In yet another example of coronavirus-related regulatory dispensation, on March 30, 2020, CMS announced that it will waive penalties for violations of the Stark Law in regard to compensation relationships between physicians and entities, such as hospitals, to which they refer if “solely related to” the Covid-19 pandemic. In particular, the waiver applies, among other things, to:

  • violations of FMV requirements in the services, space and equipment lease exceptions,
  • medical staff incidental benefits in excess of the regulatory cap,
  • non-monetary compensation to physicians that exceeds the regulatory cap,
  • interest free or low interest loans,
  • use of space by group practices that does not meet the same building requirements, and
  • violations of the signature requirements.

The following are examples of actions that would be deemed “related to the Covid-19 pandemic”:

  • diagnosis and treatment of Covid patients,
  • securing the services of physicians to provide services even if unrelated to Covid-19,
  • ensuring the ability and expanding the capacity of providers to meet patient needs,
  • shifting patient care locations to alternative sites, and
  • addressing medical practice or business interruptions.

CMS cites a number of specific examples of permissible activity including:

  • paying a premium or below market compensation,
  • free office space,
  • non-monetary services and incidental benefit increases (e.g., food, child care, housing, clothing) beyond regulatory limits,
  • providing hospital staff to assist private physicians’ offices in staff training related to Covid-19, patient intake and treatment and care coordination tied to the crisis, and
  • paying the physician’s 15% EHR subsidy obligation.

The waiver only applies, “absent the government’s determination of fraud and abuse.”  In this regard, the premise of the waiver is that the party is acting in good faith, and unable to meet the otherwise generally applicable exceptions, which may limit the benefit if interpreted literally; how does “unable” apply when technical compliance is feasible but at unnecessary delay and expense? Another concern is the use of the word “solely” before “related,” because very few things are “solely” the product of another. Nevertheless, the examples of the types of arrangements that CMS would appear to bless provide some comfort as to how “unable” and “solely related” will be defined.  The Stark waiver is welcome news to providers on the front lines, but must be utilized conservatively and only when reasonably necessary to facilitate prompt, quality and coordinated services during the emergency.

The waiver is effective March 1, 2020, and will last for the duration of the emergency.

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Proskauer’s cross-disciplinary, cross-jurisdictional Coronavirus Response Team is focused on supporting and addressing client concerns. Visit our Coronavirus Resource Center for guidance on risk management measures, practical steps businesses can take and resources to help manage ongoing operations.

Photo of Edward S. Kornreich Edward S. Kornreich

Past long-standing chair of Proskauer’s Health Care Department, Ed Kornreich is a recognized authority on the legal, regulatory and business issues related to health care services.

Ed works primarily on health care transactions, regulatory compliance, health care payment and governance issues for varied…

Past long-standing chair of Proskauer’s Health Care Department, Ed Kornreich is a recognized authority on the legal, regulatory and business issues related to health care services.

Ed works primarily on health care transactions, regulatory compliance, health care payment and governance issues for varied providers (both for-profit and not-for-profit), vendors, GPOs, distributors and entrepreneurs. His approach combines sensitivity to meeting regulatory business goals with a comprehensive and realistic assessment of the health care environment, and he is particularly experienced in dealing with the complex issues related to integrated health care systems.

After working for the Legal Aid Society, Ed entered private practice, where he helped represent a major public hospital corporation in a series of reimbursement disputes with the state and federal governments, and counseled New York area hospitals and nursing homes on reimbursement and operational issues. Thereafter, Ed served as General Counsel of St. Luke’s-Roosevelt Hospital Center, one of the largest teaching hospitals in New York. After leaving St. Luke’s-Roosevelt Hospital Center, Ed joined Proskauer as a Partner in 1990.

Ed frequently writes and lectures on Medicare and Medicaid reimbursement, health care integration, not-for-profit law and corporate governance issues, and the application of federal and state anti-kickback and “Stark” laws to health care transactions.

Photo of David Manko David Manko

David is Chair of the Firm’s Health Care Group, with a national practice representing clients in the health care services sector in complex business transactions (private equity, M&A and joint ventures) and regulatory matters. After more than 25 years, David has developed deep…

David is Chair of the Firm’s Health Care Group, with a national practice representing clients in the health care services sector in complex business transactions (private equity, M&A and joint ventures) and regulatory matters. After more than 25 years, David has developed deep healthcare industry expertise which he leverages to provide practical, creative and actionable advice to clients. Recently, David has been involved with representing stakeholders as they navigate a shifting healthcare landscape arising from COVID-19 including CARES Act compliance matters and implementing new healthcare delivery models.

Chambers USA recognizes David as a regulatory and transactional healthcare lawyer who earns impressive reviews from peers and clients alike.” “He is a master negotiator and is second to none in his responsiveness,” says one commentator, who adds that “he turns around whatever needs to be done promptly and efficiently.”

As one of the architects of the NYS ACO statute and regulations and a former member of the NYS Value Based Payment Workgroup, David has deep expertise in regulatory and transactional  issues involving large provider networks and risk bearing entities. David has also worked with clients to develop demonstration projects with the Center for Medicare and Medicaid Innovation.

In the community, David is dedicated to expanding access to primary care services for underserved populations. For almost 10 years, he has been an active member of the Board of Directors of Primary Care Development Corporation (“PCDC”). PCDC is a nonprofit Community Development Financial Institution dedicated to providing low-cost debt financing to not-for-profit organizations to expand and improve primary care in underserved communities.

Photo of Jason S. Madden Jason S. Madden

Jason Madden is a partner in the Corporate Department and a member of the Health Care Group. His practice focuses on representing health care clients, including hospitals, physician groups, not-for-profit corporations, private equity firms and other financial institutions. Jason provides legal advice on…

Jason Madden is a partner in the Corporate Department and a member of the Health Care Group. His practice focuses on representing health care clients, including hospitals, physician groups, not-for-profit corporations, private equity firms and other financial institutions. Jason provides legal advice on a wide range of  transactional and regulatory matters, including fraud and abuse compliance; HIPAA and data privacy; mergers, acquisitions and financings; and general corporate and business planning.

In addition, Jason actively participates in pro bono matters, representing not-for-profit organizations on a variety of matters, and is an active member of the American Health Lawyers Association (AHLA). Jason has led the Proskauer’s Election Protection Call Center during the last two election cycles.