In Brief: As the PHE ends, so do waivers that some organizations have come to rely on.
The COVID-19 public health emergency (PHE) will end on May 11, 2023. At the outset of the COVID-19 pandemic, the US Department of Health & Human Services (HHS), Centers for Medicare & Medicaid Services (CMS), and other agencies issued several waivers supporting a provider’s ability to operate and care for patients during the PHE. All waivers that have not been extended beyond the PHE (e.g., the CMS telehealth waivers and the Acute Hospital Care at Home program, both of which have been extended through December 31, 2024) will terminate with the PHE, including the Stark law blanket waivers.
CMS has made this clear, stating that “physicians and entities must immediately comply with all provisions of the Stark law.” The Stark law is considered one of the most important federal fraud and abuse laws that apply to physicians, as it prohibits physicians from referring patients to receive “designated health services” payable by Medicare and Medicaid from entities with which the physician or an immediate family member has a financial relationship, unless an exception applies.
Violating the Stark law may result in criminal penalties, civil fines, exclusion from federal healthcare programs, and loss of a medical license from the state medical board. As such, the immediate compliance requirement should be noted by parties currently relying on a blanket waiver to protect an arrangement.
Stark Blanket Waivers
On March 30, 2020, CMS issued blanket waivers of sanctions under the physician self-referral law that provided vital flexibility for physicians and providers in the fight against COVID-19. The waivers became effective March 1, 2020 (retroactively), and could be used without notifying CMS. The waivers were available for specific referral and financial relationships that were solely related to at least one COVID-19 purpose, which included the following:
- Diagnosis or medically necessary treatment of COVID-19 for any patient or individual, whether or not the patient or individual was diagnosed with a confirmed case of COVID-19
- Securing the services of physicians and other healthcare practitioners and professionals to furnish medically necessary patient care services, including services not related to the diagnosis and treatment of COVID-19, in response to the COVID-19 outbreak in the United States
- Ensuring the ability of healthcare providers to address patient and community needs due to the COVID-19 outbreak in the United States
- Expanding the capacity of healthcare providers to address patient and community needs due to the COVID-19 outbreak in the United States
- Shifting the diagnosis and care of patients to appropriate alternative settings due to the COVID-19 outbreak in the United States
- Addressing medical practice or business interruption due to the COVID-19 outbreak in the United States in order to maintain the availability of medical care and related services for patients and the community
CMS waived application of the Stark law for 18 different types of financial and referral relationships if they were related to a COVID-19 purpose.
Fair Market Value Implications
The first of the 18 different types of financial and referral relationships referenced by CMS was as follows: “Remuneration from an entity to a physician (or an immediate family member of a physician) that is above or below the fair market value for services personally performed by the physician (or the immediate family member of the physician) to the entity.” Effectively, the waiver protected the entity in the event the entity decided to pay the physician increased salary to mitigate a provider shortage and ensure consistent care during the COVID-19 pandemic.
Accordingly, organizations currently relying on these blanket waivers may be compensating providers in excess of fair market value. At the termination of the PHE, organizations will need to ensure compensation paid to a provider under an arrangement relying on a blanket waiver is consistent with fair market value for services rendered.
A PHE Termination To-Do List
Organizations should immediately undertake the following actions to ensure applicable arrangements are compliant with the Stark law following the end of the PHE:
- Evaluate all arrangements initiated during the PHE to ensure Stark law compliance.
- Terminate, unwind, or amend any arrangements that are currently relying on a waiver and do not presently comply with the Stark law.
- Review documentation to ensure an arrangement’s reliance on a blanket waiver was properly detailed and subsequently reviewed by legal counsel.
- Confirm payments to providers after the termination the PHE will still satisfy all requirements of a Stark law exception.
What Happens Next?
The burden to maintain records documenting compliance with the blanket waivers during the PHE falls on the organization. Specifically, CMS stated, “Parties utilizing the blanket waivers must make records relating to the use of the blanket waivers available to the Secretary upon request…we encourage parties to develop and maintain records in a timely manner as a best practice.”
Organizations should begin compiling and organizing their compliance records immediately. It is likely CMS and the Office of Inspector General will increase scrutiny of this compliance as the PHE comes to a close. Failure to produce documentation, if requested, could result in significant penalties for the organization if prosecuted under the False Claims Act.
Edited by: Matt Maslin
Published May 11, 2023