CMS and OIG Offer Additional Details on Blanket Waivers and AKS Policy Statement

May 18, 2020

The Centers for Medicare & Medicaid Services and the US Department of Health and Human Services Office of Inspector General have provided additional guidance and clarification on the application of Stark Law blanket waivers and enforcement of the Anti-Kickback Statute amid the coronavirus (COVID-19) pandemic, helping providers establish new arrangements or modify existing arrangements to accommodate unprecedented demands.

The Centers for Medicare & Medicaid Services (CMS) and the Office of Inspector General of the US Department of Health and Human Services (OIG) have recognized the need for regulatory flexibility for the healthcare provider community in addressing the COVID-19 pandemic. CMS issued blanket waivers of the Physician Self-Referral Law, known as the Stark Law on March 30, and on April 3, the OIG issued a policy statement regarding its decision not to enforce administrative sanctions under the federal Anti-Kickback Statute (AKS) in certain circumstances. Both the OIG and CMS have provided further guidance related to the application of these laws, as well as the federal beneficiary inducement provision of the Civil Monetary Penalties Law (Beneficiary CMP).

CMS Provides Explanatory Guidance

On April 21, CMS issued explanatory guidance on the scope and application of the Stark Law blanket waivers. First, CMS advised readers that the blanket waivers waive only certain requirements of an applicable Stark Law exception, and financial relationships must continue to satisfy all nonwaived requirements of an applicable exception. For example, while blanket waiver No. 6 permits the payment of below fair market value rental charges by a physician to an entity for the physician’s lease of equipment from the entity, the lease arrangement must continue to satisfy the other requirements of the equipment lease Stark Law exception (e.g., the arrangement must be commercially reasonable). CMS notes that the failure of a financial relationship to satisfy one or more of the other requirements of an applicable exception would trigger the Stark Law’s referral and billing prohibitions.

Next, CMS addressed amendments to compensation arrangements. In the explanatory guidance, CMS appears to clarify its view that remuneration terms can be amended multiple times in the same year, so long as each time the remuneration terms are amended, all requirements of an applicable exception are satisfied, the amended remuneration is determined before the amendment is implemented, the formula for the amended remuneration does not take into account the volume or value referrals or other business generated by the referring physician, and the overall arrangement remains in place for at least one year following the amendment.

CMS stated that following the expiration of the emergency period, the remuneration terms of a compensation arrangement may be modified to return to the original terms of the arrangement or to effectuate additional necessary modifications to the arrangement, provided that, each time the remuneration terms are amended, the requirements set forth in the explanatory guidance (as noted above) are satisfied. CMS also noted that parties may not need to amend an existing arrangement, but they may rather enter into an additional compensation arrangement to cover the unique COVID-19-related arrangement.

Finally, CMS provided the following additional points of consideration in connection with the blanket waivers:

  • The blanket waivers do not apply to indirect compensation arrangements.
  • Loans made pursuant to blanket waivers Nos. 10 and 11 may be repaid through in-kind services or in-kind benefits (e.g., the provision of office space, equipment). The in-kind payments must be consistent with the amount of the loan balance being reduced through the in-kind payments.
  • The completion of obligations under an arrangement after its expiration or termination is common and does not result in noncompliance with the Stark Law. Specifically, an entity may make appropriate payments for previously furnished services after the expiration of the arrangement or beyond the termination of the blanket waivers.
  • The blanket waivers do not permit the extension or other restructuring of existing physician recruitment arrangements.

OIG Offers Informal Inquiry Process

In furtherance of the goal of regulatory flexibility, the OIG is now accepting informal inquiries regarding the application of administrative enforcement under the AKS and Beneficiary CMP to arrangements directly related to the COVID-19 public health emergency. The process is informal but the OIG notes that the more formal OIG Advisory Opinion process remains available. Questions submitted to the OIG must include sufficient facts to identify key parties to the arrangement and the terms of the arrangement. Answers to the inquiries are published as FAQs on the OIG website.

Inquiries considered by the OIG to date include the following:

  • An arrangement pursuant to which a clinical lab pays a pharmacy a fair market rate for costs incurred by the pharmacy in establishing onsite COVID-19 testing sites for the lab.
  • The ability of mental health providers to accept donations from public entities, private charitable foundations, and health plans to fund cell phones and data plans for financially needy individuals.
  • The ability of an oncology group to provide transportation to patients to assist them in obtaining oncology care at one of the group’s remaining open locations.
  • A hospital’s provision of its telehealth platform to independent physicians on the medical staff at no cost.

In all instances, the OIG stated that the arrangement presented a low risk of fraud and abuse under the AKS and Beneficiary CMP. The analysis in each case was based on factors specific to the arrangement, although several inquiries noted common themes, including the medical necessity of the services furnished under the arrangement in general and as related to the COVID-19 pandemic; the absence of a connection between the receipt of the remuneration and the volume or value of referrals or self-referral by the recipient; and the absence of marketing or advertising of the arrangement, e.g., the availability of free transportation in the case of the oncology services.

The OIG identified several limitations to the FAQs. First, they are not binding on the OIG or any other governmental agency, and no prospective immunity or protection from administrative or criminal enforcement is granted in the event of favorable answers. Second, no opinion is offered regarding application to other laws, including the Stark Law or the False Claims Act. Finally, the informal feedback is applicable to arrangements solely during the time period subject to the COVID-19 public health emergency.

Parting Thoughts and Key Takeaways

CMS and the OIG should be commended for their willingness to provide additional guidance and clarification surrounding the application of the blanket waivers and enforcement of the AKS and Beneficiary CMP during the COVID-19 public health emergency. This willingness to engage with the provider community has helped providers establish new arrangements or modify existing arrangements to accommodate the unprecedented demands created by the pandemic. Among the many lessons learned from the pandemic, perhaps CMS and the OIG will recognize the benefits of this increased dialogue and consider ways to continue this practice beyond the expiration of this public health emergency.

Providers entering into financial arrangements with referrals sources to address COVID-19-related matters should be mindful of the following:

  • The rules still apply! Each arrangement should be evaluated from a fraud and abuse perspective.
  • If the Stark Law is applicable to proposed arrangement, evaluate whether the arrangement qualifies for an existing exception to the Stark Law. If the parties plan to rely on a blanket waiver, they should confirm that the arrangement satisfies all nonwaived requirements of an applicable exception.
  • Evaluate all arrangements from an AKS perspective, and consider submitting an informal inquiry to the OIG in connection with this analysis. If the proposed arrangement is sufficiently similar to an existing issue considered by the OIG in its published FAQs, then the parties may not need to submit the arrangement to the informal inquiry process.

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If you have any questions or would like more information on the issues discussed in this LawFlash, please contact any of the following:

Washington, DC
Michele Buenafe
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Scott Memmott
Albert Shay
Howard Young
Jacob Harper
Ariel Landa-Seiersen

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Banee Pachuca
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Mark Stein