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Stark Blanket Waivers Related to COVID-19
Chip Hutzler, Director, Horne LLP, talks to Julie Kass, Shareholder, Baker Donelson, about the waivers of the Stark Law issued by CMS on March 30. The podcast details what’s in the waivers, what providers should consider when using the waivers, and what arrangements might not be covered by the waivers. From the Public Health System Affinity Group of AHLA's Hospitals and Health Systems Practice Group. Sponsored by Horne, LLP.
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Speaker 2:Hello, this is Chip Husler. I am a director with Horns Healthcare team, um, in Tennessee. And with me today is Julie Cast from Baker Donaldson. And Julie is an expert in the topic we're gonna talk about today. Um, hope you're all safe and sound wherever you're listening to this. And we're gonna talk about the waivers that came from CMS in the last couple of days related to the physician self deferral law, the Stark Law, as many people call it. And, uh, those are brand new related, of course, to the Coronavirus outbreak. And, um, Julie's gonna walk through in some detail what's in them, and then we'll have a little chat about kind of what it all means for you. And it probably won't be more than about 20 minutes or so, but we look forward to, uh, you listening and hope this is helpful to you. So with that, Julie, why don't you walk us through a little bit about what the waivers say and what, uh, what you think it means, at least initially.
Speaker 3:Thank you, chip. And thanks for Horn for sponsoring this podcast. I also wanna thank Andrea Ferrari for helping put together this podcast series in inviting me to speak today. Uh, on March 30th, CMS issued blanket waivers, uh, under section 1135. Uh, there are waivers to the Stark Law. Um, they are nationwide. Uh, they don't suspend all of Stark. Um, what they do, uh, however, do is remove the sanction provisions for a variety of arrangements that otherwise would be prohibited under the Stark Law. Um, notably, uh, you don't have to seek approval to use these blanket waivers. You don't have to give notice to CMS that you're using a blanket waiver. Uh, but you do have to maintain records relating to your use of records of the waivers, and you would do it contemporaneously just so that you're keeping track and keeping records. They don't specify any particular way to do that, but HHS does have the ability to come back and ask you for records relating to them. So we suggest that, uh, folks who wanna use a waiver of any kind, and we'll talk about what those waivers are, you know, keep some kind of record keeping as to arrangements that otherwise may have been prohibited but aren't under the waiver. And, uh, and just keep sort of a running list and why you did it. But it doesn't have to be anything formal, and it doesn't have to be anything, um, uh, very, very detailed or extensive. Um, while the notice of the waivers came out on March 30th, they are effective retroactively back to March 1st. Um, CMS said this, these are the first waivers that they're issuing as blanket waivers. Um, they can change them to narrow them, and if they do so, however, it will only be prospectively. So none of us need to worry that if they change them at a later time, things that would've been okay under the waivers today won't be okay under the waivers tomorrow. Uh, or they, they might not be okay under tomorrow once they change them, but they won't go back and we wouldn't have had to figure out what to do about things that had previously been under the waivers. Uh, they also might issue new waivers and those waivers would be effective as of the date they say in whatever the new waiver is. Um, one of the things about the waivers is that they have to be, uh, within a covid 19 purpose. Now, that may sound limiting, but actually the covid 19 purposes, um, are very, uh, broad. Um, they give, uh, five different, um, purposes that you can use. Um, some of them relate to diagnosis and treatment for COVID 19, which, you know, sounds, uh, pretty reasonable, but as well, um, some are more broad. Um, for example, a Covid 19 waiver include a Covid 19 purpose includes securing the services of physicians and other healthcare practitioners to provide medically necessary patient care, including services unrelated to the diagnosis and treatment of Covid-19. Um, also one of the purposes is addressing medical practice and business interruption due to the COVID-19 outbreak in order to maintain availability of medical care and related services for the patients in the community. I think in the world we live in right now, most anything can be related to the COVID 19 outbreak and certainly everything that's going on in healthcare with business interruptions or medical practice issues, it would be hard to say that it's not related to covid 19. So I think that that gives, um, you know, broad ban bandwidth to these waivers in terms of what your purpose needs to be. Um, I think, uh, one of the things that we have to be, be cognizant of when we enter into these arrangements that may fit within waivers on the front end, think about when the waivers will end so the waivers will end, uh, when the public health emergency ends. Um, and so as you go into these arrangements, uh, on the front end, be thinking how you're gonna unwind it or how it will terminate, uh, when that happens, and I don't think, you know, they, there may be notice that the public health emergency will be ending, but I don't think that the waivers will be grandfathered for any period of time after the public health emergency ends. Um, waivers under