The COVID-19 pandemic has quickly upended many aspects of the healthcare system, including enforcement of three important federal fraud and abuse laws: the physician self-referral law, commonly known as the “Stark law”; the Anti-Kickback Statute (AKS); and a civil monetary penalty provision prohibiting inducements to beneficiaries (the Beneficiary Inducement CMP).
On March 30, the Centers for Medicare & Medicaid Services (CMS) exercised its authority under Section 1135 of the Social Security Act to waive certain aspects of the Stark law. CMS issued 18 different waivers to protect conduct that otherwise might violate the Stark law. For example, the waivers permit hospitals to pay physicians above fair market value for services personally performed by the physician and to provide nonmonetary compensation (e.g., free meals, free child care) that exceeds the $423 annual limit that would otherwise apply to such compensation. These waivers apply only if the parties are engaging in “COVID-19 purposes,” which includes treating individuals with COVID-19, or those suspected of having the disease, and expanding the capacity of healthcare providers to address the COVID-19 outbreak.
However, conduct that may violate the Stark law may also violate the AKS and the Beneficiary Inducements CMP, and waivers under Section 1135 do not apply to these other two fraud and abuse laws. A waiver of compliance with the Stark law for certain conduct is not helpful to a provider if the provider is investigated for violating the AKS for that very same conduct. In response to this issue, on April 3 the Office of Inspector General (OIG)—the office that enforces the AKS and the Beneficiary Inducements CMP—said it would not impose administrative sanctions under these laws for conduct that is protected under 11 of the 18 Stark law waivers.
Nevertheless, OIG’s guidance leaves open many questions. Why, for example, did OIG exclude seven of the Stark waivers? While the seven excluded waivers target referrals, not remuneration (which is the subject of the AKS), those waivers implicitly involve remuneration as well. And given that the Stark law focuses on relationships between doctors and other providers of “designated health services”—such as hospitals, home health agencies, and laboratories—is OIG willing to extend any protection to organizations not subject to the Stark law that may also be engaging in new practices to respond to the COVID-19 pandemic? For instance, a pharmaceutical manufacturer may seek to financially support physicians, nurses, or home health agencies that administer the manufacturer’s drugs in patients’ homes, but this does not appear to be protected by the guidance.
Given this dynamic, on April 10 OIG offered to respond to public inquiries regarding its enforcement discretion. OIG noted that its responses would not carry the weight of advisory opinions, in that the responses would not bind OIG in the future and would not give inquirers immunity from future OIG action even if OIG responded favorably positively. Nevertheless, OIG’s offer may prove useful to a complex industry seeking to navigate a new fraud and abuse landscape.
OIG has already begun to provide guidance. For example, OIG indicated that hospitals may provide a telehealth platform to their medical staff for free, even though free items provided to physicians can be viewed as remuneration intended to induce those physicians to make referrals to the hospital. OIG indicated that this type of arrangement is permissible so long as the telehealth services are medically necessary, provided only during the COVID-19 disaster declaration, not conditioned on the physician’s past or anticipated value of referrals to the hospital, and offered to all physicians on the medical staff on an equal basis. During the coming weeks, OIG’s continued responses may give healthcare stakeholders additional comfort as they explore new forms of flexibility in response to the public health emergency.