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Stark Law Waiver: What's Changing with the End of the Public Health Emergency?

The Stark Law, also known as the physician self-referral law, prohibits physicians from referring patients to receive “designated health services” payable by Medicare or Medicaid from entities with which the physician or an immediate family member has a financial relationship unless an exception applies (HHS-OIG Fraud & Abuse Laws). During the Public Health Emergency (PHE), the Centers for Medicare & Medicaid Services (CMS) issued blanket waivers of sanctions under the Stark Law (CMS Guidance). These blanket waivers provided providers flexibility during the COVID-19 emergency. Specifically, CMS permitted certain financial relationships and referrals that were directly related to the COVID-19 Emergency that would have otherwise violated the Stark Law. Although the Stark Law Waiver is for COVID-19 purposes, the blanket waiver defines COVID-19 purposes broadly. The Biden Administration announced plans to end the PHE on May 11, 2023. Upon the end of the PHE, all COVID-19 waivers will terminate, including the Stark Law Waiver.

The blanket waivers did not waive all Stark Law relationships. Instead, the waivers permitted 18 specific types of relationships, including remuneration from an entity to a physician that is above or below the fair market value for services personally performed by the physician to the entity, referral 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 services that would otherwise violate the Stark Law.

There are many potential applications for the Stark Law Waiver under the COVID-19 PHE. The following are examples of the types of arrangements that providers and hospitals could enter into:

  • In order to accommodate a patient surge or designation of a COVID-19 unit, a hospital may rent equipment or office space owned by a physician at a rate below fair market value.
  • Hospitals may pay incidental benefits in excess of $36 or nonmonetary gifts and benefits (business courtesies) in excess of $423 annually for COVID-19 related purposes such as appreciation meals or supplies.
  • Hospitals may provide, free of charge or at a reduced rate, the use of space in the hospital or medical office building to allow physicians to provide services to patients who come to the hospital but do not need inpatient care.
  • Compensation arrangements may begin before all required documentation of the arrangement is in writing and signed by the parties.

It is crucial to ensure compliance with the Stark Law after the Stark Law Waiver is terminated. The following is a roadmap that may be used to implement changes after the end of the PHE:

  • Conduct a thorough review of your current arrangements and determine which may have been covered by the waiver and identify steps necessary to bring those into Stark compliance. This may involve renegotiating or terminating agreements.
  • Identify training opportunities and develop targeted training related to Stark compliance, recognizing there may be a significant number of staff members who have only operated under PHE processes.
  • Incorporate a review of arrangements entered into during the PHE into your standard monitoring and auditing processes and annual risk assessments.
  • Review any policies or procedures that may have changed during the PHE to ensure that the policies and procedures are accurate or if they need to be updated.

Further, compliance departments should partner with operations and legal and make appropriate staff aware of the upcoming changes and Stark implications. Health and Human Services requires “[P]arties utilizing the blanket waivers must make records relating to the use of the blanket waivers available to the Secretary upon request.” For compliance purposes, ensure records are developed and maintained for all Stark Law Waiver arrangements. Additionally, compliance departments should consider the following best practices:

  • Identify a random sample of agreements that are applicable and conduct a targeted audit once you have given operations a chance to update to ensure compliance.
  • Ensure your department understands the important dates from the start of the waiver to the end so that audits performed in the future take into consideration the waivers that were in place.

Organizations and physicians will be expected to immediately comply with all provisions of the Stark Law. If organizations do not ensure compliance with the Stark Law after the waivers have been terminated, organizations may face penalties. Potential penalties include denial of payments for services, civil monetary penalties, exclusion from Medicare/Medicaid, or False Claims Act liability. For these reasons, organizations should perform a detailed compliance review of arrangements that may implicate compliance with the Stark Law.

© Copyright 2023. The views expressed herein are those of the author(s) and not necessarily the views of Ankura Consulting Group, LLC., its management, its subsidiaries, its affiliates, or its other professionals. Ankura is not a law firm and cannot provide legal advice.


healthcare & life sciences, healthcare compliance, healthcare operations, article

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