section 1135 can only be applicable during the time of the public health emergency. So think about those things on the front end. Uh, now getting to the actual waivers themselves, which you've all been waiting, waiting for, um, they are fairly broad too. There are certain categories, for example, um, the waivers, uh, wave issues related to remuneration that's paid to a physician above or below fair market value for personal services. Meaning, for example, in a call coverage arrangement, you can pay now above fair market value for those services if you need them during this time. Again, rental charges to either physicians or entities below or above fair market value. A hospital, for example, could use the space of a physician office cause the physician's not going into their office, and if the physician wants to give that space for free. And yes, we have heard that that has happened, use it for a testing site without having to pay rent to that physician during this public health emergency. Um, in addition to, uh, personal service arrangements, lease arrangements for office space, rental of equipment, also the fair market value, um, can be below. So an entity can pay below fair market value to a physician to use equipment and supplies or, um, you can purchase services or items at below fair market value from a physician. Uh, so those are the kinds of waivers that really deal with those sections of 3 57, where you're using the rental of office space, you're using the rental of equipment and you're using personal services exceptions. Um, there are waivers from, uh, for loans from entities to physicians or from a physician to an entity, uh, where the interest might be below fair market value. Uh, or you can give, uh, physician or a physician can give an entity a that is better than, uh, what would normally be commercially reasonable or what you could find, you know, a loan for if you were, um, otherwise looking at a bank. So they've provided for that. Um, both medical staff, incidental benefits and non-monetary comp exceptions have limitations. Generally speaking on the amount that you can provide of non-monetary compensation or benefits to physicians from designated health service entities. Um, those are waived during this period. So there's no limitation on the amount of non-monetary comp that a hospital can pay a physician. What isn't waived is the requirement that it is not cash or cash equivalent. That's still five. And, uh, in that exception, uh, the physician can't be asking, right? It has to be offered by a, a hospital, it can't be requested by a physician. Um, and that part of the exception is not waived in these blanket waivers. Um, so if you're thinking of doing things like providing housing, temporary housing, transportation to take, uh, healthcare work physicians back and forth to the hospital, uh, we have heard of childcare services. Uh, what I'd suggest is that the designated health service entity or go out and say, we are going to make this available, um, rather than waiting for the physician, a specific physician to ask and to give that to a specific physician. So come up with from a business perspective what it is you want to be providing to the physicians. If you are a hospital, uh, or if you're physicians and wanna provide you a designated health service entity, what is it? What is it you wanna provide? Uh, and then go out there. And to that, um, especially hospitals to physicians on the incidental benefits and the non-monetary comp provisions, um, because of the lack of healthcare facilities, uh, they have waived two, uh, physician owned, uh, exceptions that will help with needing additional hospital beds. They are allowing the conversion of physician owned ASCs, uh, into a hospital. So then you'd have a physician owned hospital. It still needs to meet all the requirements for enrollment and state licensure, but the, the stark part of having a physician owned hospital, uh, and the conversion of an asc, that is ways as well as current physician owned hospitals, which, uh, folks know have, uh, bed requirements. So you can't exceed the number of beds that you previously had. Those, uh, bed numbers can be exceeded now. So you can expand your physician owned hospital. Again, state licensing requirements would apply for group practices. Um, the waivers relax the same building and the centralized building requirements. Uh, and then there are certain waivers for referrals to home health agencies, uh, where a physician's immediate family member has an ownership interest or referrals to patients in rural areas where they have a financial interest. And then one, the last waiver that they have, which I think could be most helpful to everyone, is that they are waiving the writing and the signature requirements for compensation arrangements as long as all of the other non wave requirements of an exception are met. What does that mean? So you don't have to have a writing, you don't have it, have it signed, um, and, you know, everything else from the exception needs to be met. Of course, if you're paying, for example, over fair market value, another waiver allows you to pay in a, in a way you wouldn't be able to under, for example, the personal services. So you can hatch the waivers together and get, uh, to where you need to be. I mean, the overall, um, the overall use of these waivers is to allow our healthcare system to function without needing to think about these stark, uh, issues which come up every day. And they wanted stark to not stand in the way of that. And that's the intention of the waivers. I will say that the waiver document has a lot of examples of how they