CMS Issues Explanatory Guidance for Stark Law Blanket Waivers

April 22, 2020

As outlined in a previous email update, on March 30, 2020, the Secretary of the Department of Health and Human Services (the “Secretary”) issued blanket waivers of the Stark Law in response to the COVID-19 emergency. The blanket waivers, effective retroactive to March 1, 2020, apply nationwide and do not require submission of documentation to the Secretary of the Centers for Medicare & Medicaid Services (“CMS”). In response to requests for guidance related to the blanket waivers, CMS issued Explanatory Guidance on April 21, 2020 to address the scope and application of the blanket waivers to certain financial relationships. Below are some key takeaways from the Explanatory Guidance:

Compliance with non-waived requirements of an applicable Stark Law exception still apply.
CMS states that sanctions under the Stark Law are waived for referrals and claims that would violate the Stark Law due to a failure of the financial relationship or referral to satisfy the specified requirements of the applicable Stark Law exception. CMS reiterates that all non-waived requirements of an exception must be satisfied to avoid triggering the prohibitions of the Stark Law.
Amendments of existing compensation arrangements must adhere to non-waived requirements.
Utilizing the blanket waivers, if parties amend the remuneration terms of an existing compensation arrangement during the COVID-19 emergency, the amended arrangement must satisfy all non-waived requirements for the applicable Stark Law exception. Upon conclusion of the COVID-19 emergency, the remuneration may be amended once again to return to the original terms or to effectuate additional modifications so long as each time the remuneration terms are amended, all requirements of an applicable Stark Law exception are satisfied, the amended remuneration is determined prior to the implantation of the amendment, volume or value of referrals or other business generated by the referring physicians is not taken into account and the overall arrangement remains in place for at least one year following the amendment. Additionally, CMS notes that a change to an existing compensation arrangement could potentially be analyzed as an additional compensation arrangement depending on the facts, rather than an amendment to an existing arrangement.

Blanket waivers do not apply to indirect compensation arrangements.
The blanket waivers do not apply to indirect compensation arrangements as defined in the Stark Law regulations; however, parties may request an individual waiver from CMS. This being said, the Stark Law’s “stand in shoes” doctrine may apply, meaning a physician stands in the shoes of his/her physician organization and is deemed to have the same compensation arrangements as the physician organization itself. In such instances, a waiver for indirect compensation may not be necessary.

Repayment options for loans and repayment of amounts due following the end of the COVID-19 emergency must satisfy applicable requirements.
CMS responded to parties’ inquiries as to the availability of non-cash or in-kind repayment options for loans between a DHS entity and a physician related to the blanket waivers that address remuneration in the form of a loan with an interest rate below fair market value or on terms unavailable from a lender not in a position to make referrals. CMS points out that neither the isolated transactions nor fair market value exceptions to the Stark Law require cash payments to satisfy a borrower’s debt to a lender. Appropriate repayment terms agreed to prior to the termination of the blanket waivers may continue without violating the Stark Law after the termination of the blanket waivers. Any disbursement of loan proceeds or additional remuneration after termination of the blanket waivers must satisfy all requirements of an applicable Stark Law exception.

Restructuring of existing recruitment or relocation agreements must comply with CMS’ longstanding guidance.

None of the blanket waivers change the core requirement of the Stark Law exception for physician recruitment previously detailed in a 2007 CMS advisory opinion. In that advisory opinion, CMS opined that a recruitment arrangement should not be amended to provide for additional compensation to the recruited physician because the physician would have already relocated his/her medical practice. Other blanket waivers may be available to assist a physician in order to maintain the availability of care for patients and the community during the COVID-19 emergency depending on the facts of such arrangement.

To view the Explanatory Guidance in its entirety, please visit here .
Joshua M. Weaver
Phone: (214) 705-3516
Board Certified – Health Law
Texas Board of Legal Specialization
Steve Litke
Phone: (972) 427-7685
Ashley E. Johnston
Phone: (214) 763-8296
Board Certified – Health Law
Texas Board of Legal Specialization
Chris Reed
Phone: (214) 705-3935
Joseph E. Nelson
Phone: (214) 705-3907
Board Certified – Health Law
Texas Board of Legal Specialization
Rachael Nelson Gearing
Phone: (469) 680-9609
Kevin Mitchell
Phone: (469) 680-9049
Stephanie Toth
Phone: (469) 480-9729
Shannon Cahalan
Phone: (214) 938-9898
Paul Wehrmann
Phone: (214) 957-0919
Vicki Wanjura
Phone: (214) 587-6026
The material contained in this email alert is for informational purposes only. It is not intended to be legal advice nor is it intended to create and receipt does not establish an attorney-client relationship. Legal advice of any nature should be sought from legal counsel. The COVID-19 disaster, and the federal, state and local governmental response, is a fluid and rapidly involving situation, meaning the material contained herein may be subject to change.