Security Act (cms.gov). Also, an updated list of the blanket waivers and other flexibilities issued by HHS and other federal agencies can be found in “COVID-19 Emergency Declaration Blanket Waivers for Health Care Providers,” dated October 13, 2022, on the CMS website at www.cms.gov.

[2] 42 USC § 1395nn.

[3] 42 CFR §§ 411.350 et seq.

[4] See: Definition of Designated Health Services at 42 CFR §§ 411.351.

[5] See: 42 CFR §§ 411.355to 357.

[6] See: 42 USC § 1395nn(g).

[7] See: https://www.hhs.gov/about/news/2023/02/09/fact-sheet-covid-19-public-health-emergency-transition-roadmap.html.

[8] See: https://www.cms.gov/coronavirus-waivers (dated February 23, 2023). See also: “What Do I Need to Know? CMS Waivers, Flexibilities, and the Transition Forward from the COVID-19 Public Health Emergency,” dated February 27, 2023 and available at: CMS PHE Fact Sheet.

[9] See: “Physicians and Other Clinicians: CMS Flexibilities to Fight COVID-19,” dated February 24, 2023, at 17.

[10] See: Footnote 1 above, at p. 2.