The Stark Law Post-Pandemic

The Physician Self-Referral Law, also known as Stark Law, is a federal law that prohibits physicians from referring Medicare and Medicaid patients to other entities for designated health services if that physician or a family member has a financial relationship with that entity. It is designed to encourage ethical and necessary medical referrals; before Stark’s Law, doctors could make unnecessary referrals to a laboratory or other medical facility or practice that they own, thereby increasing profit. This incentivized unnecessary referrals. 

The Stark Law has been largely set aside for the last two years, as the government issued waivers due to the unprecedented challenges presented by the COVID-19 public health emergency. How has the waiver affected health care during the pandemic? What can we expect regarding the law and waiver as we move toward a post-pandemic future? Let’s find out! 

Stark Law: The Blanket Waiver

On March 30, 2020, under the direction of the Secretary of the Department of Health and Human Services, the Centers for Medicare and Medicaid (CMS) issued blanket waivers for the Stark Law for the duration of the COVID-19 public health emergency. The waiver was retroactive to March 1, 2020, and applied nationwide to claims and cases pertaining to at least one COVID-19 related purpose. 

The blanket waiver was intended to give providers more freedom and flexibility to meet patient needs during the unprecedented public health emergency presented by COVID-19. The waiver, like other section 1135 waivers issued in response to COVID-19, will terminate at the end of the emergency period. 

The blanket waiver only applies if: 

  • The provider is acting in good faith to provide patient care in response to the COVID-19 pandemic (which is interpreted very broadly in practice) 
  • The government does not determine there are fraud or abuse concerns associated with the financial relationship 
  • The financial relationship between provider and other entity is protected by one of CMS’ permitted referral classifications

There are 18 exceptions covered by the waiver, in two broad categories: permissible renumeration/financial forms and permissible referral relationships. 

In regards to remuneration, for example, the waiver has relaxed the law’s guidelines regarding low-interest or interest-free loans from one provider to another, providing the additional ability for providers to assist each other with liquidity challenges during the pandemic. The waiver has also relaxed the law’s provisions regarding non-monetary compensation, allowing providers to provide free technology and training for other providers to facilitate telehealth, or free hotel rooms and childcare for personnel working extra hours or in different locations to provide care in hard-hit areas.

The guidelines for permissible referral relationships have been similarly broadened. For example, under the current Stark Law waiver, a physician can refer a patient to a home health agency or ambulatory surgery center (ASC) owned by the physician or a physician’s family member, because there may not be an alternative with capacity due to the pandemic. 

Post Pandemic: The New Normal

The Stark Law waivers issued by DHS and CMS have allowed providers much-needed flexibility during the disruptions caused by the COVID-19 public health emergency. However, these waivers will expire at the end of the public health emergency, and the provisions of the Stark Law will go back into effect. 

While no date has yet been established for the end of the waivers, the rapid return to normalcy in the last few months suggests that they may end sooner rather than later. Providers should consider doing a compliance review of their referral and remuneration arrangements soon to facilitate returning to compliance once the waivers end. This review should include: 

  • Ensuring any financial or referral arrangements made during the waiver period are documented properly. This documentation should specify the COVID-19 purpose for the arrangement and which of the approved waivers apply to the arrangement. 
  • Returning loaned items provided to the provider by other entities to combat the pandemic, such as telehealth equipment, mobile clinic equipment, etc.
  • Terminating financial relationships allowed under the blanket waivers, or modifying them to meet current Stark Law exception guidelines.
  • Ensuring all non-monetary compensation of medical staff reflects the 2022 limit of $452 and that any variances issued under the Stark Law waivers were applied per CMS guidelines.

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