can be used. You know, some examples we've gotten from our clients have been, can we defer rent payments? Can we, uh, if we are a hospital that has a captive that provides medical malpractice insurance, can we defer the payments on medical malpractice insurance? Can we give loans to physicians? Um, can we provide housing and food? All of those things are covered, uh, are covered by these waivers, uh, which I think is very helpful to, to folks. The only other final thing I will say is, while these waivers are really helpful from a stark perspective, we do need to consider and keep in mind that, um, there is still the anti-kickback statute, the Office of Inspector General, um, because it's a criminal statute, really doesn't have the ability to grant waivers in the same way, uh, has made statements that it will, um, look at arrangements in the overall context of the Covid 19 public health emergency. And I think, you know, it's useful for folks thinking about the using of these waivers, how they're gonna be used, and keeping in mind that the kickback statute still applies. So you don't wanna get too farfield. So what do I mean by that? If you're looking at individual physician arrangements and saying, okay, I'd like to pay this physician more than fair market value because we need him or her to do a particular service for us, I think it's important to keep in mind why are you picking a particular physician? Um, it's probably best to put a plan in place of how you're going to handle a whole set of physicians or, or a whole set of issues so you're not picking out and benefiting the physician or physicians who are your best referral sources. I think, you know, the biggest problem from these waivers could be if someone does that, uh, and they pick and choose, and someone who doesn't get the benefit of these waivers, you know, could later become a whistleblower someday, um, if they're not really careful and if they're doing it in a way that's really not based on the epidemic or with the needs, but really picking and choosing based on volume or value referrals. So I think that's the one place I think that folks should be careful about. But you know, you're really looking at the anti-kickback statute, you're really looking at intent, um, and just making sure that your intent on why you're doing things is good, I think will help protect arrangements, um, under the Stark waivers to also be protected under the kickback statute, you know, as we, as we continue to, to work through these
Speaker 2:Issues. Thank you, Julie. That's great summary on on that last point. Quick question. Um, I think you make a great point there about the kickback statute, and I, I I think you stated well that really the purpose of this is to deal with the immediate needs that healthcare clients have related to the outbreak. And so hopefully most of the, um, most of the reason people are gonna take advantage of these waivers, uh, will be to address the outbreak and the immediate needs they have and, and, and kickback won't come up. Um, but do you see any other, uh, risk areas or things that could lead people into, into problems in that area where, you know, maybe they, they, they take advantage of the waiver, but they don't necessarily have the purpose, the government intent?
Speaker 3:You know, I could come up with crazy scenarios, I suppose, where people are taking advantage of waivers that have nothing to do with the Covid 19 crisis, but the way our system is, the way our world is today, I really don't see people thinking about those things. People are really thinking about how do we deal with, you know, the health issues that we have and the medical crises we're having on a day-to-day basis. So I'm not thinking that those will come up. Uh, hopefully they don't come up, but that are, you know, totally unrelated, but that doesn't mean someone won't think of something. Um, so I do think you need to be careful and if something is completely unrelated and you know, you're just trying to use a waiver because they're there, but it has nothing to do with, um, the current crisis, um, then I do think you do need to be careful about that. So as I said in the beginning, you need to document, um, why you're doing something. And so everyone should just think, even though we quickly say, well, it's because of the covid crisis. I mean, people should be thinking, is this because of the covid crisis? I mean, the things that we think about on a normal day-to-day basis, you know, I need extra physicians in our er, I need cardiologists to serve as hospitalists in our icu, and so I need to pay them more, or whatever it is. You know, everybody's like, of course that's related to this. But if it's something that's not so evident, people should take the time to pause and think, okay, is what I'm doing is this related to something going on right now?
Speaker 2:Great. That's excellent. Obviously this rule to me seems like there's a lot of common sense in here, right? A lot of, hey, we, we've got a, a, an exigent circumstance and a huge need and we want to get stark, as you said, out of the way of that so that even if for example, um, fair market value is significantly different today than it was six weeks ago, um, you don't have to bother with figuring it out because it's ta takes time and, and and effort. Um, is there, is there anything else you think, um, clients would've liked to have seen CMS done that they, that they didn't cover here? This is very broad, but is there any, is there any concern that they missed anything? I don't see anything. It seems like it's covered an awful lot, but I'm wondering if there's anything you're hearing.
