Stark Law Waivers Amidst COVID-19 Crisis

By Mathew J. Levy, Esq. & Stacey Lipitz Marder, Esq.

In light of the current COVID-19 crisis, the U.S. Department of Health and Human Services has recently issued temporary waivers, including a waiver involving sanctions under the “Stark Law”, in order for providers to be able to focus on providing care to patients affected by COVID-19. Although these waivers were issued on March 30, 2020, they are retroactive to March 1, 2020 and will be in effect through the end of the emergency declaration.

It is important to note that these waivers only apply as they relate to “COVID-19 Purposes”, which include the following: (i) diagnosis or medically necessary treatment of COVID -19 for any patient, regardless of whether such patient is diagnosed with a confirmed case of COVID -19; (ii) securing services of physicians or other health care practitioners to furnish medically necessary services, including services not related to diagnosis and treatment of Covid-19, in response to the COVID -19 outbreak; (iii) ensuring health care providers have the ability to address patient and community needs due to the COVID -19 outbreak; (iv) expanding capacity of health care providers to address patient and community needs due to the COVID -19 outbreak; (v) shifting diagnosis and care of patients to appropriate settings; and/or (vi) addressing medical practice or business interruption due to the COVID -19 outbreak.

As per the “Stark Law”, physicians are generally prohibited from making referrals for designated health services (DHS) (i.e. imaging services, lab services, DME, physical therapy) payable by Medicare if the physician (or his/her immediate family member) has a financial relationship with the entity performing and billing for the services unless an exception is met.

In accordance with the “Stark Law” waiver, CMS will temporarily allow certain referrals which previously were deemed to be in violation of the Stark Law provided the items and services are furnished in good faith as a result of the consequences of the COVID-19 pandemic. There is currently no requirement that providers and suppliers notify CMS in order to utilize the Stark Law waiver.

CMS has provides several examples of arrangements that otherwise might not comply with the Stark Law, but are permitted under the waiver, as follows: 

  • Fair Market Value: Health care providers may pay physicians above or below fair market value to rent equipment or receive services from physicians (or vice versa).
  • Loans: Health care providers may support each other financially (i.e. providing loans without charging FMV interest) to ensure continuity of health care operations.
  • Benefits: Hospitals can provide benefits to their medical staff, such as daily meals, laundry service or child care services.
  • Items/Services: Physicians may receive certain items and services that are related to the COVID-19 Purposes (i.e. continuing medical education regarding latest care protocols for COVID-19, isolation shelter or meals to the family of the physician who was exposed at work) even if the provisions of such items and services would exceed the annual non-monetary compensation cap.
  • Hospital Capacity: Physician-owned hospitals may temporarily increase the number of licensed beds, operating rooms and procedure rooms, even if such increases would otherwise be prohibited under the Stark Law.
  • Services in a Patient’s Home: Group practices may furnish medically necessary DHS in a patient’s home (i.e. a physician in a group practice can order medically necessary DHS in the patient’s home to be furnished by a technician or nurse if done contemporaneously with a physician service that is furnished via telehealth).
  • Part-Time Locations: Group practices may furnish medically necessary MRIs, CT scans or clinical laboratory services from locations that the group practice rents on a part-time basis (i.e. mobile vans in parking lots).

Although the Stark Law waiver will certainly help providers and suppliers provide necessary care when they may otherwise not have been able to due to the Stark Law, providers and suppliers must carefully review each arrangement in order to ensure that it is consistent with the applicable waiver. Since the Stark Law waiver only applies to services being billed under a federal program, providers also need to make certain that their arrangements do not fun afoul of applicable state laws, as well as other federal laws regarding fraud, waste and abuse. Providers and suppliers must also keep detailed documentation in the event that they rely on a Stark Law waiver, as this information may be requested by CMS in the future.

Should you have any questions regarding the Stark Law waiver please contact Mathew Levy at 516-926-3320 or MLevy@weisszarett.com or Stacey Marder at 516-926-3319 or SMarder@weisszarett.com.

Weiss Zarett Brofman Sonnenklar & Levy, P.C. is a Long Island law firm providing a wide array of legal services to the members of the health care industry, including corporate and transactional matters, civil and administrative litigation, healthcare regulatory issues, employment matters, bankruptcy and creditors’ rights, and commercial real estate transactions.

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