benefit of COVID-19 waivers at Stark Law
These waivers could lead to lasting flexibilities for doctors – if a few bad apples don’t spoil the bunch
On October 19, 2020, the administrator of the Centers for Medicare & Medicaid Services (CMS) highlighted recent steps taken by the federal government to criminalize and revoke billing privileges for healthcare providers nationwide for their alleged involvement in fraudulent schemes. The recent crackdown results from coordination between the Department of Justice (DOJ), the Office of the Inspector General (OIG) and CMS, and demonstrates the government’s continued attention to enforcing federal fraud and fraud laws. abuse and target abusive arrangements. despite loosening of these laws in response to the COVID-19 pandemic. To the extent that fraud and abuse waivers can potentially lead to lasting flexibilities under current fraud and abuse regulations, the proliferation of abusive arrangements could threaten the prospect of long-term change.
Fraud and Abuse Waivers and Flexibilities in Response to COVID-19
CMS and OIG have worked together since the onset of the COVID-19 pandemic to ease regulatory restrictions under fraud and abuse laws to facilitate pandemic response efforts. Specifically:
- On March 30, 2020 (retroactive to March 1, 2020), CMS issued general exemptions from the Stark Law, also known as the Physician Self-Referral Law, applicable to financial relationships and related referrals. to the national COVID-19 emergency. In the follow-up guidelines, CMS highlighted the flexibility that suppliers have to enter into and modify indemnification agreements that might otherwise result in technical violations of strict liability status. CMS said the waiver can potentially apply to a number of possible arrangements, including:
- A hospital paying doctors above their contractual rate for professional services to COVID-19 patients in particularly dangerous or difficult environments;
- A hospital that allows physicians to use campus offices free of charge to provide timely and convenient services to patients presenting to the hospital who do not require hospital care;
- Providing telehealth equipment free of charge to a practicing physician to facilitate the delivery of telehealth services to patients who are socially distanced or in isolation or quarantine;
- A hospital providing ancillary benefits to medical staff in excess of annual limits prescribed by Stark for physicians who spend long hours in hospital responding to COVID-19; and
- Hospital loans to contracted service providers to compensate for revenue reductions due to the cancellation of elective procedures to ensure the capacity of COVID-19 services.
- The OIG followed up on a policy statement dated April 3, 2020, announcing that it would not sanction vendors for potential violations of the Anti-Recoil Act (AKS) for certain arrangements covered by the Stark Act waivers in order to to allow providers to focus “on providing necessary patient care” in response to COVID-19.
- The OIG also issued a “Message from Leaders on Reducing Burdens on Providers” expressing the high priority it places “on providing the health care community with the flexibility to deliver the care needed during this period. emergency ”and posted informal comments on the FAQ dealing with the regulatory risk of specific provisions related to COVID-19. In responses to the non-binding FAQ, the OIG indicated, among other things, that:
- Clinical laboratories may offer free COVID-19 antibody tests to patients who are receiving other medically necessary blood tests at the same time with certain safeguards in place;
- A hospital may suspend rental charges and accrued interest for an entity similar to a federally accredited health center (FQHC) when such a suspension is established in writing, without a baseline condition, and certain other guarantees are in place. in place ; and
- Provider groups may provide modest in-kind transportation assistance to established patients for transportation to alternative care locations in response to COVID-19, provided certain safeguards are in place.
Department of Justice review of COVID-19 fraud
At the same time, the DOJ is closely scrutinizing COVID-19-related fraud, including through its disaster fraud hotline, and in particular has warned consumers about test fraud programs. COVID-19 vaccine fraud programs, and fraud targeting disaster relief programs. . As noted above, the Justice Department also announced a series of enforcement actions, the biggest loss of alleged fraud resulting from “programs involving telemedicine” that allegedly involved payments to vendors for unnecessary durable medical equipment. , diagnostic tests and pain relievers without properly evaluating the patient. . At the same time, CMS revoked the billing privileges of 256 medical providers for their involvement in telemedicine programs.
Lessons for providers and policy makers
The federal government has made significant efforts to extend flexibilities to providers under otherwise strict fraud and abuse laws to facilitate the delivery of patient care during the COVID-19 emergency. Stark law waivers give providers the opportunity to address the immediate challenges of the pandemic with new agreements, which may include short-term rental agreements or licenses to enable the safe delivery of in-person care, provision of additional telehealth technologies to promote access to care while social distancing (which may be particularly useful in addressing mental health issues arising from the pandemic) and provisions which may not correspond to fair market value, but are essential to ensure that the capacities of establishments on the front line of the COVID-19 crisis are maintained.
While waivers provide short-term regulatory relief to enable vendors to respond to the COVID-19 pandemic, in the long term they may represent an opportunity to influence policy development related to laws and regulations relating to the COVID-19. fraud and abuse. At the end of August 2020, CMS extended its self-imposed deadline for issuing new and amended Stark Law regulations to August 2021, as it continues to resolve issues raised by parties industry stakeholders. This means that CMS will review the new regulations while observing the impact of its waivers on the provision of healthcare items and services and the costs of healthcare programs during COVID-19. Successful implementation of arrangements consistent with Stark Law waivers and OIG guidelines could demonstrate that certain flexibilities have low risk of abuse, have potential long-term systemic benefits, and can be adopted on a permanent basis.
At the same time, abusive arrangements that seek to take advantage of regulatory flexibilities, including those that use COVID-19 as a blanket to unduly influence referrals, may threaten the flexibility that waivers provide to hospitals and physicians who implement new good faith provisions to improve access and quality of care without unduly distorting medical decision-making. The systemic risk of abusive conduct appears particularly high for telehealth services, which were significantly expanded during COVID-19. The tremendous benefits of telehealth during the COVID-19 pandemic and beyond – including access to care and specialists, reduced risk of infection, and more effective planning – can be compromised by bad actors who capitalize on new flexibilities to promote fraudulent programs.
It remains to be seen how the illegal arrangements will affect the government’s willingness to permanently codify additional flexibilities under fraud and abuse laws and regulations. But implementing waivers during the pandemic may be a first step for the government recognizing that greater flexibility can be beneficial in some cases – and identifying areas where it can be achieved without significant risk of abuse.
Conor Duffy and Peter Struzzi are lawyers with Robinson & Cole LLP.