Speaker 3:So I do think that it has covered an awful lot. I think that they haven't addressed everything possible. I think one of the, um, one of the exceptions that they don't talk about all is physician recruitment. And I could see, um, changes to recruitment needing to be made, either physicians starting sooner, physician recruitment arrangements being lengthened, putting them on temporary standstill, a whole bunch of issues could come up with them. And those are things that usually once you set them, you don't change them and changes may need to be made in these circumstances. Uh, so that may be one area, but I also think that if you look at the preamble to, to this waiver, um, what it says is while there may not be a blanket waiver, um, here for what you're looking for, you still might be okay under the rules themselves. And it's true, you may be okay depending on how you would change an arrangement that you could fit it within a different waiver, even if it's not, you know, a specific practitioner recruitment, uh, waiver. So there's that. And I think, um, there is still the opportunity for individuals to get their own waivers. So if there's, you've looked through all the blanket waivers, you still see one, you still don't see one that applies to your particular situation, uh, you can still submit an individualized waiver request to CMS and they will respond to your individualized waiver request. I, I think that what CMS was doing when they put these waivers together was looking at the kinds of questions and waivers they were getting on an individual basis, either as waivers or just comments that people were giving them. Um, you know, we need help with these kinds of stark issues. And you, you will see that in the examples that they provide. Um, to me, those examples came from people calling or writing in and saying, Hey, we're having an issue with this, how do we deal with it? And so I think as those issues evolve, uh, that's maybe where we see more new blanket waivers or folks will get answers to individualized waivers.
Speaker 2:Yeah, that's a great point. In fact, I'm aware of at least one attorney at another firm who, um, did just that he was making comments to, uh, folks at CMS about particular arrangements and those ended up in the examples there are 22 or something like that, examples at the end of the waivers and they really are great, uh, to get a flavor of how CMS is thinking about this, in my opinion. One more question, Julie, and then I think we're done. So you, you mentioned that it's not entirely clear when this will end. It's dependent on when the emergency ends. Um, and then what, uh, for folks do they have to revert back to kinda where they were before and how quickly do they have to do it and so on. You mentioned a little bit about that, but can you elaborate a little bit on that?
Speaker 3:Sure. I think for some things, as soon as the emergency ends, they will have to go back to where they were before. So for example, if you have a PSA and you've been paying above fair market value, uh, or what was fair market value, during normal times you will need to, uh, go back to where you were or get a different fair market value. If fair market value has changed, right? You would need to say, okay, well we're paying at a different rate because fair market value used to be Y and now it's X. Um, but, but for the most part you'd be going back to where you were before the public health emergency and before the waivers. I will say that certain things and certain kinds of arrangements are going to continue, um, but I think those arrangements would've had to start during the waiver. So what do I mean? If what you're doing during the waiver is, uh, taking advantage of the waiver of for loans to give a below market loan, let's say from a hospital to a physician, um, that loan repayment may not start until after the wa until the public health emergency is over, which means it won't start until after the waivers have ended. You know, using common sense, um, I would think that the government wasn't expecting that loans given during this emergency have to be paid back in full during the emergency. I do think that your opportunity to provide a loan that isn't market is during the waiver and it would have to, you know, be effective and start during the waiver. You're not gonna be able to offer them after the waiver. But having offered it during the waiver, I think the repayment can certainly continue on after the waiver's over. But I would look very closely at termination clauses in those agreements and what the terms are to make sure that there's understanding that whatever the new terms are during this period are for this period only.
Speaker 2:Yeah, I would, I think that makes sense. If the terms are commercially reasonable during the, the emergency period here, then if that includes a longer payout, that doesn't strike me as an issue. You made a a very good point about, um, about the new normal after the emergency's over maybe different than what normal was like before and obviously that could have an impact. Uh, but obviously you do have to return to some state of what, where we were before. That's, uh, uh, helpful to know. That's all the questions I had, I think. Uh, we wanna thank everybody for listening and thank you Julie, for the helpful info. Always great to get your insight on these things, given your, your long experience and background here and hopeful hopefully.