The Stark Law and Anti-Kickback Statute in the Age of COVID-19

In the early days of the COVID-19 pandemic, government agencies were quick to ease the regulatory burden on healthcare providers battling the virus on the frontlines. Almost a year later, many of these regulatory rollbacks remain in place. Notable among them, particularly for healthcare attorneys with a significant transactional or regulatory practice, are ongoing policies regarding enforcement of the federal Stark Law and Anti-Kickback Statute (AKS).

These two laws are the main pillars of fraud and abuse law in the healthcare sector. Animated by concerns about the corrupting influence of money on medical decision-making, both laws regulate the circumstances in which healthcare practitioners (primarily physicians) may refer beneficiaries of government healthcare programs (e.g., Medicare) to other healthcare facilities and providers with which those referring practitioners have financial relationships. While each regulatory regime has its distinct features, the Stark Law and AKS are similar in imposing broad restrictions that are punctuated by myriad exceptions (or “safe harbors,” in AKS terminology). It is within these exceptions where most healthcare transactions are born.

Against this regulatory backdrop, the Secretary of the U.S. Department of Health and Human Services (HHS) issued blanket waivers of the penalty provisions of the Stark Law to facilitate coordination among providers in their COVID-19 response efforts (the “Stark Blanket Waivers”). Initially taking effect on March 1, 2020 and continuing in effect through the date of this publication, the Stark Blanket Waivers permit certain financial relationships between physicians and other healthcare providers where the relationship: (1) furthers a broadly defined “COVID-19 purpose,” (2) fits within one of 18 categories of approved waivers, and (3) otherwise complies with all non-waived requirements of an applicable exception. Examples of these permissible arrangements include:

• An entity provides free telehealth equipment to a physician practice to facilitate telehealth visits for patients who are social distancing, or in isolation or quarantine.
• A hospital lends money to a physician practice that provides exclusive anesthesia services at the hospital to offset lost income resulting from the cancellation of elective surgeries to ensure capacity for COVID-19 needs.
• A compensation arrangement commences prior to the arrangement being memorialized in a signed writing, but it satisfies all other requirements of the applicable exception.

Shortly after release of the Stark Blanket Waivers, the Office of Inspector General (“OIG”) within HHS announced a policy statement indicating it would adopt certain waiver categories from the Stark Blanket Waivers, as applied to the AKS (the “AKS Policy Statement”). Thus, in instances where a remunerative arrangement between a physician and certain other healthcare providers implicates both the Stark Law and AKS, and qualifies for protection under the Stark Blanket Waivers, OIG would not take any administrative actions to challenge the arrangement as a violation of the AKS. The AKS Policy Statement originally took effect on April 3, 2020 and remains in effect through the date of this publication.

While the Stark Blanket Waivers and AKS Policy Statement should be welcome developments across the healthcare industry, stakeholders should be mindful that these enforcement postures are nuanced and fact-dependent in their application. Accordingly, stakeholders should strive to document those instances in which they invoke these policies and the reasons why they are applicable. If the applicability of these policies is unclear, stakeholders may consider requesting an individual waiver of Stark Law sanctions by contacting the Centers of Medicare and Medicaid Services at 1877CallCenter@cms.hhs.gov or submitting an inquiry to OIG through its COVID-19-related FAQs at https://oig.hhs.gov/coronavirus/authorities-faq.asp.

Parties relying on the current HHS regulatory enforcement policies should also be aware that they are limited in their duration. If and when the HHS Secretary’s current declaration of a public health emergency resulting from the COVID-19 pandemic terminates, the Stark Blanket Waivers (and, by extension, the AKS Policy Statement) will terminate. Thus, parties should ensure these policies are still in effect whenever they utilize them and should also contemplate how they will “unwind” their arrangements in a post-pandemic landscape.

About the author

Ayesha Mehdi, Esq. is a Partner in the Las Vegas office of Spencer Fane LLP, where she represents healthcare providers as a member of the firm’s healthcare group.